Definition of HRM:

"Human Resource Management" according to a layman's language can be defined as the acquisition (through recruitment or any other internal sources), development (through Training, Mentoring or Coaching), control (by conducting Human Resource Audit on a regular basis) and maintenance (through Employee Retention Programs) of work force in an organisation.

Why Human Resources Is Important: The HRM Process

Explain how an organizations human resources can be a significant source of competitive advantage. List eight activities necessary for staffing the organization and sustaining high employee performance. Discuss the environmental factors that most directly affect the HRM process.

Human Resource Planning; Recruitment / Decruitment; Selection; Orientation; Training.

Contrast job analysis, job description, and job specification. Discuss the major sources of potential job candidates. Describe the different selection devices and which work best for different jobs. Tell what a realistic job preview is and why its important. Explain why orientation is so important. Describe the different types of training and how that training can be provided

Employee Performance Management; Compensation/Benefits; Career Development

Describe the different performance appraisal methods. Discuss the factors that influence employee compensation and benefits. Describe skill-based and variable pay systems.

Describe career development for todays employees.

Current Issues in Human Resource Management

Explain how managers can manage downsizing. Discuss how managers can manage workforce Explain what sexual harassment is and what managers need to know about it. Describe how organizations are dealing with work-life balances diversity.

The Importance of Human Resource Management (HRM)

As a necessary part of the organizing function of management Selecting, training, and evaluating the work force As an important strategic tool HRM helps establish an organizations sustainable competitive advantage. Adds value to the firm

High performance work practices lead to both high individual and high organizational performance
Self-managed teams Decentralized decision making Training programs to develop knowledge, skills, and abilities Flexible job assignments Open communication Performance-based compensation Staffing based on personjob and personorganization fit

The HRM Process

Functions of the HRM Process Ensuring that competent employees are identified and selected. Providing employees with up-to-date knowledge and skills to do their jobs.

Ensuring that the organization retains competent and high-performing employees who are capable of high performance

HUMAN RESOURSE MANAGEMENT PROCESS Environmental Factors Affecting HRM

Employee Labor Unions Organizations that represent workers and seek to protect their interests through collective bargaining.

Collective bargaining agreement:

A contractual agreement between a

firm and a union elected to represent a bargaining unit of employees of the firm in bargaining for wage, hours, and working conditions. Governmental Laws and Regulations Limit managerial discretion in hiring, promoting, and discharging employees. Affirmative Action: the requirement that organizations take proactive steps to ensure the full participation of protected groups in its workforce. Human Resource (HR) Planning The process by which managers ensure that they have the right number and kinds of people in the right places, and at the right times, who are capable of effectively and efficiently performing their tasks. Helps avoid sudden talent shortages and surpluses. Steps in HR planning: Assessing current human resources Assessing future needs for human resources Developing a program to meet those future needs.

Current Issues in HRM

Managing Downsizing The planned elimination of jobs in an organization

Provide open and honest communication. Provide assistance to employees being downsized. Reassure and counseling to surviving employees.

Managing Work Force Diversity Widen the recruitment net for diversity Ensure selection without discrimination Provide orientation and training that is effective

 Work-Life Balance Employees have personal lives that they dont leave behind when they come to work. Organizations have become more attuned to their employees by offering family-friendly benefits:

On-site child care Summer day camps Flextime Job sharing Leave for personal matters Flexible job hours. Controlling HR Costs Employee health-care Encouraging healthy lifestyles Financial incentives Wellness programs Charging employees with poor health habits more for benefits Employee pension plans Reducing pension benefits No longer providing pension plans

Current Assessment

 Human Resource Inventory

 A Review of the Current make-up of the organizations current

resource status Job Analysis

An assessment that defines a job and the behaviors necessary to perform the job.

Knowledge, skills, and abilities (KSAs). Requires conducting interviews, engaging in direct observation, and collecting the self-reports of employees and their managers.

