Human Resources Management Summary Chapter 2: Functions of management

By: Mounir Douma

Classical management functions:
Chapter 1: Definitions and concepts
● Planning: Setting goals and determining how to achieve them.
Management is both an art and a science: ● Organizing: Arranging resources and tasks to achieve the goals
● Commanding: Guiding people to achieve goals.
Unlike the exact sciences, management is heavily influenced by external factors, ● Controlling: Monitoring performance and making adjustments to stay on track
making each situation unique and seldom repeatable. toward the goals.
- Factors vs actors: actors can be influenced by us (government, bank,
suppliers…), while factors can only be adapted to (cultural, political, The command function is the precursor to HR management as it has evolved to include:
environmental…). Staffing, motivation, retention, leading (influence workers), leading (worker
commitment).
● 1st definition: "Management is the art of planning, organizing, commanding and
controlling”. Types of employee commitment:

● 2nd definition: “Management is the process of carrying out activities effectively ● Affective commitment: you are emotionally attached to the company, you like
and efficiently with and through people”. being there regardless of pay.
● Normative commitment: you feel a sense of obligation to stay with the company,
Performance: Efficiency, Effectiveness, Relevance even though the pay or atmosphere might not be to your liking.
● Continuance commitment: you stay with the company because the cons of
Performance depends on effectiveness, efficiency and relevance. leaving outweigh the pros causing a fear of quitting.

● Efficiency: refers to how well you can use the available resources towards a goal.
Doing things right Chapter 3: Evolution of HRM
● Effectiveness: refers to how successful you are in the accomplishment of a goal.
Doing the right things. 1st era: Taylorism (scientific management)
● Relevance: alignment of the goal with broader company objectives.
A system of scientific management that focused on breaking down tasks into smaller
Production, Productive capacity, Productivity: standardized parts, optimizing work gestures for specialized workers, pay is linked to
productivity. An elite group of engineers design the specifics of how work is done by the
● Productive capacity: max possible output of a company. normal workers which eliminates the need for skilled labor.
● Production: actual quantity produced.
- 5 factors: Capital, Labor, Land (natural resources), information, Human Staff management focused on recruitment, structure and worker diligence.
Resources.
● Productivity: performance measure comparing the amount of goods and services
2nd era: Fordism
produced (output) with the amount of inputs used.
Fordism is a manufacturing philosophy developed by Henry Ford and Alfred Sloan that
Note: Quantity of production doesn’t need to match productive capacity.
emphasizes mass production of identical goods (standardization) and efficiency.
Workers and machines are arranged in assembly lines, and there is a structured
hierarchy with clear levels of authority. ● Internal communication: communication between management and employees.

Staff management includes administrative management and relations with unions.. McGregor’s Two types of employees:

Criticism: ● Theory X: assumes that employees are lazy and immature and respond best to
Despite increasing the production and reducing costs, these models are criticized for the carrot and stick approach. Here, an authoritarian management style is
not giving enough importance to the human aspect of the company and for the necessary.
dehumanizing conditions of workers which was stated to limit the full potential of our It shifts the blame unto employees.
production. ● Theory Y: assumes that employees are productive, independent and intrinsically
motivated. Here, a participative management style where employees are
empowered to achieve organizational goals is best suited.
It shifts the blame unto managers.
3rd era: Human relations school ● We should identify the type of employee and proceed with an appropriate
management style, unlike the classical approach of “one size fits all” (universal
Marie Follet and Elton Mayo were the initiators of the human resources management method across all organizations and employees).
approach.

Marie Follet: Chapter 4: Contemporary theories

● Distinguishes between authority and power:
Management by objectives: Peter Drucker
- Authority is derived from a position in a hierarchy.
- Power comes from the ability to influence others.
According to Drucker, management is based on 3 major tasks:
Authority confers power, there is no authority without power. However,
there can be power without authority.
● Objective-setting:
- Examples of power without authority: a lobby, a business leader
Setting clear, operational (achievable), and motivating objectives. This involves
influencing countries…
specifying the affected roles, activities, missions, tasks).
● She advocated for employee autonomy and empowerment to realize their full
● Combining productivity and employee satisfaction
potential. A good leader influences workers rather than exercises his authority on
them.
● Managing the social impacts and responsibilities of the company:
Not taken into consideration by neither the classical nor the human relations
Elton Mayo (Hawthorne studies): schools and runs counter to Adam smith’s invisible hand.

