CHAPTER 1.

INTRODUCTION TO HUMAN RESOURCE

MANAGEMENT
Organizations today are faced with so many challenges in order to survive and grow
in today's global competitiveness. The economic recession that has engulfed the whole
world today has shaken the confidence not only of the investors and shareholders but
also of the consumers. Businessmen are scrounging for money from banks and creditors
who are reluctant to lend; consumers are hedging on their money to buy for fear of the
worse things to come. This economic uncertainty has created a great impact on
employment policies and practices. Redundancy and retrenchment are on the rise; the
number of managers, supervisors, and subordinates levels off as companies flatten there
organization. Business process engineering results in making process more efficient by
reducing operating people and administrative staff. Add the constant flux through
mergers, consolidation, rationalization, reengineering, streamlining, and downsizing,
managing human resources has increasingly become a more important and complex
function.
THE CHALLENGE OF MANAGING HUMAN RESOURCES TODAY
Against this backdrop, change seems to be the only constant. The world today is
characterized by a constant unprecedented change. All business organizations are
operating in this dynamic environment.
Some of the changes that are occurring in business today are the following:
 Changing employee expectations
 Rapidly changing technology
 Emphasis on increased productivity
 New Modalities of Employment Outsourcing
 Flatter organization
 Fall of the command-and-control manager
Changing Employee Expectations
The values of today's employees are somewhat different from the values of a
generation ago. One must recognize that today's workforce comprises of several
generations, each with a different set of values, aspirations, and each with a unique
perspective and attitude towards work.
Generations have been classified into four categories:
1. The Silent Generation, people who were born before 1946
2. The Baby Boomers, people born between 1946 and 1959
3. The Generation X, people born between 1960 and 1979
4. The Generation Y, people born between 1980 and 2008

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 Why the first classification has been dubbed as the Silent Generation has never been
explained by writers. This generation is the so-called veterans who entered the workforce
in the 1950s and early 1960s. Perhaps, the plausible explanation is, since they are
already old, they have since long retired and unheard from. They are known to be loyal
to the organization.
The Baby Boomers who were born after the Second World War when the economy
was booming are the people who never experienced the hardships of the war days.
Aggressive and ambitious, they were known to be loyal to their careers.
The Generation X who was born between 1960 and 1979 before the ad- vent of the
Information Age, are concerned about work/life issues. The Generation Y, otherwise
referred to as the Nesters, are in their 20s. This crop of twentieth something was the
subject of an article in the May 28, 2008 8 issue of the Fortune Magazine. In hipster
clothes: jeans, sneakers, hoodie and a jacket, they love the modern gadgets 8 of the
Information age like headphones, yoga mat, laptop, designer coffee, Black- berry, Digital
camera and iPod.
Known for talking back to their bosses, they are ambitious, demanding and questions
everything. When it comes to loyalty, the companies they work for are last on their list -
behind their families, friends, communities, co-workers, and, of course, themselves.
These kids, according to the article, are self-absorbed, gregarious, multitasking, loud,
optimistic, pierced. This is the most high-maintenance workforce in the history of the
world. Quoting Bruce Tulgan, the founder of leading generational research firm
Rainmaker Thinking: “The good news is they're also going to be the most high-performing
workforce in the history of the world. They walk with more information in their fingertips
and sure, they have high expectations, but they have the highest expectations first and
foremost for themselves." Nexters place a high value on their financial success. Human
resource policies must address compensation and reward packages to meet their needs.
Some jobs maybe redesigned to reduce monotony.
Rapidly Changing Technology
The advent of computer has fundamentally changed jobs. Automation has
eliminated huge numbers of jobs in manufacturing, finance, sales and marketing, and
administration and human resources. Technology has lead to shorter cycle times in
manufacturing. It has made customers more demanding.
An article appeared in the San Jose Mercury news, Feb. 2009 reporting that Intel,
the Silicon Valley computer chip giant will invest in the next two (2) years state- of-the art
chip manufacturing in the U.S. The outlay, the largest in the company's history, will make
32- nanometer chips, whose circuitry is about one-millionth of an inch in size. Using that
technology, the chip's transistors would be so small that more than 4 million of them
would fit in the period at the end of the sentence! (Emphasis from author)

