POST GRADUATE DIPLOMA IN BUSINESS MANAGEMENT
HUMAN RESOURCE DEVELOPMENT
STUDY GUIDE
Copyright © 2016 MANAGEMENTCOLLEGE OF SOUTHERN AFRICA All rights reserved; no part of this book may be reproduced in any form or by any means, including photocopying machines, without the written permission of the publisher. Please report all errors and omissions to the following email address:
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Human Resource Development
Table of Contents PART 1: INTRODUCTION TO HUMAN RESOURCE MANAGEMENT CHAPTER 1: A STRATEGIC APPROACH TO HUMAN RESOURCE MANAGEMENT .......................... 4 CHAPTER 2: HUMAN RESOURCE PLANNING, RECRUITMENT, SELECTION, INDUCTION AND TRAINING ............................................................................................................................................. 17 CHAPTER 3: PERFORMANCE MANAGEMENT .................................................................................. 32 CHAPTER 4: COMPENSATION............................................................................................................ 39 CHAPTER 5: EMPLOYEE RELATIONS AND LEGISLATION ............................................................... 47 CHAPTER 6: HR RISK MANAGEMENT ............................................................................................... 57 PART 2: INTRODUCTION TO HUMAN RESOURCE DEVELOPMENT CHAPTER 7: INTRODUCTION TO HUMAN RESOURCE DEVELOPMENT (HRD) ............................. 67 CHAPTER 8: A STRATEGIC APPROACH TO HUMAN RESOURCE DEVELOPMENT (HRD) ........... 72 CHAPTER 9: TALENT MANAGEMENT STRATEGY ............................................................................ 79 CHAPTER 10: THE LEARNING ORGANISATION ................................................................................ 85 CHAPTER 11: ORGANISATIONAL DEVELOPMENT (OD) .................................................................. 92 CHAPTER 12: HUMAN RESOURCE TECHNOLOGY ........................................................................ 103 CHAPTER 13: HUMAN RESOURCE MEASUREMENT ..................................................................... 110 BIBLIOGRAPHY .................................................................................................................................. 120 APPENDIX A: CASE STUDY 1: PART 1 – HRM RECRUITMENT – A SPECIALIST RECRUITER’S PERSPECTIVE.................................................... 125 APPENDIX B: CASE STUDY 2: PART 2 - HRD INA BEARING COMPANY ................................................................................................................. 129
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Human Resource Development
INTRODUCTION TO THE HUMAN RESOURCE DEVELOPMENT STUDY GUIDE 1.
Introduction
Welcome to the module on Human Resource Development which is a part of the PGDBM programme. 2.
Structure of this Study Guide
This Study Guide is structured as follows: Introduction to Human Resource Development Study Guide
Provides an overview of the Human Resource Development Study Guide and how to use it.
1.
Chapter 1: A strategic approach to human resource management
2.
Chapter 2: Human resource planning, recruitment, This Part of the Study Guide details selection, induction and training what you are required to learn. Chapter 3: Performance management Each part details: Chapter 4: Compensation Specific learning outcomes Chapter 5: Employee relations and legislation Essential reading (textbooks and journal articles) Chapter 6: Hr risk management An overview of relevant theory Chapter 7: Introduction to human resource development Questions for reflection Chapter 8: A Strategic Approach to human resource development (HRD)
3. 4. 5. 6. 7. 8. 9.
Chapter 9: Talent management strategy
10. Chapter 10: The learning organisation Appendix A: Assignment Appendix B: Case Study 1 Appendix C: Case Study 2
3.
Structure of Each Part
Each part is structured as follows:
1
Specific Learning Outcomes
Essential (Prescribed) Reading
Brief Overview of Relevant Theory
Questions for Reflection MANCOSA - PGDBM
Human Resource Development 3.1
Specific Learning Outcomes
These are listed at the beginning of each part. These detail the specific outcomes that you will be able to competently demonstrate on successful completion of the learning that each particular section requires. 3.2
Essential (Prescribed) Reading
Your essential (prescribed) reading comprises the following:
International Textbook This textbook will provide you with a strategic understanding of Human Resource Management (HRM) and introduce you to Human Resource Development (HRD). Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M. (2015) Human Resource Management: Gaining a Competitive Advantage 9th Ed. McGraw-Hill
South African Textbook This textbook will provide you with an understanding of Human Resource Management and Development within the South African context.
Nel, P.S., Werner, A., Botha, C., du Plessis, A., Mey, M., Ngalo, O., Poisat, P., van Hoek, L. (2014) Human Resource Management. 9th Edition. Cape Town: Oxford University Press Southern Africa
Meyer, M. (2012) Managing Human Resource Development. A Strategic Learning Approach. 4th edition. Durban: LexisNexis.
Journal Articles Journal articles have been prescribed for each part. They are available from the EBSCO, Emerald and Sabinet databases that are accessible through the http://mymancosa.com website. These journal articles will provide you with an understanding of HRM and HRD. It is imperative that you acquire and read these journal articles, as they form a key part of the curriculum.
3.3
Brief Overview of Relevant Theory
Each part contains a very brief overview of theory relevant to the particular HRM or HRD topic. Once you have read the overview, you need to explore the relevant topic further by reading the prescribed textbooks and journal articles listed under “Essential Reading” for each part.
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Human Resource Development 3.4
Questions for Reflection
At the end of every part there are questions for reflection. You need to attempt these on completion of your study of the entire part. The questions are designed to enable you to reflect on what you have learnt, and consider how, what you have learnt should be applied in practice. Case Studies Case studies form an integral part of developing competence in HRM and HRD. Two case studies, based on companies operating in the HRM and HRD environment are included in Appendix A and Appendix B of this study guide 4.
Electronic Learning Resources
Additional electronic learning resources are available to supplement your learning. These are detailed in the document “Electronic Learning Resources”. These resources seek to build on, and expand, the learning that is facilitated in this Study Guide. They include video podcasts, individual activities, as well as additional recommended reading and Think points.
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Human Resource Development
PART 1: INTRODUCTION TO HUMAN RESOURCE MANAGEMENT CHAPTER 1: A STRATEGIC APPROACH TO HUMAN RESOURCE MANAGEMENT Specific Learning Outcomes The overall outcome for this part is that, on its completion, the learner should be able to demonstrate a broad understanding of the field of Human Resource Management (HRM). This overall outcome will be achieved through the learner’s mastery of the following specific outcomes, in that the learner will be able to:
1. Critically discuss the transformation of human resource management. 2. Understand the strategic-partner role of HR professionals. 3. Identify and critically discuss the current trends and challenges in the field of human resource management. 4. Explain the importance of integrating an organisation’s human resource management strategy with the overall business strategy. 5. Discuss the strategic management phases of strategy formulation, strategy implementation and strategy evaluation and control. 6. Critically discuss the function and role of human resource management within the strategic management process. 7. Understand the various HR practices and its integration into the overall human resource function of the organisation.
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Human Resource Development ESSENTIAL READING Learners are required to read ALL of the relevant textbook parts and journal articles listed below. Textbooks:
Nel, P.S., Werner, A., Botha, C., du Plessis, A., Mey, M., Ngalo, O., Poisat, P., van Hoek, L. (2014) Human Resource Management. 9th Edition. Cape Town: Oxford University Press Southern Africa.
Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M. (2015) Human Resource Management: Gaining a Competitive Advantage 9th Ed. McGraw-Hill.
Journal Articles & Reports
Bourne, A. and Haddon, D. (2010) "An evidence-based approach to developing HR strategy: transformation in Royal Mail". Strategic HR Review, Vol. 9, No.1, pp.10 – 16
Jana, F. and Jan, R. (2015) “Get strategic Human resource Management Really Strategic: Strategic HRM In Practice.” International Journal of Management Cases. 17 (4) pp148-155 (available from Ebsco).
Kramer, R. (2014) “Beyond Strategic human resource management:is sustainable human resource management the next approach?” International Journal of Human Resource Management. 25(8) pp1069-1089 (available from Ebsco).
Marler, J.H. (2012) “Strategic Human Resource Management in Context: A Historical and Global Perspective.” Academy of Management Perspectives. 26(2) pp6-11 (available from ebsco).
Othman, A.E.A (2009) “Strategic Integration of Human Resource Management Practices: Perspectives of Two Major Japanese Electrical and Electronics Companies in Malaysia.” Cross Cultural Management: An International Journal. 16 (2), pp 197 – 214. (available from Emerald).
Ulrich, D., Brockbank, W. & Johnson, D. (2009) “The Role of Strategy Architect in the Strategic HR Organisation.” People & Strategy. 32 (1), pp 24 – 31. (available from EBSCO).
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Human Resource Development 1.1
Introduction
The role human resource management (HRM) plays within organisations has changed dramatically. Having excluded HRM from participating actively in business decisions for most of its existence, organisations now require HRM to play an active role in the fight to be successful and remain competitive. HR professionals must play a number of new roles to be successful, one being the strategic-partner role which involves linking the HRM practices, systems, policies with the strategic initiatives of the company. This process is known as strategic human resource management. Despite the benefits that can be derived from this process, the strategic use of human resources within companies frequently remains an after thought (Grobler et.al., 2014). Given the fact that HRM goes beyond the administrative tasks of personnel management and encompasses a broad vision of how management would like the people resources to contribute to the success of the organisation, the adoption of a professionally accepted HRM standard for South Africa, according to the SABPP (2013), can help all South African organisations move up the change curve more rapidly. They believe that a set of clear, formal standards for HR will set the minimum requirement for what is considered good HR management practice in any organisation. The project is being managed by the South African Board for People Practices (SABPP), which is the HR professional and quality assurance body of South Africa. The purpose of the national HR standards development initiative, therefore, is to formulate a consistent set of HR Standards for South Africa, including HR metrics to measure the bottom-line impact of HR on business. While still recognising unique operating contexts, industry and company differences, national standards will create a consistent framework for high quality HR work practised by true professionals throughout the country. All participating HR Directors, their companies and professional bodies will be acknowledged as the pioneers in setting HR standards for South Africa (SABPP). 1.2
Overview of Strategic Human Resource Management
Strategic human resource management can be thought of as “the pattern of planned human resource deployments and activities intended to enable an organisation to achieve its goals.” (Noe et.al., 2015).
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Human Resource Development Figure 1.1 provides an overview of the strategic management process, and how HRM should be aligned with this process. The Strategic Management Process Strategy Formulation
Strategy Implementation HR Practices
External Analysis
Recruitment & Selection Training & Development Performance Management Compensation & Incentives Employee Relations
Opportunities Threats
Mission
Goals
Strategic Choice
Human Resource Needs
Internal Analysis Strengths Weaknesses
Firm Performance
Human Resource Capability
Human Resource Actions
Skills Abilities Knowledge
Behaviours Results
Strategy Evaluation
Emergent Strategies
Figure 1.1: The Strategic Management Process (adapted from Noe et al, 2015) As an organisation grows, and maintaining effective and efficient management practices become more complex the need for regarding HRM as a strategic imperative is realised. This new strategic accountability implies that HRM must be able to provide evidence that it contributes to the mission and goals of the organisation, and ultimately ‘the bottom line’. Strategic human resource management (SHRM) is the development of a consistent, aligned collection of practices, programmes and policies to facilitate the achievement of the organisation’s strategic objectives. SHRM includes all people management activities and it is crucial to ensure that it is aligned to and supports the overall organisational strategy. This will result in ensuring that the function of managing people is a priority and that all HR policies, activities and programmes are in line with the organisational strategy (Nel and Werner; 2014). It is critical that SHRM is aligned with the organisational strategic plan in order to improve organisational competitiveness.
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Human Resource Development Case study - Example The Saatchi & Saatchi case Saatchi & Saatchi was one of the most famous businesses in the global advertising industry for over thirty years, but rapid expansion in the 1980s saw the company face disaster. The 1980s boom experienced by the agency was quickly followed by a bust that exposed the gaping debts at the agency, hitting the company’s share price hard. This resulted in the organisation’s founders – the Saatchi brothers – being sacked by the board, and, after several failed chief executive appointments, Kevin Roberts was brought in to lead the organisation in 1997. The ‘strategic problem(s)’ Roberts faced was essentially one of firm viability. Although advised to make wholesale redundancies in order to reduce headcount costs, he refused to do so, instead he focused on restoring firm viability through a strategic orientation of Saatchi & Saatchi as an ‘ideas company’. This involved moving away from its status as an ‘advertising agency’ to a company that transformed its clients’ business model, brands and reputation through the use of an ideas brief and brand navigation rather than relying upon a simple advertising campaign. The shift was demonstrated in the new ways Saatchi pitched for business. Instead of traditional pitches focusing on advertising campaigns, it broadened its focus to include the client’s business strategy. The decision to reorient the company as an ideas company was not an original one, since the possibilities of developing this strategy were being generally mooted within the industry at the time when Saatchi & Saatchi was facing problems. However, the organisation was able to gain first-mover advantage through being the first to use it so extensively as a form of strategic leverage. This was critical in order for it to retain its status as a roster agency for global clients such as Proctor and Gamble, General Mills and Toyota. However, whilst it could be stated that viability was largely secured through this strategic change, it could also be argued that it also rested upon the ability of the existing staff to enact it. The Saatchi example, therefore, shows that an important relationship existed between strategy and staff competencies; whilst there is an important need to identify the ‘right’ strategy that will leverage the organisation against its competitors, this will be dependent upon the existence, maintenance, or acquisition (at the right price and right number) of staff capable of enacting it. In this case, Saatchi staff were not being asked to do something they could not do. Source : (Grobler et.al, 2014)
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Human Resource Development 1.2.1
Formulating HR management strategy
This process involves deciding on an appropriate strategic direction by defining a company’s mission and goals, its external opportunities, threats, and its internal weaknesses and strengths for the management of HR within the context of the organisation’s environment. Strategic choices must be made preferably within the context of environmental constraints. An organisation’s success is dependent upon its ability to match or fit the variability of the environment in which it operates. There must be a fit between the organisation and its environment for any particular organisation’s strategy to work. This entails a focus that includes:
A scanning of the environment to create the necessary fit.
