CHAPTER 1
HUMAN RESOURCE MANAGEMENT: AN OVERVIEW
CHAPTER OBJECTIVES
1 Define human resource management.
2 Identify the human resource management functions.
3 Describe who performs human resource management activities.
4 Explain how HR serves as a strategic business partner.
5 Identify the elements of the dynamic HRM environment.
6 Explain the importance of corporate culture and human resource management.
7 Describe the importance of employer branding.
8 Discuss human resource management issues for small businesses.
9 Identify ways that country culture influences global business.
10 Describe the human resource management profession.
KEY TERMS
Human resource management (HRM): The utilization of individuals to achieve
organizational objectives.
Staffing: Process through which an organization ensures that it always has the proper
number of employees with the appropriate skills in the right jobs, at the right time, to
achieve organizational objectives.
Performance management: Goal-oriented process directed toward ensuring that
organizational processes are in place to maximize the productivity of employees, teams,
and ultimately, the organization.
Human resource development (HRD): Major HRM function consisting not only of
training and development, but also of individual career planning and development
activities, organization development, and performance management and appraisal.
Direct financial compensation: Pay that a person receives in the form of wages, salary,
commissions, and bonuses.
Indirect financial compensation (benefits): All financial rewards that are not included
in direct financial compensation.
Nonfinancial compensation: Satisfaction that person receives from the job itself or from
the psychological and/or physical environment in which the person works.
Safety: Protection of employees from injuries caused by work-related accidents.
Health: Employees’ freedom from physical or emotional illness.
Human resource management professional: An individual who normally acts in an
advisory or staff capacity, working with other managers to help them address human
resource matters.
Line managers: Individuals directly involved in accomplishing the primary purpose of
the organization.
HR outsourcing (HRO): Process of hiring external HR professionals to do the HR work
that was previously done internally.
1
Copyright © 2016 Pearson Education, Inc.
,Shared service center (SSC): A center that takes routine, transaction-based activities
dispersed throughout the organization and consolidates them in one place.
Professional employer organization (PEO): A company that leases employees to other
businesses.
Capital: The factors that enable companies to generate income, increase company stock
prices, economic value, strong brand identity and reputation.
Human capital: As defined by economists, refers to sets of collective skills, knowledge,
and ability that employees can apply to create economic value for their employers.
Union: Comprised of employees who have joined together for the purpose of dealing
with their employer.
Shareholders: Owners of a corporation.
Human resource information system (HRIS): Any organized approach for obtaining
relevant and timely information on which to base human resource decisions.
Corporate culture: System of shared values, beliefs, and habits within an organization
that interacts with the formal structure to produce behavioral norms.
Country’s culture: Set of values, symbols, beliefs, languages, and norms that guide
human behavior within the country.
Employer branding: Firm’s corporate image or culture focused on attracting the type of
employees the firm is seeking.
Executive: Top-level manager who reports directly to a corporation’s chief executive
officer or to the head of a major division.
Generalist: Person who may be an executive and performs tasks in a variety of HR-
related areas.
Specialist: Individual who may be an HR executive, a human resource manager, or a
nonmanager, and who is typically concerned with only one of the six functional areas of
human resource management.
Profession: Vocation characterized by the existence of a common body of knowledge
and a procedure for certifying members.
LECTURE OUTLINE
HUMAN RESOURCE MANAGEMENT
Human resource management (HRM) can be defined as the optimal utilization of
individuals to achieve organizational objectives.
HUMAN RESOURCE MANAGEMENT FUNCTIONS
Six functional areas are associated with effective human resource management: staffing,
human resource development, performance management, compensation, safety and
health, and employee and labor relations.
• STAFFING—Process through which an organization ensures that it always has
the proper number of employees with the appropriate skills in the right jobs, at the
right time, to achieve organizational objectives.
2
Copyright © 2016 Pearson Education, Inc.
, • Job analysis: Systematic process of determining the skills, duties, and
knowledge required for performing specific jobs in an organization.
• Human resource planning: Systematic process of matching the internal
and external supply of people with job openings anticipated in the
organization over a specified period of time.
• Recruitment: Process of attracting qualified individuals and encouraging
them to apply for work with the organization.
• Selection: Process through which the organization chooses, from a group
of applicants, those individuals best suited both for open positions and the
company.
• PERFORMANCE MANAGEMENT—A goal-oriented process to ensure
organizational processes are in place to maximize the productivity of employees,
teams, and ultimately, the organization.
• Performance appraisal: A formal system to review and evaluate
individual or team performance.
• HUMAN RESOURCE DEVELOPMENT—A major HRM function consisting
not only of training and development but also of career planning and development
activities, organization development, performance management and appraisal.
