PART I - 21ST Century Human Resource Management Strategic Planning and Legal Issues

1. The New Human Resource Management Process

Why study human resource management (HRM)?

"The better you can work with people, the more successful you will be in your personal and professional lives - whether as an employee, a (line) manager, or a human resource manager." The role of modern managers also continues to change, requiring today's organizational leaders to deal with increasingly dynamic and complex environments. When it comes to managing organizations, a three-step approach applies:

• To learn the important functions and concepts of HRM.
• To develop your capability to apply HRM functions and concepts by using critical thinking.
• To develop your HRM skills in your personal as well as professional lives.

The main reason in today's business for human resource managers to change their way of working, is the fact that there is much greater competition and an external environment that requires a greater range of change. Therefore, the qualities to be adaptable and productive are considered an absolute requirement. In the 21st century organization, the people within an organization are the most important asset, because they create the competition through competetive performance. 

Employee engagement is a combination of job satisfaction, ability, and a willingness to perform for the organization at a high level and over an extended period of time. According to HR Magazine, companies that fall into the top 10% on employee engagement, beat their competition by 72% in earnings per share during 2007-08. Engaged employees are considered those who understand and are willing to do whatever it takes to make the organization succeed. 

HRM Past and Present

HRM in the Past

Previously, HR managers were expected to only manage personal paper files and were not involved with the organization's business process. The tasks of a HR manager consisted of keeping track of job applicants, maintaining employee paperwork, and filing annual performance evaluations. The HR department was considered to be more of a cost center. 

Present View of HRM

Nowadays, organizations are focused on working through teams and also expect greater productivity than during the past. Within the current vision, organizations are viewed as productivity centers instead of cost centers. A producivity center is considered a revenue center that enhances the profitability of the organization by enhancing the productivity of people within the organization. The function of an HR manager today has grown to improving organizational revenues and profits - by enhancing the performance of the people within the organization. 

Productivitiy is considered the amount of output that an organization gets per unit of input, with human input, usually expressed in terms of units in time. Productivity is considered a key element to survive in today's business. Productivity is therefore considered the end result of two components that HR managers work on creating and improve within organizations:

• Effectiveness - focuses on performing the job no matter when or where. It answers the question "Did we do the right things?"
• Efficiency - focuses on the amount of organizational resources used in order to get the job done. It answers the question, "Did we do things right?"

The two elements above indicate the importance of influencing the effectiveness of employees. For this matter, managers need to find an indirect way to affect the employees' productivity (efficiency and effectiveness). 

Technology's Effect on Efficiency

One of the effective ways to improve people's efficiency within an organization is through the use of technology. Using technology allows organizations to gather, analyze and manage large amounts of data. This allows managers to look for parts in the data, that can help them create new and more efficient processes. 

The Changing World of HRM

New HRM Challenges

The three biggest challenges according to HR executives are:

1. Keeping high levels of employee engagement
2. Developing next generation organization leaders
3. Keeping competetive compensation and benefits offerings

The HR competencies that will be the most critical:

1. "Business acumen: ability to understand and process information to contribute to the organization's strategic plan.
2. Organizational leadership: ability to direct and add value to initiatives and processes within the organization.
3. Essential evaluation: ability to interpret information to make business decisions and recommendations.
4. HR expertise: ability to apply the principles and practices of HRM to add to the success of the business".

Labor Demographics

Businesses no longer have a "typical" worker. In the current reality, there exists a diversity in terms of gender, ethnicity and religion among employees within an organization. Companies in developed countries are experiencing a reduction in the number of quality of potential skilled employees. The lack of skilled workers for fairly complex jobs is considered a major issue. This results in fairly older and highly skilled employees to remain within the workforce of the organizations. Due to an increasing gender mix within organizations, managers of the 21st century will be required to be more culturally aware and take into consideration different work ethics, cultural norms and even languages. 

Knowledge workers and the Pace of Change 

"Knowledge workers are workers who "use their head more than their hands" and who gather and interpret information to improve a product or process for their organizations." In essence, they manage the knowledge for the firm. 

The technology currently available should be used more efficiently through hiring and training better and more capable employees, also known as the human resources. Due to a continuous shortage of knowledgeable workers, there will be a shortage on a global scale for the forseeable future. This means each HR manager is going to be competing with every other HR manger in the world, for the available pool of knowledgeable workers. 

Understanding HR's Critical Factors

Due to the free will of each employee to perform in any way they consider a fit for the business, the importance for the HR managers to indirectly control their human resources, has become even more important. 