Job Description A written statement of what the job holder does, how it is done, and why it is done. Job Specification A written statement of the minimum qualifications that a person must possess to perform a given job successfully. Recruitment and Decruitment Recruitment The process of locating, identifying, and attracting capable applicants to an organization Decruitment The process of reducing a surplus of employees in the workforce of an organization E-recruiting Recruitment of employees through the Internet Organizational web sites Online recruiters

COMPENSATION

MANAGEMENT

Evolution of Compensation
Todays compensation systems have come from a long way. With the changing organizational structures workers need and compensation systems have also been changing. From the bureaucratic organizations to the participative organizations, employees have started asking for their rights and appropriate compensations. The higher education standards and higher skills required for the jobs have made the organizations provide competitive compensations to their employees. Compensation strategy is derived from the business strategy. The business goals and objectives are aligned with the HR strategies. Then the compensation committee or the concerned authority formulates the compensation strategy. It depends on both internal and external factors as well as the life cycle of an organization.

Evolution of Strategic Compensation

Traditional Compensation Systems

In the traditional organizational structures, employees were expected to work hard and obey the bosses orders. In return they were provided with job security, salary increments and promotions annually. The salary was determined on the basis of the job work and the years of experience the

employee is holding. Some of the organizations provided for retirement benefits such as, pension plans, for the employees. It was assumed that humans work for money, there was no space for other psychological and social needs of workers.

Change in Compensation Systems

With the behavioral science theories and evolution of labour and trade unions, employees started asking for their rights. Maslow brought in the need hierarchy for the rights of the employees. He stated that employees do not work only for money but there are other needs too which they want to satisfy from there job, i.e. social needs, psychological needs, safety needs, self-actualization, etc. Now the employees were being treated as human resource. Their performance was being measured and appraised based on the organizational and individual performance. Competition among employees existed. Employees were expected to work hard to have the job security. The compensation system was designed on the basis of job work and related proficiency of the employee. Maslows Need Hierarchy

Todays Modern Compensation Systems

Today the compensation systems are designed aligned to the business goals and strategies. The employees are expected to work and take their own decisions. Authority is being delegated. Employees feel secured and valued in the organization. Organizations offer monetary and nonmonetary benefits to attract and retain the best talents in the competitive environment. Some of the benefits are special allowances like mobile, companys vehicle; House rent allowances; statutory leaves, etc.

COMPONENTS OF COMPENSATION
Job Analysis
Job Analysis is a systematic approach to defining the job role, description, requirements, responsibilities, evaluation, etc. It helps in finding out required level of education, skills, knowledge, training, etc for the job position. It also depicts the job worth i.e. measurable effectiveness of the job and contribution of job to the organization. Thus, it effectively contributes to setting up the compensation package for the job position.

Importance of Job Analysis

Job analysis helps in analyzing the resources and establishing the strategies to accomplish the business goals and strategic objectives. It forms the basis for demand-supply analysis, recruitments, compensation management, and training need assessment and performance appraisal.

Components of Job Analysis

Job analysis are a systematic procedure to analyze the requirements for the job role and job profile. Job analysis can be further categorized into following sub components.

Job Position
Job position refers to the designation of the job and employee in the organization. Job position forms an important part of the compensation strategy as it determines the level of the job in the organization. For example management level employees receive greater pay scale than non-managerial employees. The non-monetary benefits offered to two different levels in the organization also vary.

Job Description
Job description refers the requirements an organization looks for a particular job position. It states the key skill requirements, the level of experience needed, level of education required, etc. It also describes the roles and responsibilities attached with the job position. The roles and responsibilities are key determinant factor in estimating the level of experience, education, skill, etc required for the job. It also helps in benchmarking the performance standards.

Job Worth
Job Worth refers to estimating the job worthiness i.e. how much the job contributes to the organization. It is also known as job evaluation. Job description is used to analyze the job worthiness. It is also known as job evaluation. Roles and responsibilities helps in determining the outcome from the job profile. Once it is determined that how much the job is worth, it becomes easy to define the compensation strategy for the position. Therefore, job analysis forms an integral part in the formulation of compensation strategy of an organization. Organizations should conduct the job analysis in a systematic at regular intervals. Job analysis can be used for setting up the compensation packages, for reviewing employees performance with the standard level of performance, determining the training needs for employees who are lacking certain skills.

Pay-Structures
Once job analysis has been done organizations need to decide upon the pay structures. Pay structure refers to the process of setting up the pay for a job in an organization. The process deals with internal and external analysis to estimate the compensation package for a job profile. Internal equity, External equity and Individual equity are the most popular pay structures. Job description provides the in depth knowledge about the job profile and its worth. Pay structures are the strong determinant of employees value in the organization. It helps in analyzing the employees role and status in the organization. It provides for fair treatment to all employees. Pay structures also include the estimation of incentives. The level of incentives also depends on the level of job position in the organizational hierarchy.