Considering the organisation’s mission in terms of its HRM approach.
Deciding on an appropriate HRM strategy.
Establishment of a HRM business plan.
This focus is essential because the HRM strategy and the HRM business plan must fit into a particular organisation’s strategy. In other words, the HRM business plan’s purpose should be basically to operationalise or bring about the concept of fit between general business strategy and the HRM strategy (Nel and Werner, 2014). It is of utmost importance that all people-related business issues be considered during strategy formulation. These issues are identified in the HRM function. Mechanisms or structures for integrating the HRM function into strategy formulation may help the strategic planning team make the most effective strategic choice. Once that strategic choice is determined, HRM must take an active role in implementing it (Noe et. al., 2015). 1.2.2
Strategy Implementation
After an organisation has chosen its strategy, it has to execute that strategy (Noe et.al., 2015). In other words, at this stage the organisation has to operationalise options and choices made in the planning process (Nel and Werner, 2015). The basic premise behind strategy implementation is that “an organisation has a variety of structural forms and organisational processes to choose from when implementing a given strategy” and these choices make an economic difference (Noe et.al., 2015). The role of the HR function thus becomes one of ensuring that the organisation has the proper amount of employees with the right KSA’s required by the strategic plan, and also the developing control
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Human Resource Development systems that ensure those employees are acting in ways that promote the achievement of the goals specified and agreed upon in the strategic plan (Nel and Werner, 2015). 1.2.3
Strategy Evaluation and Control
Thus far we have focused on the planning and implementation of strategy. Evaluation and Control could be regarded as the last component in the strategic management process. An effective and successful organisation will constantly monitor the effectiveness of both the strategy and the implementation processes. This monitoring makes it possible for the company to identify problem areas and either revise existing structures and strategies, or devise new ones (Nel and Werner, 2014). Have You Completed the ‘Essential Reading’ for this Part? Now that you have been introduced to this part, source and work through the textbook parts and journal articles listed in the “Essential Reading” list at the beginning of this part. It is essential that you read all of the textbook parts and journal articles listed.
QUESTIONS FOR REFLECTION After completing your study of this part ‘reflect on the following questions. (To adequately address these questions you will need to have completed all the ‘essential reading’ listed at the beginning of this part.) Read the case study below taken from Milmore et.al. (2007) and answer the questions that follow: HALCROW Halcrow Group Limited is a multidisciplinary consultancy group specialising in the provision of planning, design, and management services for infrastructure development throughout the world. Within this the Group’s main interests are transportation, water, property and consulting. Although Halcrow has a background in civil engineering and associated specialisms, in recent years the group has extended its range of disciplines to cover architecture, project management, environmental science, transport planning and other non-engineering but related skills. Unlike many organisations, Halcrow does not have a mission statement, arguing that their ‘purpose to sustain and improve the quality of people’s lives’ describes their approach better. This purpose is underpinned by a series of values which outline those things that are important to the Group: ‘Skills and innovation; Enjoying what we do; Delivering within time and budget’, codes of business behaviour and business principles.
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Human Resource Development Halcrow’s first projects outside the UK, were undertaken in the 1980s, such work now accounting for nearly 40 per cent of an annual turnover in excess of 200 million with the Group currently undertaking projects in over 70 countries. Recent projects in which Halcrow have been involved include the Channel Tunnel Rail Link, road construction near the Stonehenge World Heritage Site, the International Congress Centre in Rome, Kuala Lumpur International Airport, new and refurbished stands for Chelsea Football Club, coordination of wetland conservation and river basin management for the Danube and its tributaries and managing pollution risk from the animal mass burial sites arising from the UK’s 2001 foot and mouth disease outbreak. Halcrow was founded in 1868 by Thomas Meik, the company becoming Sir William Halcrow & Partners in 1941. In 1985 a private limited company bearing the same name was formed, the most recent change being in 1998, when the various Halcrow Group Limited. The Halcrow Trust owns 90 per cent by its employees. Halcrow has grown extensively over the past decade and now operates through a network of 29 UK and 32 international offices. As part of this growth, the number of employees has increased from 1700 to nearly 5000 worldwide. Approximately 80 percent of Halcrow’s employees are classified by the Group as professional and technical (P&T) staff who have a minimum of an undergraduate degree in engineering or a related subject. The majority are engineers who are also members of a relevant professional institution or are undergoing training to gain membership. The remaining 20 per cent of employees, including those in human resources, are classified by Halcrow as non-P&T and provide corporate support services. Halcrow Group’s strategy As a result of restructuring to meet the future needs of the business environment, Halcrow’s operations were brought together in 2001 as four main business groups: Consulting, Property, Transport and Water. These operate as a matrix structure across the Group’s eight geographical regions, this structure facilitating appropriate employees or teams to be brought together for specific projects throughout the world. Each of the four business groups is led by a management team comprising five people including a Group board director or managing director. Within each business group, P&T staff are assigned to technical skills groups the leader of whom is responsible for their training and career development. Employees are also assigned to an office in one of the regions. These vary in size from less than ten to more than 500 employees. The business groups and regional offices are supported by Corporate Support Services, comprising all the corporate and business support functions, including human resources, and located predominantly within the UK. At the time of writing the human resource function had 31 employees divided between three teams: Personnel (22), Pensions (3) and Training (6) with a director at the executive level. 11
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Human Resource Development In 2004, Halcrow launched its change programme, ‘Act now’, which was designed to help the Group ‘to continue to develop in a dynamic and sustainable way’. The focus of ‘Act now’ was to align employees’ behaviours and approaches to Halcrow’s purpose, values, codes of behaviour and business principles thereby improving individual, team and overall business performance. This was summarised in Act Now: Your pocket Guide to Halcrow’s Change Programme as: To take Halcrow’s existing personality, strengthen all those things that are good about it, for example, our…
Technical competence
Dependability
Friendliness
Reputation for being a safe pair of hands
Commitment
Pride in one’s profession
…and give it some added extras
Passion
Dynamism
Fleetness of foot
Better listening skills
Excitement
Innovation
Confidence (with a clear sense of self)
Being more celebratory
Consistent delivery to expectation
Greater commercial edge
Being performance driven
This change programme is intended to be continuous rather than having a specific end date. It emphasises the need for flexibility and the sharing of good practices and learning throughout the Group, the centrality of employees to achieving this, and the need to monitor and evaluate. SHRM at Halcrow The ‘Act now’ change programme is central to everything that Halcrow planned to do in relation to the HRM strategy. The overriding concern is to change the organisation’s culture. It is often said that the group is full of people who are professional engineers and who take pride in a job well done.