Critical Dependent Variables

Dependent variables are considered variables which cannot be influenced directly, but indirectly, because it involves the free will people have within an organization. HR Managers have brought up the following issues, as being the most important and difficult thing to deal with: 

1. Productivity
2. Employee engagement
3. Turnover - permanent loss of workers from the organization. A distinction between voluntary and involuntary turnover is made, depending if someone quitted willingly (voluntary) or was forced to (involuntary). 
4. Absenteeism - temporary absence of employees 

Turnover causes an organization to experience consequences related to organizational productivity, performance and - potentially - competetive advantage. Also, an increase of costs on several levels will be associated with this new turnover, since employees - in most cases- will have to be replaced.

Absenteeism is the failure of an employee to the workplace as scheduled. The consequence that is related to this phenomenom is that it costs the organization money - indirectly. The productivity lost due to the absence of employees also costs money. Not to forget the decreased employee satisfaction due to the extra workload that needs to be carried by the cowokers due to an absent employee. 

The Importance of Strategic HRM

In the last 30-40 years HR management has made a shift from a fairly reactive to a proactive approach. HR managers are now actively seeking for new talent to acquire, instead of waiting for people to quit, sometimes unexpectedly. Good HR managers focus on processes within the organization and optimizing the strategies when it comes to fixing problems, whether it may be a training problem, motivational problem or any other people-oriented problem. 

HRM has been redesigned to make organizations more competetive and create sustainable competetive advantages, a capability that creates value for customers that rivals can't copy quickly or easily and that allows the organization to differentiate its products or services from those of competitors. 

The Influence of Social Media

Social media has developed itself into a major tool for the workplace. It has created an impact for the following phases: recruiting and selection, the onboarding process, training and development and performance management.

HRM Skills

All managers require a mix of technical, interpersonal, conceptual, design and business skills in order to perform successfully. 

Technical Skills

Technical skills are defined as the ability to use methods and techniques to perform a task. A successful HR manager is required to possess knowledge of laws, rules and regulations related to HR. In addition, understanding the performance appraisal process, computer skills and interviewing skills are considered highly important. 

Interpersonal Skills

Interpersonal skills comprise the ability to understand, communicate, and work well with individuals and groups through developing effective relationships. An HR manager is required to have strong people skills, meaning they have to be empathetic. Empathy is simply being able to put yourself in another person's place - to understand not only what he or she is saying but why he or she is communicating that information to you. Interpersonal skills also translate into holding the ability to work well with others in teams. 

Conceptual and Design Skills 

Conceptual design skills include the ability to evaluate a situation, identify alternatives, select a reasonable alternative, and make a decision to implement a solution to a problem. This skill set is critical in creating the ability to lead within an organization. The conceptual part of this skill set is the ability to understand what is going on in the business process and understanding how different departments and divisions within an organization operate. 

Design skill is the skill set that allows an HR manager to create innovative solutions to problems that have been identified during application of the conceptual skills. 

Business Skills

Business-oriented proficiency competency is also considered a mandatory HRM skill. Business skills are the analytical and quantitative skills - including in-depth knowledge of how the business works and its budgeting and strategic-planning processes - that are necessary for a manager to understand and contribute to the profitability of the organization.

Line Managers' HRM Responsibilities

Line Versus Staff Management

Line managers are the individuals who create, manage and maintain the people and organizational processes. HR managers would generally be staff managers, individuals who advise line managers in some field of expertise. 

Major HR Responsibilities of Line Management

Every manager's primary job is to manage the resources of the organization, including the human resources. A line manager should therefore understand the following elements, in order to perform sucessfully:

• Legal matters
• Labour costs controlling mechanisms
• Leadership and motivation
• Training and development
• Appraisal and promotion
• Safety and security of employees 

HR Managers' responsibilities: Discplines within HRM

The following specialists careers exists when it comes to the specialties of an HR Manager:

• The legal environment: Equal Employment Opportunity (EEO) and diversity management
• Staffing matters
• Training and development
• Employee relationships
• labor and industrial relationships
• Compensation and benefits programs
• Safety and security conditions
• Ethics and sustainability matters

Sustainability is meeting the needs of today without sacrificing future genrations' ability to meet their needs. 

Practioner's Model for HRM

The practioner's model is designed to show how each of the sections of HRM interact and which items must be dealt with. The model first describes the critical elements when it comes to organizational functions in order for an organization to be viable long-term. This way the organization will be allowed to operate legally and work towards the goals that it has identified as critical to gaining success. Secondly, it helps identifying what the organization needs to do in order to sustain itself and its human resources over the long term. 

In the next step, the model discusses the critical issues in managing those human resources successfully. Then, the model discusses how to maintain the workfoce by managing the compensations and benefits provided to employees. The model consists of the following five sections:

1. 21st Century HRM, strategic planning and HR laws
2. Staffing
3. Developing and managing
4. Compensating
5. Protecting and expanding stakeholder reach