Tutorial 1

1.

Define human capital management and human resources management

Human capital management is the task of measuring the cause and effect relationship of various HR
programmes and policies on the bottom line of the firm. It is an approach to managing people as assets
and is concerned with the abilities and training people possess.
Human resources management is the utilization of a firms human resources to achieve organizational
objectives. It oversees the recruitment of capable employees and is focused on the job performed by
people.
A differentiating factor between human capital and human resources is that while human capital refers
to returns on investments, one of the responsibilities of human resources is to identify the potential
employees who have the type of capital the organization needs. The human resources department also
has the responsibility of deciding the ways in which the organization can invest in human capital in
order to improve the pool of available employees. Organizations understand that the more the human
capital improves, the more the organization will benefit in the long run. This is why some organizations
offer their employees training, conferences, seminars and even further education. Such an investment in
human capital will yield rewards in the form of improved and more effective employee performance.
Human capital includes aspects like education, training, personal development and medical attention.
This may be disbursed through schools, mentors, training camps and hospitals. Since human beings are
attached to any capital investment concerning their work skills, training or education will always be
attached to them, even if they no longer work for the company or organization responsible for the initial
capital investment. Such a concept also separates human capital and human resources, since human
resources as a department in an organization will always be attached to the organization.

2.

3.

Which human resources management function must be performed regardless of the organization's size
HRM department regardless of the organizations size must perform following human resource
management functions
Staffing (HR planning, recruitment and selection)
Human resource development
Compensation and benefits
Safety and health
Employee and labor relations
Records maintaining, etc.
HR research (providing a HR information base, designing and implementing employee
communication system).
Interrelationship of HR functions.
What are the external environmental factors that affect human resources management? Describe each.
The Labor Force the pool of external individuals from which the organization obtains its
workers. Changes in supply and demand may impact the availability of qualified candidates

Legal Considerations Labor related legislations will affect all HRM functions

Society Managers are increasingly expected to fulfil the implied, enforced or felt obligations in
their official capacity (Corporate Social Responsibility)

Unions A union is where employees joined together to deal with the employer in areas of wage
levels, benefits and working conditions

Shareholders Shareholders are owners who invest in shares of a company. Managers are
required to comply with legitimate requests by shareholders

Competition Firms may face intense competition in their product, service and labor market. A
firm must ensure the sufficient supply of qualified and competent employees to achieve its business
objectives

Customers To satisfy customers requirement, the firm must train, develop and motivate its
employees to provide quality goods and services

Technology changes in technology impact HRM in many areas such as recruitment, international

assignments, etc.
The Economy the state of economy directly impact the supply and demand of qualified
candidates as well as the pay trend which is always tied with the economy

4.

What is the difference between Personnel Manager and Human Resources Manager?
Personnel Manager who is not part of the executive management team, is responsible for recruiting and
selecting employees, managing their information and overseeing their departure, and does not involve in the
long-term strategic planning. The responsibility for training, rewarding, disciplining and terminating
workers falls to department managers.
Human Resources Manager preforms the human resource management functions like staffing, human
resources development, compensation and benefits, safety and health, and employee and labor relations.
The Manager also helps the executive team plan the long-term employee needs of the company.
5.

How should HR act as a strategic Partner?

Making HR as strategic partner is perhaps of the best approach to making human resources as the most
important asset in an organization. "Being a strategic partner" is understood as a long-term relationship
to achieve defined objectives common to all partners. Some people refer to HR as business partner. In
the context of strategic human resource management, the HR function and activities are intended to
ensure the organization's financial success. As partners your HR people and employees in the various
areas of the organization's operations must not get in the others' way. Partners do not hinder one another.
Instead, they support each other to achieve common objectives with the purpose of attaining the overall
objectives, including business objectives. There are some who are of the opinion that the
implementation of HR strategic partnership is not easy. HR people themselves may hinder its
implementation. A strategic plan will ensure that your people will carry out their own specific role in
their assigned area of operation in partnership with other employees. This is part of the plan to make
HR as strategic partner. It incorporates the HR Vision and Mission that help pull HR people in the same
direction.
Why there is need to make HR as Strategic Partner
Some of the reasons may sound familiar to you.
These include:

To increase productivity of the labor force and thus, profitability of the organization

Competency and talent management

Onset of information technology and the vast amount of knowledge used in the course of the
activities of organizations

The changing business environment

Effect of globalization on the business landscape

Provision of Human Resource Services
It is through effective delivery of human resource services that you can make human resource as
strategic partner. Use a simple approach, make effective use of technology, and either serve most of
your customers or serve a particular sector exceptionally well. All of us are aware that customers
include both internal and external customers. Strive to serve both well. In the case of internal
customers, concentrate on employees at the strategic and tactical levels. Make sure HR is involved at
both levels. If not, there is not much that HR can contribute towards improving organizational
performance. But it does not mean we ignore employees at the operational level. Serve well those
involved in the day-to-day operations of the organization that are closest to where the money is. These
are the employees whose activities generate revenue for your organization. It is necessary that you
identify these positions and the employees holding those positions.
Translating Business Strategy Into Action
You make HR as strategic partner when and if HR spend more time in the organization's planning,
design and development. Your organization does this in order to achieve its mission and objectives.
HR must become part of the business team, involved in planning at the highest level. Changes in HR

management are inevitable. HR Managers and HR professionals are in the strategic position in
providing the leadership in change management. However, HR Managers are not without challenges.
Enhance the position of HR as strategic partner by ensuring that teamwork exists in your organization.
The Human Resource Manager is the key person in ensuring that people play a strategic role in the
organization. In activities carried out by the HR department, working in cooperation with each other
and every member of the workforce is essential. This can help your organization to succeed in achieving
its plans.
Making HR as Strategic Partner