In the Hawthorne studies, a group of workers maintained the same level of productivity (Competition) John Nash:
despite reduced working conditions. This was because the employees felt a sense of John Nash criticized the "invisible hand" theory, arguing it's incomplete as it emphasizes
importance from being observed (Hawthorne effect). individual self-interest over group benefit. He proposed that optimal outcomes arise
when individuals act in their own best interest as well as that of the group.
● Mayo concluded that emotions and social relationships are important factors in
the productivity of employees.
In contrast, Taylor/Ford adhered to the invisible hand, and focused on producing as
much as possible for as low a price as possible to maximize profits.
90s/2000s : Robotism & rationalization
Example: The great depression was exacerbated by companies overproducing with no
regard for the supply and demand imbalance. ● Rationalization of companies: reorganizing them to increase operating efficiency.
● E-commerce and globalization.
● Subcontracting: a customer hires contractors with core competencies (e.i core
The Neoclassical Synthesis: competency of a university: professors), who then subcontract non-core tasks (e.i
non core tasks of university: janitors).
● Combines elements from both the Classical school (with its scientific approach) ● Personnel function focused on forecasting needs, talent hunting, company
and the Human Relations school (emphasizing the human aspect) in a pragmatic culture…
and empirical manner to create the Contingency approach to management,
which asserts that the best course of action depends on the company context. 2012 : New collaborative waves => RH 2.0
● It helped disseminate certain managerial practices, such as:
● The 2012 era refers to the rise of startup culture, emphasizing collaboration,
- Management by objectives.
innovation, and shared networks, with HR becoming everyone's business,
- Decentralization.
focusing on trust, flexibility, and innovation.
- Results-based control.
- Empowerment.

Era of automation: Summary of the history of HRM:

● In classical theories we focused more on the process rather than the employees.
This era was marked by the integration of electronic machines. Which mainly resulted
In the human relations school, we focused more on the employees. These two
in:
eras target the short term and considers the company a closed system with an
● Increased accountability: machines calculated employee efficiency.
internal focus and an inconsideration of external influences.
● New management tools: key performance indicators (KPI).
● Centralized management: one manager oversees many employees who are not
● In the third era: neoclassical synthesis:
involved in the decision making process.
We introduced the contingency approach, which considers the company context
(the external environment micro/macro).

70s/80s: Toyotism
● In the fourth era: Strategic HRM
We consider HR practices aligned with long term organization goals and external
● Push and pull production: production begins only after clients place orders. factors.
● Deadlines (Just in time): technique reduces logistics costs by producing goods
only when needed, minimizing warehouse expenses.
● Total quality management: (e.g Iso 9001 certification), focusing on both product
Chapter 5: Theoretical foundations of HRM
and management quality.
● Social audit: assess employee-related aspects such as accidents, problems,
compensation, and training delivered. Definition of Human Resource Management:
● Change management: managing organizational changes like acquisitions...
1st definition: - (optional) Behavioral competencies: how the employee should behave on
Human Resources Management is a strategic approach that consists of nurturing and the job (depends on the job).
supporting employees, and ensuring a positive workplace environment so that the - (Optional) Functional competencies: Technical or what not competencies
enterprise can achieve its objectives. required for the job.
7. Additional job dimensions and work environment info.
2nd definition:
To have in time and permanently, in sufficient numbers, of competent and motivated Note: in a job description we don’t list compensation/benefits, they are part of the job
people, at an optimal cost, to do the necessary work, in the best possible social climate. announcement.

HRM Objectives: Chapter 6: HRM vs Personnel (staff) administration

● Ensure that the organization complies with local laws.

● Assist the company in acquiring talent that serves its strategic and operational
objectives.
● Create a positive social climate.
● Establish a harmonious relationship between employer and employee
● Ensure optimal employee performance through performance evaluation and skills
development systems.

HRM challenges:

● Market uncertainty and rapid change.

● Selection
● Retention
● Compensation: After attracting the best employees (external competitiveness),
the next step is rewarding productive workers (internal equity).

Elements of a job description:

1. Job Title
2. Job purpose / position objective: what are you gonna do on the job.
3. Location
4. Reports to: your hierarchical position on the job
5. Roles and responsibilities
6. Job profile: candidate requirements
- Academic background Bottom-up (Personnel administration):
- Professional trainings/certificates
- Hard/Soft skills ● Operational: Focuses on executing orders, distributing tasks and organizing
- Work experience (number of years of work in related jobs) them.
 ● focuses on the short run. Core competencies: crucial for the company (e.g teaching is a core competency for
● seeks to reduce costs. We think of employees as expenses. professors)
● Bureaucratic and centralized: excellent for information organization, and makes
you follow procedures (inflexible).
● Managers: are specialists in fields outside of HR management.

Chapter 7: Competency-based management

Top-down (HRM):
COMPETENCY:
● Strategic: human resources are an integral part of overall company strategy. The ability of an employee to use a specific combination of resources (competencies:
● Focuses on the contents and assessment of the task. knowledge, skill…) to perform his job well.
● Focuses on the long run.
● Seeks to increase productivity rather than reduce costs (enhance the return on
investment in employee salaries). We think of people as investments. COMPETENCY-BASED MANAGEMENT:
● Self-control: some procedures are fixed, but there is more room for flexibility. An approach for managing employees. It defines the competencies needed by the
● More communication channels. organization, and then provides a framework for how the employees are hired,
● Skills+teams: we focus more on employee skills and cooperation rather than on developed and managed according to these competencies.
formal divisions.
● Managers: specialize in management. Key Points about this approach:

HRM approach evolution: ● Recognizes the competency’s potential to change the organization.
● Empowers employees regardless of their job/position.
● Grade or rank based management: more common in the public sector, we ● The goal is not to reduce costs but to attract and empower employee talent that
manage people based on their rank/grade, not on their performance/skills/tasks has a high return on investment.
(salary depends on your rank/grade...). This is the traditional HRM approach. ● The objective is to increase the added value for the customer which in turn will
Lacks a job description. satisfy shareholders.
● Requires a strategy that aligns with the global company strategy.
● Job or position based management: training/salary/benefit depends on your
position in the company (your job description). Introduced the "job repository" COMPETENCY-BASED MANAGEMENT PROCESS:
tool.
1. Definition of repositories (pool): the first step is to identify the competencies
● Competency/talent based management: less focused on the job description needed by the company.
but more so on the talent of the employee (skillset). 2. Competencies evaluation: Assess job candidates according to these defined
competencies. Typically done through an interview with a manager.
3. Decision making: manage the acquisition and development of employee skills,
remuneration progression, career paths.

Repository (pool) of jobs: contains all job descriptions of the company or the
competency/talent needed by the company.
 Chapter 8: International HRM
OVERALL HRM PROCESS:

1. Acquire competencies through recruitment. Management Challenges of an international business:

2. Develop and stimulate them through training.
3. Retain and mobilize through compensation and career development. ● Coordinating a product worldwide isn't the same as managing it locally.
● Striking a balance between local autonomy and headquarter control.
HR STRATEGY: ● Applying the company’s policies in other countries
● Different Labor markets, culture, legal systems, economic systems.
The company can adopt different strategies on how it acquires talent: ● Problems to determine when to use expatriates and how to manage them:
Who should be sent: managers, or more operational level employees? How to
● Buy: Hire employees for the long term. compensate them? How to train them? How to reorient them when they return
● Borrow: borrow talent from another company for a specific period. back home after sending someone to another country and he comes back, what
● Build: develop existing employees. will be his new position?
● Rent: short-period talent (e.g temporary staff…).
Global HRM:
Strategic workforce planning:
Global HRM includes all activities concerning the hiring, retention and overseeing of
employees worldwide. These activities include:
● Labor relations: how should we deal with unions (e.g which union does our
employees belong to, the foreign union or the one in their home countries).
● Fairness: ensure that there are enough incentives for expatriates.

Global Staffing issues:

● Selecting appropriate candidates for overseas assignments.

● Relocation processing: the formal procedures and travel challenges.
● Cultural and language orientation training
● Compensation processing: how are we gonna reward the employee adequately.
● Tax administration
● Career planning and development
● Handling of spouse and dependent matters

Factors Affecting HRM in International Markets

 Staffing policy:

When organizations operate globally, employees (Which work abroad) may come from:

● Parent (home) country national: employees from the company's country.

● Host country national: local employees.
● Third country national: citizens of neither the host country nor the parent
country of the company.

Types of Staffing Policies:

Culture: Ethnocentric approach: fills key management positions with parent-country nationals.
Firms that pursue this policy believe that there is a lack of qualified individuals in the
Culture affects the behavior of our employees, the suitability of our HRM practices, how host country to fill senior management positions.
employees communicate and coordinate their activities. ● Advantages:
● We have to update our HRM policy to suit certain countries, however we can’t - It makes sense for firms pursuing an international strategy which
totally change it. implements a standardized approach across all of its branches.
● Organizations must prepare their managers to recognize and deal with cultural - Ensures tight control.
differences to avoid miscommunication with local employees. We should - Maintains a cohesive company culture and ensures transfer of core
evaluate the adaptability of our managers. competencies and values.
- Protects from industrial espionage.
● Disadvantages:
Education and skills:
- It's no longer popular with firms because it limits advancement
opportunities for local employees and it can lead to "cultural myopia".
The education and skills levels of the country's labor force affects the attractiveness of
- Relocation of employees is expensive
the country to foreign companies. Companies may also choose to train local employees.
- Can give the business a foreign image.
In countries with a poorly educated population, companies will limit their activities to low
skill, low wage jobs.
Polycentric approach: recruits host country nationals to manage branches in their own
country, and parent country nationals for positions at headquarters.
Economic System: ● Advantages:
- Good for pursuing a localization strategy,
● A country’s economic system, whether capitalist or socialist, as well as - Can be less expensive than the ethnocentric approach and can minimize
the government’s involvement in the economy. “cultural myopia”.
● In developed countries with great wealth, labor costs are relatively high which ● Disadvantages:
impacts HR practices. - local employees can’t progress beyond senior positions in their country.
● Income tax differences between countries make pay structures complex. - A gap can form between local managers and parent country managers
which reduces integration and knowledge sharing.
Political-Legal System: The local country's law dictates the training,
compensation, hiring and firing of employees. Geocentric approach: Hires the best, regardless of nationality. Makes sense for
companies pursuing a global or transnational strategy.
● Advantages:
- The firm can fully utilize its human resources regardless of national
boundaries.
- Builds a team of international executives adaptable to different cultures.
● Disadvantages:
- Policies of national governments may be a limiting factor.
- International executives demand High salaries.