• Training: Activities designed to provide learners with the knowledge and
skills needed for their present jobs.
• Development: Process that involves learning that goes beyond today’s
job; it has a more long-term focus.
• Career planning: Ongoing process whereby an individual sets career
goals and identifies the means to achieve them.
• Career development: Formal approach used by the organization to ensure
that people with the proper qualifications and experiences are available
when needed.
• COMPENSATION—All rewards that individuals receive as a result of their
employment.
• Direct Financial Compensation: Pay that a person receives in the form
of wages, salaries, bonuses, and commissions.
3
Copyright © 2016 Pearson Education, Inc.
, • Indirect Financial Compensation (Benefits): All financial rewards that
are not included in direct compensation such as paid vacations, sick leave,
holidays, and medical insurance.
• Nonfinancial Compensation: Satisfaction that a person receives from the
job itself or from the psychological and/or physical environment in which
the person works.
• EMPLOYEE AND LABOR RELATIONS—Businesses are 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. Internal employee relations comprise the human
resource management activities associated with the movement of employees
within the organization such as promotions, demotion, termination, and
resignation.
• SAFETY AND HEALTH—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.
• Safety: Activities involved in protecting employees from injuries caused
by work-related accidents.
• Health: Activities involved in securing the employees’ freedom from
illness and their general physical and mental well-being.
• HUMAN RESOURCE RESEARCH—Pervades all HRM functional areas and
the researcher’s laboratory is the entire work environment. Human resource
research is key to developing the most productive and satisfied workforce
possible.
• INTERRELATIONSHIPS OF HRM FUNCTIONS—All HRM functional
areas are highly interrelated.
WHO PERFORMS THE HUMAN RESOURCE MANAGEMENT ACTIVITIES?
The person or units who perform human resource management tasks has changed
dramatically in recent years.
• HUMAN RESOURCE MANAGEMENT PROFESSIONAL—An individual
who normally acts in an advisory (or staff) capacity when working with other
(line) managers regarding human resource matters.
• LINE MANAGERS—Individuals directly involved in accomplishing the
primary purpose of the organization. As the traditional work of HR managers
diminishes, line managers are stepping up and performing some duties typically
done by human resource professionals.
4
Copyright © 2016 Pearson Education, Inc.
HUMAN RESOURCE MANAGEMENT: AN OVERVIEW
CHAPTER OBJECTIVES
1 Define human resource management.
2 Identify the human resource management functions.
3 Describe who performs human resource management activities.
4 Explain how HR serves as a strategic business partner.
5 Identify the elements of the dynamic HRM environment.
6 Explain the importance of corporate culture and human resource management.
7 Describe the importance of employer branding.
8 Discuss human resource management issues for small businesses.
9 Identify ways that country culture influences global business.
10 Describe the human resource management profession.
KEY TERMS
Human resource management (HRM): The utilization of individuals to achieve
organizational objectives.
Staffing: Process through which an organization ensures that it always has the proper
number of employees with the appropriate skills in the right jobs, at the right time, to
achieve organizational objectives.
Performance management: Goal-oriented process directed toward ensuring that
organizational processes are in place to maximize the productivity of employees, teams,
and ultimately, the organization.
Human resource development (HRD): Major HRM function consisting not only of
training and development, but also of individual career planning and development
activities, organization development, and performance management and appraisal.
Direct financial compensation: Pay that a person receives in the form of wages, salary,
commissions, and bonuses.
Indirect financial compensation (benefits): All financial rewards that are not included
in direct financial compensation.
Nonfinancial compensation: Satisfaction that person receives from the job itself or from
the psychological and/or physical environment in which the person works.
Safety: Protection of employees from injuries caused by work-related accidents.
Health: Employees’ freedom from physical or emotional illness.
Human resource management professional: An individual who normally acts in an
advisory or staff capacity, working with other managers to help them address human
resource matters.
Line managers: Individuals directly involved in accomplishing the primary purpose of
the organization.
HR outsourcing (HRO): Process of hiring external HR professionals to do the HR work
that was previously done internally.
1
Copyright © 2016 Pearson Education, Inc.
,Shared service center (SSC): A center that takes routine, transaction-based activities
dispersed throughout the organization and consolidates them in one place.
Professional employer organization (PEO): A company that leases employees to other
businesses.
Capital: The factors that enable companies to generate income, increase company stock
prices, economic value, strong brand identity and reputation.
Human capital: As defined by economists, refers to sets of collective skills, knowledge,
and ability that employees can apply to create economic value for their employers.