Make effective use of your Human Resource Information System (HRIS) to handle daily
administrative HR tasks. Employees can make use of the self-service facility online. This saves
time and reduces costs.

Fully involve your human resource in HR system development that is supportive of business
strategy development and implementation. This promotes ownership.

Appoint an HR Head who understands well the strategic partnership relationship between
organizational strategy and human resource.
It is said that someone who is an expert in every aspect of the HR function will 'fit the bill'. But, you
may not easily find someone of this caliber. You may have to identify someone from within your
organization and groom him or her for this important role.

In a knowledge economy, HR has an opportunity to become a strategic partner. Knowledge and

information are required to formulate, implement and review strategies. Decide to become a
knowledge organization.
The Human Resource Function and Your Strategic Business Plan
It was shown in a survey that there is a correlation between being strategic business partner and the
effectiveness of the HR function. You require strategic HR management to ensure that your HR
function can fully support the achievement of business objectives. Chief executives including general
managers need to that this is done. The administrative reactive approach in people management can no
longer support your organization in an increasingly competitive business environment.
What about Decentralizing your HR Function?
Never allow full decentralization. Line managers and supervisors resent it and will put the blame on
HR when problems arise. And if you do so, it interferes with the effective use of line managers' and
supervisors' time in the day-to-day operations of the organization. Give line managers and supervisors
HR accountability, not responsibility. And give them undivided support in order to make them more
proficient in managing their subordinates in the performance of daily tasks.
Strategy Development and Implementation
Full participation of HR people in strategy development and implementation promotes HR as strategic
partner. Ensure that your HR Manager and HR professionals:

contribute to business decisions

develop business acumen to understand how a profitable business is run

are customer-oriented

learn how to link HR practices to your organizational business strategy

What are Required of HR as Strategic Partner?
These are among the important ones.

Recruiting the right employees. Align corporate values to your recruitment strategy.

Well-developed competencies of the workforce, and their relevance to organizational core

business.

Participative culture where HR initiatives fully support the overall strategic plan.

Effective use of information technology.

Effective leadership through appointment of the right HR Head.

Identification of human resource practices that make HR as strategic partner, namely, serving the

business needs of your organization. Discard ineffective HR practices that do not contribute to the
success of your organization.
Continuous Improvement
HR management requires continuous improvement to ensure it retains its relevance as strategic partner.
Capable and committed people are needed at every level in order for this to happen
Senior management support is crucial to ensure that human resource becomes your organization's
strategic partner.
It is said that nothing changes except change itself. Change is inevitable for the continued success of
your organization. Manage them well to avoid or minimize disruption in your organization's activities.
Other Pre-Conditions
The effectiveness of your people as HR as strategic partner is also dependent upon your existing
corporate policies and practices, structures, the types of activities you carry out, the location, effective
communication, and the business environment. Review every aspect of HR in the process of
implementing the necessary changes and reorganization. Having the right leadership is crucial to
success. Provide the necessary leadership and support to your employees at every level. Motivate them
and engage their full attention with the view to ensure HR truly becomes strategic partner.
And always remember, effective and on-going communication is crucial to ensure that everything is
understood by every employee at every level. And that things keep moving in the right direction
according to plan.
Measurement of HR Contribution
The things already stated are important. But there is an important matter that needs attention.
You may ask, "How do I know whether my HR function is playing its role?" Implement an HR
performance measurement such as the HR Scorecard. This can show whether your organization is well
on the road to making HR as strategic partner.
What is an HR Scorecard?
Read some good books by experts such as "The HR Scorecard: Linking People, Strategy, and
Performance" by Brian E. Becker, Mark A. Huselid and Dave Ulrich.
Enhancement of Competitive Advantage
By doing these things, you can increase the competitive advantage of your organization through the
alignment of human resource strategies to your overall business plan.
This goes towards strengthening the importance of HR as strategic partner.
It goes without saying that effective leadership skills at various levels in your organization, including
HR, is vital to corporate success. This is the type of leadership that drives the success of organizations.
HR Budget
In order to ensure that HR truly becomes strategic business partner, adequate financial backing is
necessary.

Risks of financial shutdown

Take measures to ward off or minimize risks to HR. Further to this, ensure that HR plays a meaningful
role, if not a major role, during financial crises.
Being in HR requires you to know and understand certain things and to do something about them.
You do not have the luxury of experimenting how to manage people experiment and, thus, using a trial
and error approach. Making HR as strategic partner is an insurance that your organization will succeed
in more ways than one.