1.1 What Is Human Resources?
http://open.lib.umn.edu/humanresourcemanagement/chapter/1-1-what-is-human-resources/
Learning Objectives
1. Explain the role of HRM in organizations.
2. Define and discuss some of the major HRM activities.
Every organization, large or small, uses a variety of capital to make the business work. Capital includes cash,
valuables, or goods used to generate income for a business. For example, a retail store uses registers and
inventory, while a consulting firm may have proprietary software or buildings. No matter the industry, all
companies have one thing in common: they must have people to make their capital work for them. This will be
our focus throughout the text: generation of revenue through the use of people’s skills and abilities.
What Is HRM?
Human resource management (HRM) is the process of employing people, training them, compensating them,
developing policies relating to them, and developing strategies to retain them. As a field, HRM has undergone
many changes over the last twenty years, giving it an even more important role in today’s organizations. In the
past, HRM meant processing payroll, sending birthday gifts to employees, arranging company outings, and
making sure forms were filled out correctly—in other words, more of an administrative role rather than a
strategic role crucial to the success of the organization. Jack Welch, former CEO of General Electric and
management guru, sums up the new role of HRM: “Get out of the parties and birthdays and enrollment forms.…
Remember, HR is important in good times, HR is defined in hard times” (Frasch, et. al., 2010).
It’s necessary to point out here, at the very beginning of this text, that every manager has some role relating to
human resource management. Just because we do not have the title of HR manager doesn’t mean we won’t
perform all or at least some of the HRM tasks. For example, most managers deal with compensation,
motivation, and retention of employees—making these aspects not only part of HRM but also part of
management. As a result, this book is equally important to someone who wants to be an HR manager and to
someone who will manage a business.
Human Resource Recall
Have you ever had to work with a human resource department at your job? What was the interaction like? What
was the department’s role in that specific organization?
The Role of HRM
Keep in mind that many functions of HRM are also tasks other department managers perform, which is what
makes this information important, despite the career path taken. Most experts agree on seven main roles that
HRM plays in organizations. These are described in the following sections.
1
,Staffing
You need people to perform tasks and get work done in the organization. Even with the most sophisticated
machines, humans are still needed. Because of this, one of the major tasks in HRM is staffing. Staffing involves
the entire hiring process from posting a job to negotiating a salary package. Within the staffing function, there
are four main steps:
1. Development of a staffing plan. This plan allows HRM to see how many people they should hire based on
revenue expectations.
2. Development of policies to encourage multiculturalism at work.Multiculturalism in the workplace is
becoming more and more important, as we have many more people from a variety of backgrounds in the
workforce.
3. Recruitment. This involves finding people to fill the open positions.
4. Selection. In this stage, people will be interviewed and selected, and a proper compensation package will
be negotiated. This step is followed by training, retention, and motivation.
Development of Workplace Policies
Every organization has policies to ensure fairness and continuity within the organization. One of the jobs of
HRM is to develop the verbiage surrounding these policies. In the development of policies, HRM, management,
and executives are involved in the process. For example, the HRM professional will likely recognize the need
for a policy or a change of policy, seek opinions on the policy, write the policy, and then communicate that
policy to employees. It is key to note here that HR departments do not and cannot work alone. Everything they
do needs to involve all other departments in the organization. Some examples of workplace policies might be
the following:
Discipline process policy
Vacation time policy
Dress code
Ethics policy
Internet usage policy
These topics are addressed further in Chapter 6 “Compensation and Benefits”, Chapter 7 “Retention and
Motivation”, Chapter 8 “Training and Development”, and Chapter 9 “Successful Employee Communication”.
Compensation and Benefits Administration
HRM professionals need to determine that compensation is fair, meets industry standards, and is high enough to
entice people to work for the organization. Compensation includes anything the employee receives for his or her
work. In addition, HRM professionals need to make sure the pay is comparable to what other people performing
similar jobs are being paid. This involves setting up pay systems that take into consideration the number of
years with the organization, years of experience, education, and similar aspects. Examples of employee
compensation include the following:
Pay
Health benefits
2
, 401(k) (retirement plans)
Stock purchase plans
Vacation time
Sick leave
Bonuses
Tuition reimbursement
Since this is not an exhaustive list, compensation is discussed further in Chapter 6 “Compensation and
Benefits”.
Retention
Retention involves keeping and motivating employees to stay with the organization. Compensation is a major
factor in employee retention, but there are other factors as well. Ninety percent of employees leave a company
for the following reasons:
1. Issues around the job they are performing
2. Challenges with their manager
3. Poor fit with organizational culture
4. Poor workplace environment
Despite this, 90 percent of managers think employees leave as a result of pay (Rivenbark, 2010). As a result,
managers often try to change their compensation packages to keep people from leaving, when compensation
isn’t the reason they are leaving at all. Chapter 7 “Retention and Motivation” and Chapter 11 “Employee
Assessment” discuss some strategies to retain the best employees based on these four factors.
Training and Development
Once we have spent the time to hire new employees, we want to make sure they not only are trained to do the
job but also continue to grow and develop new skills in their job. This results in higher productivity for the
organization. Training is also a key component in employee motivation. Employees who feel they are
developing their skills tend to be happier in their jobs, which results in increased employee retention. Examples
of training programs might include the following:
Job skills training, such as how to run a particular computer program
Training on communication
Team-building activities
Policy and legal training, such as sexual harassment training and ethics training
We address each of these types of training and more in detail in Chapter 8 “Training and Development”.