Union: Comprised of employees who have joined together for the purpose of dealing
with their employer.
Shareholders: Owners of a corporation.
Human resource information system (HRIS): Any organized approach for obtaining
relevant and timely information on which to base human resource decisions.
Corporate culture: System of shared values, beliefs, and habits within an organization
that interacts with the formal structure to produce behavioral norms.
Country’s culture: Set of values, symbols, beliefs, languages, and norms that guide
human behavior within the country.
Employer branding: Firm’s corporate image or culture focused on attracting the type of
employees the firm is seeking.
Executive: Top-level manager who reports directly to a corporation’s chief executive
officer or to the head of a major division.
Generalist: Person who may be an executive and performs tasks in a variety of HR-
related areas.
Specialist: Individual who may be an HR executive, a human resource manager, or a
nonmanager, and who is typically concerned with only one of the six functional areas of
human resource management.
Profession: Vocation characterized by the existence of a common body of knowledge
and a procedure for certifying members.
LECTURE OUTLINE
HUMAN RESOURCE MANAGEMENT
Human resource management (HRM) can be defined as the optimal utilization of
individuals to achieve organizational objectives.
HUMAN RESOURCE MANAGEMENT FUNCTIONS
Six functional areas are associated with effective human resource management: staffing,
human resource development, performance management, compensation, safety and
health, and employee and labor relations.
• STAFFING—Process through which an organization ensures that it always has
the proper number of employees with the appropriate skills in the right jobs, at the
right time, to achieve organizational objectives.
2
Copyright © 2016 Pearson Education, Inc.
, • Job analysis: Systematic process of determining the skills, duties, and
knowledge required for performing specific jobs in an organization.
• Human resource planning: Systematic process of matching the internal
and external supply of people with job openings anticipated in the
organization over a specified period of time.
• Recruitment: Process of attracting qualified individuals and encouraging
them to apply for work with the organization.
• Selection: Process through which the organization chooses, from a group
of applicants, those individuals best suited both for open positions and the
company.
• PERFORMANCE MANAGEMENT—A goal-oriented process to ensure
organizational processes are in place to maximize the productivity of employees,
teams, and ultimately, the organization.
• Performance appraisal: A formal system to review and evaluate
individual or team performance.
• HUMAN RESOURCE DEVELOPMENT—A major HRM function consisting
not only of training and development but also of career planning and development
activities, organization development, performance management and appraisal.
• Training: Activities designed to provide learners with the knowledge and
skills needed for their present jobs.
• Development: Process that involves learning that goes beyond today’s
job; it has a more long-term focus.
• Career planning: Ongoing process whereby an individual sets career
goals and identifies the means to achieve them.
• Career development: Formal approach used by the organization to ensure
that people with the proper qualifications and experiences are available
when needed.
• COMPENSATION—All rewards that individuals receive as a result of their
employment.
• Direct Financial Compensation: Pay that a person receives in the form
of wages, salaries, bonuses, and commissions.
3
Copyright © 2016 Pearson Education, Inc.
, • Indirect Financial Compensation (Benefits): All financial rewards that
are not included in direct compensation such as paid vacations, sick leave,
holidays, and medical insurance.
• Nonfinancial Compensation: Satisfaction that a person receives from the
job itself or from the psychological and/or physical environment in which
the person works.
• EMPLOYEE AND LABOR RELATIONS—Businesses are 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. Internal employee relations comprise the human
resource management activities associated with the movement of employees
within the organization such as promotions, demotion, termination, and
resignation.
• SAFETY AND HEALTH—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.
• Safety: Activities involved in protecting employees from injuries caused
by work-related accidents.
• Health: Activities involved in securing the employees’ freedom from
illness and their general physical and mental well-being.
• HUMAN RESOURCE RESEARCH—Pervades all HRM functional areas and
the researcher’s laboratory is the entire work environment. Human resource
research is key to developing the most productive and satisfied workforce
possible.
• INTERRELATIONSHIPS OF HRM FUNCTIONS—All HRM functional
areas are highly interrelated.
WHO PERFORMS THE HUMAN RESOURCE MANAGEMENT ACTIVITIES?
The person or units who perform human resource management tasks has changed
dramatically in recent years.
• HUMAN RESOURCE MANAGEMENT PROFESSIONAL—An individual
who normally acts in an advisory (or staff) capacity when working with other
(line) managers regarding human resource matters.
• LINE MANAGERS—Individuals directly involved in accomplishing the
primary purpose of the organization. As the traditional work of HR managers
diminishes, line managers are stepping up and performing some duties typically
done by human resource professionals.
4
Copyright © 2016 Pearson Education, Inc.