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 This piece of news dramatizes the impact of advanced technology and
communication on the workflow and productivity of the organization and ultimately on its
human resources. For one, companies must invest millions of money in training and
development to update their employees' skills to keep pace with changing technology.
Organizations must hire more skilled workforce and redesign jobs to take advantage of
this new technology.
Emphasis on Increased Productivity
The shrinking global village has liberalized tariffs in almost all parts of the world.
Alternative goods are available in the world market at lower prices. This global
competitiveness has spurred organizations to take care of their labor costs by increasing
productivity, eliminating redundant jobs or jobs which have no value.
A new equation is created by one author, Charles Handy, for success in
productivity: 1/2 workforce, paid twice as much, producing three times as much. The
challenge is, increased productivity or outputs must be accomplished with fewer inputs
including people. The need to increase productivity must be balanced by the need to
contain cost and improve quality. In short, each organization wants its human resources
to increase productivity without increasing costs and sacrificing quality.
Increased competition has prompted managers to focus more on competencies of
their employees. Competencies are the underlying attributes or characteristics that
assures superior performance. This includes tangible skills and knowledge and intangible
aspects required of the job such as attitude, values, and interactive abilities of the job-
holder. These competencies now become the focus of management not only in terms of
recruitment, compensation, training and development.
New Modality of Employment Outsourcing
Most business organizations today, wherever possible, prefer to adopt flexibility in
the acquisition of human resources. Firstly, companies that depend on the cyclical
demands of their products or services must flexible in their hiring practices. Department
store for instance, have their seasonal cycles in their sales. They experience brisk sales
during graduation, enrollment, and Christmas seasons. The need for extra manpower is
high during these periods. When no longer needed, services of these temporary workers
could be dispensed with.
Secondly, it is not easy under our laws to terminate the services of employees when
no longer needed. Employees, whether casual or temporary can only be terminated for
just cause or authorized causes. This prompted some employers to resort to outsource
their temporary employers from labor service contractors. The past few years saw the
emergent practice of hiring workforce from workers' cooperatives. (This issue of hiring
temporary workers to avoid extra cost on benefits and ease in terminating their services
will be discussed more extensively in the next chapter.)

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 The practice of hiring the euphemistically called "inorganic" employees has been
actively denounced by the labor sector as the creeping "casualization" of the labor force
in the country to avoid unionization.
The irony of this phenomenon, regardless of the legal and moral issues is, our
country is the beneficiary of outsourcing through the mushrooming of Business Process
Outsourcing (BPO) by local and foreign companies to avoid the high labor costs in the
U.S., Canada and other developed countries.
Outsourcing has changed the human resource dimension in many organizations.
As a result, some employees are laid off, some are hired on a contractual basis while
some others are on a fixed or definite period of employment.
Flatter Organization
The days of multiple hierarchical levels are gone. Delayering in business
organizations is the name of the game. Flattening of organizations improves productivity,
efficiency, and communications.
In a flatter organization, people are expected to produce more using fewer
resources. Multitasking is required as they are asked to perform a variety of ever-
changing roles, taking new responsibilities, and significantly changing the job contents of
the incumbents.
The layoffs as a result of a flattening of organizations have affected both
management and rank and file employees. No one is spared from the corporate cuts.
The restructuring of organizations, impacts on human resource management in
many ways. First, HR must develop and implement policies to minimize the pain in
downsizing. The policies need to set standards from communicating the termination to
affected employees to severance packages.
Second, those being given the so- called “pink papers” (the euphemism for layoffs),
must be let go with dignity. Organizations with moral conscience should include in their
severance agreements or offers transitional training, outplacement assistance, or
extended benefits. Although reorganizations, restructuring or retrenchments may be the
result of financial considerations or for improved profits - and these severances will cost
money - such efforts should preserve the organization's reputation and maintain goodwill
to both the laid off and current employees
Finally, extreme care must be addressed to remaining employees. Security of
tenure is jarred. Assurances of no more layoffs sometimes are taken with disbelief among
the survivors. Questions of who is next would be uppermost in their minds. Morale is
usually low after layoffs. Through effective human resource management, an organization
should be able to keep its staff pacified, assuaged and productive through the difficult
transition.