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Human Resource Development In essence, technical excellence takes precedence over commercial success. By the very nature of their training, Halcrow people tend to be concerned with ‘detail’ rather than seeing the bigger picture. This has served the Group well. But a recent client satisfaction survey commissioned by the Group did not show Halcrow in a uniformly glowing light. It reported that Halcrow emerged as technically excellent and a ‘safe pair of hands’ but that clients were looking for much more than technical competence and a track record. They wanted business partners whose behaviours were aligned to their own needs. In addition the Group was also seen as rather ‘grey’. The challenge for Halcrow is to retain the reputation for technical excellence and reliability while becoming increasingly commercially aware, flexible and, above all, more responsive to customer needs. Halcrow has designed several key HRM initiatives to support the change programme. These are:
The development of core competences. This is seen as important because Halcrow employees have traditionally emphasised the importance of professional qualifications above all else. The development of a core competence programme is designed to move the emphasis from what people know to what they can do.
The introduction of 360-degree appraisal. It is envisaged that this will make a significant contribution to the ‘Act now’ culture change initiative. The Group’s culture has always tended to reinforce the importance of hierarchy in that employees have been very conscious of their position in the organisation. In addition, there had been something of an ‘ignore deflect culture’ in which people sought to evade responsibility for mistakes rather than being open enough to learn from them. By opening up the system of employee appraisal to people above and below the individual being appraised and by seeking the views of significant other stakeholders, particularly customers, Halcrow management believe that a far greater degree of openness will be developed.
The instigation of a profit share bonus scheme. This is particularly designed to create in employees a greater awareness of the Group’s profit performance. In the view of senior Halcrow management, this has the potential to make a major contribution to fostering in Halcrow employees more commercially aware values. In view of the fact that senior management have set clear targets for increases in Halcrow’s profit performance, greater knowledge of the Group’s profitability is seen as an effective way of focusing the minds of employees on profit performance.
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Human Resource Development
The development of ‘ideas labs’. This is an important part of the Halcrow management of innovation programme which is designed to promote innovative thinking and enable commercially valuable ideas to be implemented. It is designed to: -
Add value to the business;
-
Encourage cross-fertilisation between disciplines; and
-
Give staff ownership of the ideas put forward.
Overall, the key change issue that is driving SHRM, is the need for Halcrow to be more responsive in the light of a more competitive industry. Therefore, the principle aim of the new HR initiatives is to generate more competitive employee behaviours which, in turn, is envisaged will generate better allround employee business performance. There are other critical issues facing HR at Halcrow. An important one of these is a consequence of customer feedback. Increasingly this shows that customers are taking technical excellence for granted when making decisions about which consultancy group to employ. In view of Halcrow’s reputation for technical excellence among customers, this is bad news for the Group. As the HR director explained the world has moved on. Clients are now more demanding and want more all the time. Among the most demanding clients are the public sector. In the UK, Halcrow management feel that the UK government’s Private Finance Initiative (PFI) has contributed to change in the industry. (The PFI is a mechanism developed by the government to raise money to pay for new buildings and services. Under PFI schemes a public authority buys the services of private-sector companies to design, build, finance, and operate a public facility, such as a hospital. The private-sector companies borrow the money for the scheme and then the government pays an annual fee to the companies under a long-term operating contract for the services). Three examples of the more demanding nature of clients are evident, each of which demands an HR response. The first is clients asking for an assurance that the staff commencing work on a project will stay with the Group for the duration of the project. This is a key issue in an industry where the reputation of the consultancy is such that, in effect, the staff appointed to a project can be more important factor in the client’s decision to engage a particular consultancy than the consultancy group itself. The implications for HR are twofold. First, it must assure both external and internal clients that succession planning is in place. In the past this was not an HR strength at Halcrow or other similar consultancies, but is an issue that is now receiving more attention. MANCOSA – PGDBM
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Human Resource Development The second implication is the problem of retention. There is a shortage of high-quality consultants throughout the construction and engineering sectors and competition for consultants is high. Like the sector in general, staff turnover is high at Halcrow. This is an issue that senior management know must be addressed. The problem is exacerbated by the declining number of construction-related graduates in the UK, the number of students studying relevant courses in the UK dropping by 10 per cent in the late 1990s. The second example of the more demanding nature of clients is the requirements that companies state their policy and practice on employee diversity and equal opportunities. Again, this presents a problem for companies in this sector, like Halcrow, which has been traditionally male dominated and has, until recently, employed considerable numbers of expatriates in its overseas operations. In the UK construction industry as a whole, the proportion of women employed is less than 9 per cent. The third example of client demands is the requirement that companies offer assurances over corporate governance. In the light of corporate scandals such as Enron and Parmalat, this is understandable. The HR response to this is to ensure that global training of key staff to ensure compliance with industry standards take place. In addition, organisational structure issues, such as the revision of reporting relationships to ensure greater transparency, are receiving attention. The level of staff turnover at Halcrow and decline in the number of graduates entering the constructionrelated industry has shaped another HR priority for the Group. This is to define more clearly a people statement that states more precisely what is meant by ‘employer of choice’. In particular, Halcrow is concerned about losing high-quality graduates to the financial sector, both at the time of graduation and after they have worked with the Group for a short period. High-quality graduates can earn more money in financial services. In addition, younger graduates are more concerned with the work-life balance issues and their own staff development than were their predecessors. A measure of the significance of this issue to Halcrow is the large number of graduates employed each year, this being 133 in 2003. There is also worry over an ageing workforce in the construction industry in general. It is felt by the HR director that employees and employee issues at Halcrow need to be higher on the list of Group priorities. Staff turnover is now a key performance indicator for the HR director. In her view ‘it is no good imposing things upon people at Halcrow – the Group need to win hearts and minds.’ This is typical of companies employing a high proportion of professional staff who tend to define, and act upon, their own standards of professional behaviour.
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Human Resource Development QUESTIONS FOR REFLECTION 1. Making reference to the case study provide a brief overview of Halcrow Group’s strategy. 2. The HR function at Halcrow has been largely administrative rather than strategic, a situation that is now changing because of the HR challenges that Halcrow faces. Discuss how managing human resources strategically will provide a competitive advantage to Halcrow. 3. Evaluate the contribution of Halcrow’s ‘Act now’ change programme in contributing to the emerging HR strategy. 4. Consider the organisation for which you work; 4.1 Does the HR function fulfil the role of a strategic-partner 4.2 Which of the HR practices implemented within your organisation are consistent with the business strategy? Which HR practices are inconsistent with the business strategy? 4.3 Make recommendations to the HR director for the improvement of your organisation’s approach to SHRM
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Human Resource Development
CHAPTER 2: HUMAN RESOURCE PLANNING, RECRUITMENT, SELECTION, INDUCTION AND TRAINING Specific Learning Outcomes The overall outcome for this part is that, on its completion, the learner should be able to demonstrate a broad understanding of the field of HRM and HRD. This overall outcome will be achieved through the learner’s mastery of the following specific outcomes, in that the learner will be able to: 1. Critically discuss the alignment of human resource planning with an organisation’s strategy. 2. Discuss the workforce planning focus areas. 3. Assist an HR practitioner to carry out the steps in the workforce planning process. 4. Identify, compile and apply various recruitment policies an organisation may adopt. 5. Decide whether internal or external recruitment sources and methods would be preferable for an organisation. 6. Critically discuss and effectively apply the steps in the selection process within an organisation. 7. Distinguish between induction, orientation, and socialisation. 8. Describe the stages of induction and its application within an organisation. 9. Understand the importance of the follow-up and evaluation of the induction programme. 10. Distinguish between the concepts of training and development. 11. Justify and explain the purpose of training needs analysis. 12. Indicate and apply the key steps in a generic model of the needs analysis process. 13. Discuss and apply the skills audit process within an organisation.
