FUNCTIONS AND ENVIRONMENT OF HRM
After studying this chapter, students should be able to understand the following
A. Functions of Human Resource Management Department
B. Environmental Factors influencing HRM operations
Human Resource Functions in Small Businesses
Some aspects of the human resource function may actually be more significant
in smaller firms than in
Human Resource Management Functions in Medium-Sized Firms
As firms grow and become more complex, the human resource function becomes more
complex, and its
function achieves greater importance. The basic purpose of human resource management
remains the same,
but the approach followed in accomplishing its objectives changes.
As a firm grows, a separate staff function may be required to coordinate human
resource activities. In a
larger firm, the person chosen to do so will be expected to handle most of the
human resource activities.
For a medium-sized firm, there is little specialization.
Traditional Human Resource Functions in a Large Firm
When the firm’s human resource function becomes too complex for one person, separate
sections are often
created and placed under a human resource manager. These sections will typically
perform tasks involving
training and development, compensation and benefits, employment, safety and health,
and labor relations.
AN EVOLVING HR ORGANIZATION FOR LARGE FIRMS
The HR organizational structure of large-sized firms changes as firms outsource,
use company service
centers, and evolve in other ways to make HR more strategic. Regardless of an
organization’s design, the
five functional areas must still be accomplished. The organizational mission
and corporate culture have a
major impact in determining an appropriate HR organization.
A. Functions of HRM department:
An organization must have qualified individuals, in specific jobs at specific
places and times, in order to
accomplish its goals. Obtaining such people involves
job analysis, human resource planning, recruitment,
and selection. Job analysis
is the systematic process of
determining the skills, duties, and knowledge required
for performing specific jobs in an organization.
resource planning (HRP) is the process of systematically
reviewing human resource requirements to ensure that
the required numbers of employees, with the required
skills, are available when needed.
Recruitment is the
process of attracting such individuals in sufficient
numbers and encouraging them to apply for jobs with
the organization. Selection
is the process through which
the organization chooses, from a group of applicants,
those individuals best suited both for open positions
and for the company.
b. Human Resource Development
A major HRM function that consists not only of training and development but also
planning and development activities and performance appraisal, an activity that
emphasizes T&D needs.
Training is designed to provide learners with the knowledge and skills
needed for their present jobs.
Development involves learning that goes beyond today’s job; it has
a more long-term focus. Human resource
development (HRD) helps individuals, groups, and the entire organization become
more effective. It is
essential because people, technology, jobs, and organizations are always changing.
Career planning is an ongoing process whereby an individual sets career goals
and identifies the means to
achieve them. Career development is a formal approach used by the organization
to ensure that people with
the proper qualifications and experiences are available when needed. Through
employees and teams are evaluated to determine how well they are performing their
c. Compensation and Benefits
The term compensation includes all rewards that individuals receive as a result
of their employment. The
reward may be one or a combination of the following:
Pay: The money
that a person receives for performing a job.
financial rewards other than base pay include paid vacations, sick leave, holidays,
and medical insurance.
Non financial rewards:
Non monetary rewards, such as enjoyment of the work performed or a
pleasant working environment.
d. Safety And Health
Safety involves protecting employees from injuries caused by work-related accidents.
Health refers to the
employees’ freedom from illness and their general physical and mental well-being.
These aspects of the job
are important because employees who work in a safe environment and enjoy good
health are more likely to
be productive and yield long-term benefits to the organization.
e. Employee And Labor Relations
Since 1983, union membership has fallen approximately 8 percent, to only 13.9
percent of the workforce,
the lowest level since the Great Depression. Subtracting government employees,
unions represent only 9.5
percent of the private industry workforce. Even so, a business firm is required
by law to recognize a union
and bargain with it in good faith if the firm’s employees want the union to represent
them. In the past, this
relationship was an accepted way of life for many employers. But most firms today
would like to have a
f. Human Resource Research
Although human resource research is not listed as a separate function, it pervades
all HRM functional areas,
and the researcher’s laboratory is the entire work environment.
g. Interrelationships of HRM Functions
All HRM functional areas are highly interrelated. Management must recognize that
decisions in one area will
affect other areas. The interrelationships among the five HRM functional areas
will become more obvious
as we address each topic throughout the book.
B. The Dynamic Human Resource Management Environment
Many interrelated factors affect
human resource management.
Such factors are part of either
the firm’s external
environment or its internal
environment. The firm often
has little, if any, control over
how the external environment
affects management of its
human resources. In addition,
there are certain
complicate the management of
I. External Environmental Factors
External Environmental factors Comprised of those factors that affect a firm’s
human resources from
outside the organization’s boundaries.
a. The Labor Force
The labor force is a pool of individuals external to the firm from which the
organization obtains its workers.
The capability of a firm’s employees determines to a large extent how well an
organization can perform its
b. Legal Considerations
Another significant external force affecting human resource management relates
to federal, state, and local
legislation and the many court decisions interpreting this legislation. In addition,
many presidential executive
orders have had a major impact on human resource management.
Society may also exert pressure on human resource management. If a firm is to
remain acceptable to the
general public, it must be capable of accomplishing its purpose in line with
societal norms. Social
responsibility is an implied, enforced, or felt obligation of managers, acting
in their official capacities, to
serve or protect the interests of groups other than themselves.
Union is a group of employees who have joined together for the purpose of dealing
collectively with their
employer. Although unions remain a powerful force, union membership as a percentage
nonagricultural workforce slipped from 33 percent in 1955 to 9.5 percent today.