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Fall of the Command-and-Control Manager
Barking orders to subordinates is no longer an effective way of getting things done
by people. The workforce is getting- ting more educated, better informed, and aware of
their rights. Supervisors can no longer order people what to do. Interpersonal relations
must be strongly developed to get the support and cooperation of the subordinates.
Under the people empowerment philosophy, supervisors and managers must act
like coaches. Employees can make their own informed decisions, using good judgment,
under the guidance of their superiors. The legitimate or literal power inherent in superiors
is somewhat diminished.
With fewer management layers in the organization, career paths have to be
established. Training and development programs must be put up to set up new skills and
competencies that are needed by the organization.
CONCEPT OF HUMAN RESOURCES
Human resources in the business sense are people who do the actual work in the
organization. They were once viewed as costs and therefore, people were treated just the
way they treated other costs-by cutting. When companies want to improve their profits or
cut losses, they reduced their manpower.
But in the early '90s, a new concept in treating human resources has evolved.
Organizations are beginning to go beyond the usual mantra “People are our greatest
assets.” In a higher form, people are no longer treated as costs but assets.
People are treated as investors. They bring into the company their talent,
knowledge, skills, competence, values, time and effort. Having invested in this treasure
trove of qualities and attributes vital to organization's success, people demand a fair return
of their investments.
Thus, the new concept of Human Capital was established. Books on Hu- man
Capital were published in the late ‘90s. Notable of which are: “Human Capital” by Thomas
O. Davenport and “The Human Capital Edge” by Bruce N. Pfau and Ira T. Kay. (This
concept will be discussed extensively in Chapter 16 of this book.)
Managing this Human Resource or Human Capital has been a growing focus in our
highly competitive world of business.
Definition of Human Resource Management
Human Resource Management (generally referred to as HRM) is the effective use of
an organization's human resources to improve its performance. HRM is also defined as:
 The strategic and coherent approach to the management of an organization's most
valued assets- the people.

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  The productive use of people in achieving the organization's strategic business
objectives and the satisfaction of the individual.
You will note that in both definitions above, HRM is always referred to as a strategic
activity. Obviously, the field has moved from a traditionally administrative function to a
strategic one that recognizes the link between talented and engaged people and the
organization's success.
Human resources, too, is an increasingly broadening term that refers to the "human
capital"- the people in the organization with different values, aspirations, cultural and
family background, education, attitudes, and temper. It takes a lot of skills, adroitness,
people-sensitivity to manage this group of human beings. The key is to be flexible and
avoid implementing “one size fits all” policies and actions to respond to everyone's needs.
Different people have different needs and companies must respond accordingly.
Managing human resources is in- deed one of the greatest challenges confronting
businesses today. Figure 1 shows the relationship of human resources to the entire
business picture.
HRM'S ROLE IN BUSINESS ORGANIZATION

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 A company may have the best strategies and business plans, values and work
processes but these are useless if the company does not have the right people to
implement them. Equating the Strategy and Organization in Figure 1 to a computer, these
two segments comprise the hardware. Without the software (Human Resources), the
hardware is inert.
THE ORIGIN AND DEVELOPMENT OF HUMAN RESOURCE MANAGEMENT
Amid the challenge posed by the present business environment, to better understand
and effectively manage human resources, you must examine the history of human
resource management.
Today's perspective has evolved in the 17th century before the start of the industrial
revolution.3 Working arrangements involved close relationships be- tween mentors and
apprentices dedicated to a particular trade. Apprentices were often required to live in the
shop or home of the master craftsperson. If an apprentice was injured or sick, the master's
family was responsible for restoring the younger worker's health and welfare. Masters and
apprentice shared in good times and bad, in profit and in loss. With the advent of the
Industrial Age, the notion of work moved from guilds and home shops to steam-driven
factories. The introduction of the assembly lines brought a need for low-skilled employees
capable of performing repetitive tasks Management philosophy at the turn of the 20th
century was epitomized by Henry Ford who often wondered why workers brought their
heads to work when all he really needed was their hands and feet.
Assembly line production required that large numbers of people come together for
work. Employers' attentions focused on consumer demands, the speed at which new
machines produced goods and the processes that drove production concerns that were
sometimes placed well ahead of the needs of employees.
This phenomenon led to several theories of managing people. Adam Smith wrote
about the economic advantages of the division of labor. (The Wealth of Nations, 1776).
He proposed that work could be made more efficient through specialization and he
suggested that work should be broken down into simple tasks. Known as the father of
Capitalism, Smith's work led to many changes in manufacturing processes.
In the early 1800s, governments began to feel pressure from the working class masses
who started to ask questions and defy the power of the capitalists. The working class
began to form workplace organizations to provide a collective voice for their rights.
Trade unionism started to gain a foothold not just as a means for protecting and improving
workers' living standards, but also as a vehicle for changing the entire political and
economic order of society.
At the turn of the 20th century, Frederick W. Taylor, considered to be the father of
Scientific Management conducted studies at Midvale Steel Works. In his seminal work
published in 1911, The Principles of Scientific Management, he proposed four overriding
principles of management:

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  Each part of an individual's work analyzed 'scientifically.'
 The most suitable person to undertake the job is ‘scientifically chosen' and is taught
the exact way to do the job.
 Managers must cooperate with workers to ensure the job is done in a scientific
way.
 There is a clear division of work and responsibility between management and
workers.
＂Taylor's impact has been so great because he developed a concept of work design,
work measurement, production control and other functions that completely changed the
nature of industry. Before scientific management, such departments as work study,
personnel. maintenance and quality control did not exist."4 However, the individual
workers were allowed no discretion and no autonomy.
The shortcoming of this approach to managing people was quickly identified. The
Hawthorne studies ushered a new era of managing human resources. These studies
conducted from 1927 to 1932 at the Western Electric Hawthorne plant by Elton Mayo,
ultimately brought to light the human element of managing human resources. Mayo's
study high- lighted the improved productivity gained by paying attention to workers
(referred to as the Hawthorn effect) and the significant role social relationships played in
the workplace.
Mayo's work kicked off the human relations era. The contribution of scientific
management cannot be discounted, but the emphasis on human relations contributed
balance to the movement. Today's focus on the human element is seen in enriched jobs,
increased empowerment, and participation in decision- making in the workplace.
THE TRANSITION FROM PERSONNEL TO HUMAN RESOURCE MANAGEMENT
It is believed that the first personnel management department began at the National Cash
Register Co., (NCR). NCR faced a major strike at the turn of the 20th century but
eventually defeated the union after a lockout in 1901.After this difficult union battle,
company President John Patterson decided to improve worker relations by organizing
personnel department to handle grievances, discharges, safety and other employee
issues. The department also kept track of pending legislation and court decisions and
these personnel managers provide training for supervisors on new laws and practices. 6
But how did Personnel Department metamorphose into Human Resource Department?
For over seven decades since NCR put the term into the management hierarchy,
“Personnel” has always been the accepted term. In fact, up until now, there are still some
companies that put Personnel Management as the nomenclature for people-centered
activities.
It was in the 1980's that the concept of Human Resource Management (HRM) began to
permeate through larger corporations. It later on gained acceptance by other business
organizations. Some critics say that it was simply a change of name putting “old wine into

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new bottles" as a way of giving jaded personnel profession a new image. However, as
new models came to be adopted, it became apparent that there was a clear delineation
between the two titles.
People Management Association of the Philippines (PMAP), then known as Personnel
Management Association of the Philippines began to use the term ＂Human Resource
Management" earlier at the 1978 national conference in Baguio city. It raised a howl of
protest from the old timers and triggered a spirited debate when somebody asked: “What’s
wrong with Personnel Management?” Slowly but surely, it gained acceptance by the
members of the association after that national conference.

Author John Stredwick in his book, ＂An Introduction to Human Resource Management,"
(p.13) cited Storey's mod- el of distinguishing Personnel from HRM. It was a result of an
in-depth study of 15 mainstream UK organizations that covered a wide range of their
activities and processes. Table 1 shows the delineation between Personnel and HRM in
matrix form.

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SUMMARY
Personnel management has metamorphosed into human resource management. In
the future, managing people may be referred to human capital management.
Managing human resources in this changing and highly competitive global economy
is fraught with many challenges.
To keep pace with rapidly changing technology, enormous amount of money has to
be spent in training and retraining of employees. Jobs and structures in the
organizations have to be redesigned to respond to this new technology. Efforts to be
more productive to achieve global competitiveness would result in flattening of
organizations, resulting in rightsizing and promoting multi-tasking among employees.
The increasing number of Generation Y employees in the workforce poses a new style
of management that would harness the talents, information technology savvy of these
highly demanding but high performing workforce. Barking orders under the command-
and- control concept will not be effective but people empowerment in the workplace
will do.
As companies stick to their right- sizing, they would focus on their core businesses
and outsource people in their non-core operations. Identifying and assessing the core
competencies of each job is of utmost concern in human resource management.
Competency- based recruitment, compensation, performance management and
training and development is the order of the day.

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