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Human Resource Development ESSENTIAL READING Learners are required to read ALL of the textbook parts and journal articles listed below. Textbooks:
Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M. (2015) Human Resource Management: Gaining a Competitive Advantage 9th Ed. McGraw-Hill
Nel, P.S., Werner, A., Botha, C., du Plessis, A., Mey, M., Ngalo, O., Poisat, P., van Hoek, L. (2014) Human Resource Management. 9th Edition. Cape Town: Oxford University Press Southern Africa.
Meyer, M. (2012) Managing Human Resource Development. A strategic learning approach. 4 th edition. Durban: Lexis Nexis
Journal Articles & Reports
Gubman, E. (2004) “HR Strategy and Planning: From Birth to Business Results.” Human Resource Planning. 27(1), pp13-23 (available from Ebsco).
Macleer, B. and Shannon, J. (2003) “Does HR Planning Improve Business Perofrmance.” Industrial Management 45(1) (available from Ebsco).
Bielski, L. (2007) “Getting to “yes” with the right candidates.” ABA Banking Journal 99 (3) pp 30-51 (available form Ebsco).
Katz, L.M. (2015) “Cool and Competent) HR Magazine. 60(2) pp 56-60 (available form ebsco).
Faragher, J. (2015) “How to find talent on a budget…without cutting corners.” People Management. Pp 44-47(available form ebsco).
Arachchige, B.J.H. (2014)”Absence of Induction and its impact on the organisation.” IUP Journal of Management Research. 13(2) pp7-16(available form ebsco).
Shipley, F and Golden, P. (2013) “How to analyse and address your organisation’s learning needs.” Training and Development” 67(3) pp29-31(available form ebsco).
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Human Resource Development 2.1 Introduction Human resource managers are at the forefront of the worldwide war for competitive advantage. Organisations need to find the best set of workers for meeting their strategic objectives, attract those workers to their companies, and then get them to stay long enough to obtain some return on their investment. Organisations have to strive to make sure that the decisions they make with respect to who gets accepted or rejected for jobs promote the best interests of the company and are fair to all parties involved. The purpose of this part is to examine factors that influence the supply and demand for labour, focus on what human resource managers can do in terms of planning and executing human resource policies, and familiarise you with the selection, induction and training process that give firms competitive advantage in a dynamic environment (Noe et.al , 2015). 2.2 Overview of HR or Workforce Planning Human Resource Planning or Workforce Planning is an organisational process that involves proactively planning ahead to ensure your company is staffed. Within the next decade organisations can expect to experience the following:
An ageing workforce which will create an increasing need for talented employees with the skills and competencies needed
A more diverse workforce
Increased competition for highly skilled employees
Technology playing an ever-increasing role in improving efficiency and productivity
The attainment of HR is fast becoming a vital ingredient in strategic organisational success. It is imperative that companies develop processes, policies, procedures, and strategies to compete aggressively. Figure 2.1 shows that there is a clear link between HR strategies and organisational strategies. This integrative model presented below shows the flow of activities in executing workforce planning effectively by means of integrating recruitment of labour with the objectives of the organisation (Nel and Werner, 2014).
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Human Resource Development Forecasting elements
Recruiting
Retention
Leadership
Re-deployment
Employee development
Intergrated Organisational Process i.e. HR and Organisational policies and procedures
HR objectives
Functional objectives
Forecasted demand
Future supply
Talent surplus
Talent pool
Gaps
Organisational goals
Talent shortage
Action plan to fill gaps - recruiting
Figure 2.1 Workforce planning systems can be categorised into the following three basic focus areas: (Nel and Werner, 2014) 2.2.1
The talent demand and supply forecast
Talent forecasting is a process for predicting changes in the demand for and the supply of talent. Forecasts are broken down into:
Estimated increases or decreases in company growth, output and revenue
Estimated changes in talent needs that result from organisational growth
Projections of future vacancies (Nel and Werner, 2014).
2.2.2
Talent Projection and action plans
It is important to plot a time series analysis projection using past information about the number of people employed by the organisation over time on a graph, so that HR trends and requirements can be forecast into the future. This technique is known as the trend projection. Talent action plans outline which specific actions all managers have to take in terms of talent management. These plans aim to attract, retain, redeploy and develop the talent a company needs in order to meet the forecasted quantity and quality of employees. (Nel and Werner, 2014).
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Human Resource Development 2.2.3
The Integration Plan
For a company to meet its forecasted staffing needs, action plans must be fully implemented. They must be integrated into every aspect of workforce management, including communication and the identification of potential supporters and resisters concerning an integrative model for recruitment (figure 2.1 ) (Nel and Werner, 2014). 2.3 Steps in the workforce planning process The following steps are involved in the workforce planning process:
Forecasting labour demand
Forecasting techniques
Forecasting labour supply
Implementation of the workforce plan(Nel and Werner, 2014)
2.4 The Human Resource Recruitment Process As discussed above, it is difficult to anticipate exactly how many (if any) new employees will have to be hired in a given year in a given job category. The role of human resource recruitment is to build a supply of potential new hires that the organisation can draw on if the need arises. Therefore, the primary purpose of human resource recruitment is identifying and attracting potential employees. It thus creates a buffer between planning and actual selection of new employees. (Noe et. al., 2015). 2.4.1
Recruitment Policies
Recruitment policies reflect the organisation’s general business strategy and describes how organisations recruit employees of the highest calibre in accordance with employment legislation, best practice and within available resources. A company’s recruitment policy usually includes information on the following aspects:
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Whether internal or external recruitment will take place
If relatives of existing employees may be hired
If part-time, or any type of flexitime workers will be considered.
If people over retirement age may be employed. (Nel and Werner, 2014).
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Human Resource Development THINKPOINT Discuss the relative merits of internal vs external recruitment. What factors might lead an organisation to decide to switch from internal to external recruitment or vice versa. 2.5 Selection Having formulated the matching strategy and structures of the organisation the next logical step is staffing. This includes hiring different people, transferring people from other branches or even promotions. These people need to be selected to have the right person in the right job at the right time (Nel and Werner, 2014). Selection is therefore the process by which companies decide who will or will not be allowed into organisations (Noe et. al., 2015). The selection process is a series of steps through which applicants pass. These steps represent the ‘tools’, or methods of selection. The steps are mainly a number of eliminators, because as applicants drop out of the process at each step, the applicant pool becomes smaller (Nel and Werner, 2014).