Dealing with Laws Affecting Employment
Human resource people must be aware of all the laws that affect the workplace. An HRM professional might
work with some of these laws:
Discrimination laws
3
http://open.lib.umn.edu/humanresourcemanagement/chapter/1-1-what-is-human-resources/
Learning Objectives
1. Explain the role of HRM in organizations.
2. Define and discuss some of the major HRM activities.
Every organization, large or small, uses a variety of capital to make the business work. Capital includes cash,
valuables, or goods used to generate income for a business. For example, a retail store uses registers and
inventory, while a consulting firm may have proprietary software or buildings. No matter the industry, all
companies have one thing in common: they must have people to make their capital work for them. This will be
our focus throughout the text: generation of revenue through the use of people’s skills and abilities.
What Is HRM?
Human resource management (HRM) is the process of employing people, training them, compensating them,
developing policies relating to them, and developing strategies to retain them. As a field, HRM has undergone
many changes over the last twenty years, giving it an even more important role in today’s organizations. In the
past, HRM meant processing payroll, sending birthday gifts to employees, arranging company outings, and
making sure forms were filled out correctly—in other words, more of an administrative role rather than a
strategic role crucial to the success of the organization. Jack Welch, former CEO of General Electric and
management guru, sums up the new role of HRM: “Get out of the parties and birthdays and enrollment forms.…
Remember, HR is important in good times, HR is defined in hard times” (Frasch, et. al., 2010).
It’s necessary to point out here, at the very beginning of this text, that every manager has some role relating to
human resource management. Just because we do not have the title of HR manager doesn’t mean we won’t
perform all or at least some of the HRM tasks. For example, most managers deal with compensation,
motivation, and retention of employees—making these aspects not only part of HRM but also part of
management. As a result, this book is equally important to someone who wants to be an HR manager and to
someone who will manage a business.
Human Resource Recall
Have you ever had to work with a human resource department at your job? What was the interaction like? What
was the department’s role in that specific organization?
The Role of HRM
Keep in mind that many functions of HRM are also tasks other department managers perform, which is what
makes this information important, despite the career path taken. Most experts agree on seven main roles that
HRM plays in organizations. These are described in the following sections.
1
,Staffing
You need people to perform tasks and get work done in the organization. Even with the most sophisticated
machines, humans are still needed. Because of this, one of the major tasks in HRM is staffing. Staffing involves
the entire hiring process from posting a job to negotiating a salary package. Within the staffing function, there
are four main steps:
1. Development of a staffing plan. This plan allows HRM to see how many people they should hire based on
revenue expectations.
2. Development of policies to encourage multiculturalism at work.Multiculturalism in the workplace is
becoming more and more important, as we have many more people from a variety of backgrounds in the
workforce.
3. Recruitment. This involves finding people to fill the open positions.
4. Selection. In this stage, people will be interviewed and selected, and a proper compensation package will
be negotiated. This step is followed by training, retention, and motivation.
Development of Workplace Policies
Every organization has policies to ensure fairness and continuity within the organization. One of the jobs of
HRM is to develop the verbiage surrounding these policies. In the development of policies, HRM, management,
and executives are involved in the process. For example, the HRM professional will likely recognize the need
for a policy or a change of policy, seek opinions on the policy, write the policy, and then communicate that
policy to employees. It is key to note here that HR departments do not and cannot work alone. Everything they
do needs to involve all other departments in the organization. Some examples of workplace policies might be
the following:
Discipline process policy
Vacation time policy
Dress code
Ethics policy
Internet usage policy
These topics are addressed further in Chapter 6 “Compensation and Benefits”, Chapter 7 “Retention and
Motivation”, Chapter 8 “Training and Development”, and Chapter 9 “Successful Employee Communication”.
Compensation and Benefits Administration
HRM professionals need to determine that compensation is fair, meets industry standards, and is high enough to
entice people to work for the organization. Compensation includes anything the employee receives for his or her
work. In addition, HRM professionals need to make sure the pay is comparable to what other people performing
similar jobs are being paid. This involves setting up pay systems that take into consideration the number of
years with the organization, years of experience, education, and similar aspects. Examples of employee
compensation include the following:
Pay
Health benefits
2
, 401(k) (retirement plans)
Stock purchase plans
Vacation time
Sick leave
Bonuses
Tuition reimbursement
Since this is not an exhaustive list, compensation is discussed further in Chapter 6 “Compensation and
Benefits”.
Retention
Retention involves keeping and motivating employees to stay with the organization. Compensation is a major
factor in employee retention, but there are other factors as well. Ninety percent of employees leave a company
for the following reasons:
1. Issues around the job they are performing
2. Challenges with their manager
3. Poor fit with organizational culture
4. Poor workplace environment
Despite this, 90 percent of managers think employees leave as a result of pay (Rivenbark, 2010). As a result,
managers often try to change their compensation packages to keep people from leaving, when compensation
isn’t the reason they are leaving at all. Chapter 7 “Retention and Motivation” and Chapter 11 “Employee
Assessment” discuss some strategies to retain the best employees based on these four factors.
Training and Development
Once we have spent the time to hire new employees, we want to make sure they not only are trained to do the
job but also continue to grow and develop new skills in their job. This results in higher productivity for the
organization. Training is also a key component in employee motivation. Employees who feel they are
developing their skills tend to be happier in their jobs, which results in increased employee retention. Examples
of training programs might include the following:
Job skills training, such as how to run a particular computer program
Training on communication
Team-building activities
Policy and legal training, such as sexual harassment training and ethics training
We address each of these types of training and more in detail in Chapter 8 “Training and Development”.
Dealing with Laws Affecting Employment
Human resource people must be aware of all the laws that affect the workplace. An HRM professional might
work with some of these laws:
Discrimination laws
3