The owners of a corporation are concerned about shareholders. Because shareholders
have invested money
in a firm, they may at times challenge programs considered by management to be
beneficial to the
For a firm to succeed, grow, and prosper, it must be able to maintain a supply
of competent employees.
Other organizations are also striving toward that objective.
Because sales are critical to the firm’s survival, management has the task of
ensuring that its employment
practices do not antagonize the members of the market it serves.
As technological changes occur, certain skills are no longer required. This necessitates
some retraining of
the current workforce. The trend toward a service economy also affects the type
and amount of technology
i. The Economy
The economy of the nation—on the whole—and of its various segments is a major
affecting human resource management. As a generalization, when the economy is
booming, it is often more
difficult to recruit qualified workers. On the other hand, when a downturn is
experienced, more applicants
are typically available.
THE EXTERNAL ENVIRONMENT: PROACTIVE VERSUS REACTIVE APPROACH
Managers approach changes in the external environment proactively or reactively.
a. Proactive Response
Proactive responsiveness involves taking action in anticipation of environmental
b. Reactive Response
Reactive response involves simply reacting to environmental changes after they
occur. Organizations exhibit
varying degrees of proactive and reactive behavior.
II. The Internal Environment
Factors that affect a firm’s human resources from inside its boundaries are termed
as internal environmental
factors. The primary internal factors include the firm’s mission, policies, corporate
style of upper managers, employees, the informal organization, other units of
the organization, and unions.
the organization’s continuing purpose or reason for being. Each management level
should operate with a
clear understanding of the firm’s mission. In fact, each organizational unit
(division, plant, and department)
should clearly understand objectives that coincide with that mission.
A predetermined guide established to provide direction in decision making. As
guides, rather than as hardand-
fast rules, policies are somewhat flexible, requiring interpretation and judgment
in their use. They can
exert significant influence on how managers accomplish their jobs.
c. Corporate Culture
The system of shared values, beliefs, and habits within an organization that
interacts with the formal
structure to produce behavioral norms.
d. Management Style of Upper Managers
Closely related to corporate culture is the way in which the attitudes and preferences
of one’s superiors
affect how a job is done. This situation deserves special emphasis here because
of the problems that can
result if the managerial style of upper-level managers differs from that of lower-level
Employees differ in many ways including their capabilities, attitudes, personal
goals, and personalities. As a
result, behavior that a manager finds effective with one worker may not be effective
f. Informal Organization
the informal organization is the set of evolving relationships and patterns of
human interaction within an
organization that are not officially prescribed. Such informal relationships
are quite powerful.
g. Other Units of the Organization
Managers must be keenly aware of interrelationships that exist among divisions
or departments and should
use such relationships to their best advantage.
h. Labor-Management Agreement
Upper management typically negotiates labor-management agreements, but managers
organization must implement the terms of the agreements. In most instances, agreements
on the manager’s actions.
C. MANAGING THE DIVERSE WORKFORCE
Any perceived difference among people: age, functional specialty, profession,
sexual orientation, geographic
origin, life style, tenure with the organization, or position.
a. Single Parents and Working Mothers
The number of nontraditional, single-parent households in the United States is
growing. Because more than
half of all marriages today end in divorce, this trend is expected to continue.
Often, one or more children
are involved. Of course, there are always widows and widowers who have children
as well, and there are
some men and women who choose to raise children outside of wedlock.
b. Women In Business
The number of women in entry and midlevel managerial positions has risen from
34 percent in 1983 to 46
percent in 1998, meaning many more women are in the pipeline to executive spots.
Today, there are more
than 9 million women-owned businesses, up from 400,000 in 1972.
c. Dual-Career Families
The increasing number of dual-career families presents both challenges and opportunities
As a result of this trend, some firms have revised their policies against nepotism
to allow both partners to
work for the same company. Other firms have developed polices to assist the spouse
of an employee who is
transferred. When a firm wishes to transfer an employee to another location,
the employee’s spouse may be
unwilling to give up a good position or may be unable to find an equivalent position
in the new location.
Some companies are offering assistance in finding a position for the spouse of
a transferred employee.
d. Workers Of Color
Workers of color often experience stereotypes about their group (Hispanics, African
etc.). At times, they encounter misunderstandings and expectations based on ethnic
or cultural differences.
e. Older Workers
The world population is growing older, a trend that is expected to continue through
the year 2000. In
addition, the trend toward earlier retirement appears to be reversing itself.
f. Persons With Disabilities
A handicap, or disability, limits the amount or kind of work a person can do
or makes achievement
g. Young Persons With Limited Education Or Skills
Each year thousands of young, unskilled workers are hired, especially during
peak periods, such as holiday
buying seasons. In general, they have limited education—high school or less.
More jobs can be de-skilled,
making it possible for lower-skilled workers to do them.
h. Educational Level Of Employees
Another form of diversity that is now found in the workplace is that of the educational
level of employees.
The United States is becoming a bipolar country with regard to education, with
a growing number of very
educated people on one side and an alarming increase in the illiteracy rate on
i. Corporate Culture
Corporate Culture is the system of shared values, beliefs, and habits within
an organization that interacts
with the formal structure to produce behavioral norms. It is the pattern of basic
norms, and artifacts shared by organizational members.
Corporate Culture The system of shared values, beliefs, and habits
within an organization that interacts
with the formal structure to produce behavioral norms
Mission: The organization’s continuing purpose or reason for being.
Policies: A predetermined guide established to provide direction in
The Labor Force: The labor force is a pool of individuals external
to the firm from which the organization
obtains its workers
Unions: Union is a group of employees who have joined together for
the purpose of dealing collectively
with their employer.