Recruiting process completed
Initial screening
Employment tests
Reference checks
Gather information about applicant
Final selection by line managers
Evaluate qualification of each applicant
Medical checks
Application blank
Appointment
Interview/s
Placement on the job (induction begins)
Figure 2.2
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Human Resource Development The selection decision must focus on competency-related issues if the selection process is to contribute to the organisation’s success. Nel and Werner (2014) Case study - Example Kinaxis Chooses Sales Reps with Personality Kinaxis is a software company headquartered in Ottawa, Ontario, that sells to clients around the world. Its specialty is software for supply chain management – all the processes and relationships through which companies obtain supplies as needed and get their products to customers on time and at minimal cost. This is a sophisticated type of product, tailored to a company’s specific needs. Therefore, Kinaxis depends on salespeople who understand how businesses work, who listen carefully to identify needs, and who provide excellent customer service to maintain long-term business relationships. Recently Bob Dolan, vice president for sales at Kinaxis, needed to hire a sales team to serve clients in North America. The company had just one salesperson serving the continent, and Dolan wanted to add four more. He received about 100 resumes and wanted to select from these. He started by reviewing the resumes against job requirements and selected 20 candidates for a first round of interviews. The interview process helped Dolan cut the list of candidates in half, so he needed another way to narrow his options. Dolan decided his next step would be personality testing. He hired a firm called Opus Productivity Solutions to administer a test called PDP ProScan to the remaining 10 candidates. In addition, Dolan himself took the test and had his current sales rep do the same. The existing salesperson was doing an excellent job, so the results of his test could help Dolan and Opus pinpoint the characteristics of someone likely to succeed in sales at Kinaxis. Based on analysis of all the results, Opus created a benchmark of traits associated with success in the job. Representatives, from Opus also discussed the test results with each candidate, giving each one a chance to disagree with the scores. No one did. Dolan observed that all the candidates scored high in assertiveness and extroversion, not surprising for people in sales. In addition, two of them scored above the benchmark in conformity and below the benchmark in dominance. Those results suggested to Dolan that these candidates might be so eager to please that they would be quick to give in to whatever customers requested – a pattern that could become costly for the company. Dolan eliminated those two candidates. That meant Dolan still had eight candidates to fill four positions. He asked each one to give him the names of major accounts he or she had signed up in the previous two years. Four candidates were able to come up with three or four large clients.
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Human Resource Development Those were the candidates Dolan hired. Since then, Dolan says his experience with personality testing has only reinforced his belief that this selection method helps Kinaxis identify the best candidates. For example, one sales rep had scored low on “pace”, indicating that the individual might lack the patience needed for the slow cycles required to close a sale of a complex software system. Dolan hoped the issue could be overcome if he provided enough coaching, but in fact, the sales rep sometimes behaved impatiently, annoying prospects. After three years of trying to help him grow into the job, Dolan laid him off. The company’s commitment to careful selection is expressed on its website: “The Kinaxis recruitment process enables us to explore the potential of a partnership between our company and each employee] by determining if there is solid alignment between your career aspirations, your values, and your professional skills and the Kinaxis vision, culture, and passion.” (Noe et.al. 2015) Activity Making reference to the Kinaxis case study above;
Highlight the selection methods used by Bob Dolan for hiring salespeople
Discuss the advantages for Kinaxis of using personality tests to help select sales representatives. What were the disadvantages
What improvements would you recommend to the process for decisions to hire sales reps in the future
2.6 Induction Induction is the last step in the staffing process and provides an overview of the organisation’s culture. It is an early opportunity for employers to set the right expectations with new employees. From an employee perspective, it familiarises them with the systems and processes of the new workplace and encourages learning. Although induction means to introduce or to initiate, it is part of the socialisation process that is aimed at fully absorbing an employee into the organisation and turning them into a productive worker with minimum delay. Some organisations have been using the term ‘engagement’ to refer to the broader view of the whole process of induction. Orientation means to become familiar with or adjusted to facts or circumstances. It is the process of informing new employees about what is expected of them in the job and helping them cope with the stresses of transition. The broad purpose of employee induction then is to introduce the new employees to the organisation’s goals and objectives and is short-term focused.
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Human Resource Development Strategic planning
HR workforce planning Shortage of certain qualified employees
Recruitment Selection
Selected employee’s induction
Development
Training
Employee is now a member of the workforce
Figure 2.3 2.6.1 Topics covered in the employee induction programmes The topics covered in the Induction programmes include: General topics: Company history Company structure Layout of physical facilities ANTI Products or services Company policies and procedures Disciplinary regulations Safety procedures Pay scales and pay days Holidays Employee benefits Job-related issues: Introductions to supervisor and co-workers Job location Job tasks Job objectives Relationship to other jobs (Nel and Werner, 2014)
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Human Resource Development 2.6.2 The Induction Process
ANTICIPATORY STAGE
New recruit has expectations about the organisation and the job Employer uses realistic job preview (RJP)
ENCOUNTER (ORIENTATION STAGE)
New recruit needs information on policies, etc. and coping with stress Employer uses ROPES, general company orientation, and departmental orientation
SETTLING-IN (SOCIALISATION) STAGE New recruit adjusts to organisational culture Figure: 2.4 (ROPES – Realistic Orientation Programmes for New Employee Stress) (Nel and Werner, 2014) 2.6.3 Onboarding and Socialisation Onboarding or socialisation refers to the process of helping new hires adjust to social and performance aspects of their new jobs (Noe et.al., 2015). To get newly recruited and hired employees up to speed quickly, many organisations have improved and enhanced the traditional induction programme to include technical skills, training, industry background, and soft skills training. This is important to help employees adjust to their jobs by establishing relationships to increase satisfaction, clarifying goals and expectations to improve performance, and providing feedback, coaching, and follow-up activities to reduce turnover (Noe et.al., 2015).
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Human Resource Development Onboarding then is a socialisation process designed to shorten the productivity curve, to help new employees reach capacity quicker, increase employee engagement and decrease turnover by helping new employees to build stronger relationships and establish credibility earlier (Nel and Werner, 2014). Onboarding at Sierra Nevada Corporation – Example New hires at Sierra Nevada Corporation, a company in the defence and aerospace industry, are contacted by the company’s talent acquisition and training teams before orientation. The programme includes a review of the company’s history, culture, vision, and values. New hires’ first day on the job includes a meet-and-greet lunch date with their manager. Employees continue onboarding for 90 days, which includes e-learning, mentoring, on-the-job training, and a performance review. (Noe et.al., 2015) 2.6.4 Follow-up and Evaluation of the Induction programme Regular checks should be initiated and conducted by the line manager after the new employee has been on the job one day, and again after one week. An HR representative should check in with the employee after one month. The following methods can be employed to strengthen evaluation:
Unsigned questionnaires completed by all new employees
In-depth interviews of randomly selected new employees
Group discussion sessions with new employees who have settled comfortably into their jobs
Arrange meetings with longer serving employees on a structured and scheduled basis, such as refresher courses when they return from leave each year
Give feedback on the organisation’s progress and get feedback from the employee (Nel and Werner, 2014).
