Chapter 1 Overview: The Role of Human Resources

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Chapter 1 Overview

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

 Explain the role of HRM in organizations.


 Define and discuss some of the major HRM activities.
Every organization, large or small, uses a variety of capital to make 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.”

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:
 Pay
 Health benefits
 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
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:
1. Issues around the job they are performing
2. Challenges with their manager
3. Poor fit with organizational culture
4. Poor workplace environment
Despite this, 90 percent of managers think employees leave as a result of pay.  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 skills 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” and
Chapter 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, or external 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:
1. Globalization and offshoring
2. Changes to employment law
3. Health-care costs
4. Employee expectations
5. Diversity of the workforce
6. Changing demographics of the workforce
7. A more highly educated workforce
8. Layoffs and downsizing
9. 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 understanding, 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 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?

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