Internal Equity
The internal equity method undertakes the job position in the organizational hierarchy. The process aims at balancing the compensation provided to a job profile in comparison to the compensation provided to its senior level in The using job and junior the hierarchy. fairness is ensured job ranking,

classification, level of management, level of status and factor comparison.

External Equity Here the market pricing analysis is done. Organizations formulate their compensation strategies by assessing the competitors or industry standards. Organizations set the compensation packages of their employees aligned with the prevailing compensation packages in the market. This entails for fair treatment to the employees. At times organizations offer higher compensation packages to attract and retain the best talent in their organizations

TYPES OF COMPENSATION

Direct Compensation
Direct compensation refers to monetary benefits offered and provided to employees in return of the services they provide to the organization. The monetary benefits include basic salary, house rent allowance, conveyance, leave travel allowance, medical reimbursements, special allowances, bonus, Pf/Gratuity, etc. They at a are given at a regular interval definite time.

Basic Salary Salary is the amount received by the employee in lieu of the work done by him/her for a certain period say a day, a week, a month, etc. It is the money an employee receives from his/her employer by rendering his/her services. House Rent Allowance Organizations either provide accommodations to its employees who are from

different state or country or they provide house rent allowances to its employees. This is done to provide them social security and motivate them to work.

Conveyance Organizations provide for cab facilities to their employees. Few organizations also provide vehicles and petrol allowances to their employees to motivate them.

Leave Travel Allowance These allowances are provided to retain the best talent in the organization. The employees are given allowances to visit any place they wish with their families. The allowances are scaled as per the position of employee in the organization. Medical Reimbursement Organizations also look after the health conditions of their employees. The employees are provided with medi-claims for them and their family members. These medi-claims include health-insurances and treatment bills reimbursements. Bonus Bonus is paid to the employees during festive seasons to motivate them and provide them the social security. The bonus amount usually amounts to one months salary of the employee. Special Allowance Special allowance such as overtime, mobile allowances, meals, commissions, travel expenses, reduced interest loans; insurance, club memberships, etc are provided to employees to provide them social security and motivate them which improve the organizational productivity.

INDIRECT COMPENSATION
Indirect compensation refers to non-monetary benefits offered and provided to employees in lieu of the services provided by them to the organization. They include Leave Policy, Overtime Policy, Car policy, Hospitalization, Insurance, Leave travel Assistance Limits, Retirement Benefits, Holiday Homes.

Leave Policy It is the right of employee to get adequate number of leave while working with the organization. The organizations provide for paid leaves such as, casual leaves, medical leaves (sick leave), and maternity leaves, statutory pay, etc. Overtime Policy

Employees should be provided with the adequate allowances and facilities during their overtime, if they happened to do so, such as transport facilities, overtime pay, etc. Hospitalization The employees should be provided allowances to get their regular check-ups, say at an interval of one year. Even their dependents should be eligible for the medi-claims that provide them emotional and social security

Insurance Organizations also provide for accidental insurance and life insurance for employees. This gives them the emotional security and they feel themselves valued in the organisation

Leave Travel The employees are provided with leaves and travel allowances to go for holiday with their families. Some organizations arrange for a tour for the employees of the organization. This is usually done to make the employees stress free Retirement Benefits Organizations provide for pension plans and other benefits for their employees which benefits them after they retire from the organization at the prescribed age Holiday Homes Organizations provide for holiday homes and guest house for their employees at different locations. These holiday homes are usually located in hill station and other most wanted holiday spots. The organizations make sure that the employees do not face any kind of difficulties during their stay in the guest house Flexible Timings Organizations provide for flexible timings to the employees who cannot come to work during normal shifts due to their personal problems and valid reasons

Compensation and Benefits

Benefits of a Fair, Effective, and Appropriate Compensation System Helps attract and retain high-performance employees Impacts on the strategic performance of the firm Types of Compensation Base wage or salary Wage and salary add-ons Incentive payments Skill-based pay Variable pay

Factors That Influence Compensation and Benefits

Objectives of Compensation

1. Legal Compliance with all appropriate laws and regulations 2. Cost effectiveness for the organization 3. Internal, External and Individual equity for employees 4. Performance enhancement for the organization