2.7 Training and Development Training refers to a planned effort by a company to facilitate learning of job-related competencies, knowledge, skills, and behaviours by employees. The goal of training is for employees to master the knowledge, skills, and behaviours emphasized in training and apply them to their day-to-day activities. Traditionally companies have relied on formal training through a course, programme, or event to teach employees the knowledge, skills, and behaviours they need to successfully perform their jobs. Formal training refers to training and development programmes, courses, and events that are developed and organised by the company. Typically employees are required to attend or complete
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Human Resource Development these programmes, which can include face-to-face training programmes (such as instructor-led courses) as well as online programmes (Noe et.al., 2015). 2.7.1 Training Needs Analysis A key characteristic of training that contributes to competitiveness is that they are designed according to the instructional design process. Training design process refers to a systematic approach for developing training programmes (Noe et. Al., 2015) The terms “analysis” and “assessment” are often used interchangeably in the context of determining training needs. “Training-needs analysis” can be defined as a process of identifying an issue or problem, collecting, analysing and interpreting data, and using the information obtained to select or design an appropriate HRD intervention to address the issue or problem (Meyer et.al, 2012). The implementation of the Skills Development Act of 1998 requires organisations (with some exceptions, including small and micro enterprises) to submit a workplace skills plan to the relevant SETA for approval and for recovery of part of the levy. This workplace skills plan is a comprehensive document which requires the employer to give detailed information regarding:
The current skills profile by number of employees in population groups and educational levels
The skills priorities and the number of beneficiaries in population, gender and occupational groups
The process used to develop the workplace skills plan
The steps used to consult employees about the plan, for instance, whether a training committee has been established
The plan’s relationship to the organisation’s employment equity plan
A proper analysis of the organisation’s training needs and skills requirements in the form of a skills audit is therefore a vital step in the process of developing a workplace skills plan (Meyer et.al., 2012)
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Human Resource Development 2.7.1.1. The needs-analysis process A generic process approach to needs analysis, as developed by Meyer et.al. (2012), can be used to ensure that needs are identified and correctly analysed. It consists of a series of steps as depicted in Figure 2.5. Collect information on an ongoing basis to identify potential issues or problems ↓ If an issue or performance problem is identified, consult with management to agree whether it is related to training ↓ If it is training-related, identify relevant criteria (norms, benchmarks, work standards and desired current or future performance levels) ↓ Select a data collection method and procedures appropriate to the issue or problem being analysed ↓ Collect data and analyse results; compare information with relevant criteria to determine the gap; draw conclusions ↓ Report results and recommendations to the client for inclusion in the workplace skills plan if it is considered a strategic priority ↓ If the recommendations are accepted, use identified needs for selecting or designing the intervention
Figure 2.5 Key steps in Conducting training-needs analysis (Meyer et.al., 2012) Activity Describe how you would apply these key steps in the identification of the training priorities in the organisation at which you are employed 2.7.1.2 Skills Audit A “skills audit” is a process where skills held by employees are identified and compared with skills required now and in the future so that the skill shortfall or surplus can be determined. The skill shortfall forms the basis of a Training-Needs Analysis (TNA) so that the company can reach the desired skill base amongst its employees. With the advent of skills development legislation and the requirement for organisations to develop an annual workplace skills plan, many organisations have responded by performing regular skills audits (Meyer et.al, 2012).
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2.7.1.3 The Skills Audit Process (Meyer et.al, 2012) The First stage of the process is to ascertain what skill sets the organisation will require in order for business strategies to be realised The Second stage requires the organisation to establish what skills are required per role, per job, per task or per organisational process. When combined into a matrix, these two sets of skill for the “desired skills” set for the organisation The Third stage of the skills audit process is where the “desired skills” are compared to the “current skills” which are ascertained through the assessment of employee skills. Once the organisation has a skills matrix of required skills and a profile of the skills of each individual, the Fourth stage of the process is to compare the two results to identify where the skills deficit exists. Finally, in the Fifth stage the organisation prioritises skills deficits and develops a training plan to ensure that the gap between skills required and actual skills is closed over time. In order to ensure that skills audit information is usable for translation into workplace skills plans, skills audits usually report on skills requirements per role, per position of role in an organisational structure and per employee profile (this includes race, gender, and disability status) Activity Develop a framework that could be used to conduct a skills audit in your organisation. Proper training-needs analysis provides the basis for the development and implementation of workplace skills plans, the planning and organising of training programmes and the design of HRD interventions which is dealt with in Part 2 of this study guide. Have You Completed the ‘Essential Reading’ for this Part? Now that you have been introduced to this part on, source and work through the textbook parts and journal articles listed in the “Essential Reading” list at the beginning of this part It is essential that you read all of the textbook parts and journal articles listed.
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Human Resource Development
QUESTIONS FOR REFLECTION After completing your study of this part reflect on the following questions. (To adequately address these questions you will need to have completed all the ‘essential reading’ listed at the beginning of this part.) QUESTION 1. 1.1 Consider the organisation at which you are currently employed and compile a recruitment policy for your organisation. 1.2 Think back to the recruitment methods/sources that your organisation used that attracted you to apply for your job. Suggest improvements for your HR department to implement in making the recruitment process more effective. QUESTION 2 2.1 Do you agree that all new employees, whether permanent or part-time as well as longer serving employees should attend an induction programme? 2.2 Discuss benefits the organisation and the employee would gain from an induction programme. 2.3 Discuss the importance of follow-up and evaluation of the induction programme. 2.4 Did your organisation follow the typical Steps in the selection process? QUESTION 3 3.1 Identify the most important reasons for conducting training-needs analysis in your organisation. 3.2 Highlight the key steps in conducting training-needs analysis and describe how you can apply these steps in the identification of education and training priorities. 3.3 Develop and conduct a needs analysis in the organisation at which you are currently employed. QUESTION 4. Suggest ways for your organisation to improve their approach to recruitment, selection and induction.
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CHAPTER 3: PERFORMANCE MANAGEMENT Specific Learning Outcomes The overall outcome for this part is that, on its completion, the learner should be able to demonstrate a broad understanding of the field of HRM and HRD. This overall outcome will be achieved through the learner’s mastery of the following specific outcomes, in that the learner will be able to: 1. Discuss the three major parts to performance management. 2. Identify and discuss the purposes of performance management. 3. Critically discuss the performance management process and its integration with the organisation’s strategy. 4. Discuss, evaluate and implement the comparative, attribute, behavioural, results and quality approach to performance management. 5. Select the most effective approach to performance management within an organisation. 6. Conduct an effective performance feedback session.
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Human Resource Development ESSENTIAL READING Learners are required to read ALL of the textbook parts and journal articles listed below. Textbooks:
Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M. (2015) Human Resource Management: Gaining a Competitive Advantage 9th Ed. McGraw-Hill
Nel, P.S., Werner, A., Botha, C., du Plessis, A., Mey, M., Ngalo, O., Poisat, P., van Hoek, L. (2014) Human Resource Management. 9th Edition. Cape Town: Oxford University Press Southern Africa.
Journal Articles & Reports
Buckingham, M. and Goodall, A. (2015) “Reinventing Performance Management.” Harvard Business Review. 93(4) pp40-50 (available from ebsco)
Ammons, D. (2015) “Getting Real about Performance Management.” Public Management. 97(11) pp8-11(available from ebsco)
Bracken, D.W. and Church, A.H. (2013) “The ‘NEW” Performance Management Paradigm: Capitalising on the unrealised potential of 360 degree feedback.” People and Stratgey. 36(2) pp34-40 (available from ebsco)
Peiperl, M.A. (2001) “Getting 360 degree feedback right.” Harvard Business Review.” 79(1) pp142-147 (available from ebsco)
De Waal, A.A. (2007) “Is Performance Management Applicable in Developing Countries?: The Case of a Tanzanian College.” International Journal of Emerging Markets. 2 (1), pp 69 – 83. (available from Emerald).
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Human Resource Development 3.1 Introduction to Performance Management According to Noe et.al. (2015) Performance management consists of three major parts to its process, which includes;
Defining performance – specifies which aspects of performance are relevant to the organisation
Measuring performance – measures those aspects of performance through performance appraisal, which is only one method for managing employee performance.
Performance feedback - provides feedback to employees through performance feedback sessions so they can adjust their performance to the organisations goals
Performance appraisal may be viewed as only one part of the broader process of performance management. Performance management then is the process through which managers ensure employees’ activities and outputs are congruent with the organisation’s goals and is central to gaining a competitive advantage. 3.2
Overview of Performance Management
Performance management may be defined as a process of creating a work environment or setting in which people are enabled to perform to the best of their abilities for the achievement of shared goals. (Nel and Werner, 2015). 3.2.1
Purposes of Performance Management
It is a process for strategy implementation
Provides input to other HR systems such as development and remuneration
It is a vehicle for culture change (Nel and Werner, 2014)
Serves as an Administrative purpose (Noe et.al., 2015)
3.2.2
The Process of Performance Management
Step 1 Understanding and identifying important performance outcomes or results. Divisions, departments, teams and employees must align their goals and behaviours and choose to engage in activities that help achieve the organisation’s strategy and goals.
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Human Resource Development Step 2 Understanding the process (or how) to achieve the goals established in the first step. This includes identifying measurable goals, behaviours and activities that will help the employee achieve the performance results. Step 3 Organisational support – involves providing employees with training, necessary resources and tools, and frequent feedback communication between the employee and manager focusing on accomplishments as well as issues and challenges influencing performance. For effective performance management managers and employees have to value feedback and regularly exchange it. Step 4 Involves performance evaluation, that is, when the manager and employee discuss and compare the targeted performance goal and supporting behaviours with the actual results. This typically involves the annual or biannual formal performance review. One way to make the formal evaluation more effective is for managers to engage in frequent performance conversations with employees rather than wait for the formal annual review. Step 5 Involves the employee and manager identifying what the employee (with the help from the manager) can do to capitalise on performance strengths and address weaknesses. Step 6 Providing consequences for achieving (or failing to achieve) performance outcomes. This includes identifying training needs, adjusting the type or frequency of feedback the manager provides to the employee, clarifying, adjusting, or modifying performance outcomes, and discussions of behaviours or activities that need improvement or relate to new priorities based on changes or new areas of emphasis in organisational or department goals (Noe et. al, 2015)
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Human Resource Development 3.2.3
Approaches to Performance Management
There are different ways to evaluate performance. These include according to Noe et.al., 2015):
The Comparative Approach
The Attribute Approach
The Behavioural Approach
The Results Approach
The Quality Approach
Activity Refer to the text (Human Resource Management. Noe et.al 2105) and discuss:
The nature of each of these performance management approaches
The strengths and weaknesses of each of these approaches
Identify the approach that is implemented in your organisation
What are the strengths and weaknesses of the performance management system in your organisation
3.2.4
The 360-degree Feedback system
According to Noe et.al.,(2015), a recent trend in performance appraisals for management development is the use of upward feedback and 360-degree feedback. Upward feedback refers to appraisal that involves collecting subordinates’ evaluations of managers’ behaviours or skills. The 360-degree feedback process is a special case of upward feedback. In 360-degree feedback systems, employees’ behaviours or skills are evaluated not only by subordinates but by peers, customers, their bosses and themselves. The raters complete a questionnaire asking them to rate the person on a number of different dimensions. The results of a 360-degree feedback system show how the manager was rated on each item. The results also show how self-evaluations differ from evaluations from the other raters. Typically managers review their results, seek clarification from the raters, and set specific development goals based on the strengths and weaknesses identified.
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Human Resource Development Activity Highlight the benefits and potential limitations of the 360-degree approach Case Study Example Capitol One, a consumer credit company, has developed an effective 360-degree feedback system. Capitol One has included a number of features in its 360-degree feedback system to minimise the chance that the ratings will be used as ways to get back at an employee or turned into a popularity contest. The 360-degree assessments are based on the company’s competency model, so raters are asked for specific feedback on a competency area. Rather than a lengthy form that places a large burden on raters to assess many different competencies, Capitol One’s assessment asks the raters to concentrate on three or four strengths, or development opportunities. It also seeks comments rather than limiting raters to merely circling numbers corresponding to how much of each competency the employee has demonstrated. These comments often provide specific information about what aspect of a competency needs to be improved. This comment system helps tailor development activities to fit competency development. To increase the chances that the assessment will result in change, the feedback from the 360-degree assessment is linked to development plans, and the company offers coaching and training to help employees strengthen their competencies. Employees are encouraged to share feedback with their co-workers. This creates a work environment based in honest and open feedback that helps employees personally grow. (Noe et. al., 2015) 3.2.5 Performance Feedback If employees are not made aware of how their performance is not meeting expectations, their performance will almost certainly not improve. Effective managers provide specific performance feedback to employees in a way that elicits positive behavioural responses (Noe et.al.,2015). The appraisal interview should be both evaluative and developmental. Goals that have been met do not warrant long discussion except for the praise that must accompany these achievements ( Nel and Werner, 2014). According to Noe et.al. (2015), to provide effective performance feedback managers should consider the following recommendations:
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Feedback should be given frequently, not once a year.
Create the right context for the discussion
Ask the employee to rate his or her performance before the session
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Human Resource Development
Encourage the employee to participate in the session
Recognise effective performance through praise
Focus on solving problems
Focus feedback on behaviour or results not on the person
Minimise criticism
Agree to specific goals and set a date to review progress.
HR practitioners and senior managers are beginning to realise that the management of employee performance must take place within the pursuit of strategic business goals. This is one of the major reasons why many organisations are starting to favour a multi-rater, or 360-degree approach to performance evaluation (Nel and Werner, 2015). Have You Completed the ‘Essential Reading’ for this Part? Now that you have been introduced to this part, source and work through the textbook parts and journal articles listed in the “Essential Reading” list at the beginning of this part. It is essential that you read all of the textbook parts and journal articles listed. QUESTIONS FOR REFLECTION After completing your study of this part, reflect on the following questions. (To adequately address these questions you will need to have completed all the ‘essential reading’ listed at the beginning of this part. 1. Consider the performance management system implemented by the organisation for which you work. To what extent does this performance management system support your organisation’s achievement of a competitive advantage 2. In his journal article “Is Performance Management Applicable in Developing Countries?” De Waal (2007) identifies factors impacting on performance management in organisations operating in Africa 2.1 To what extent are these factors evident in your organisation’s approach to performance management? 2.2 What would you say are other emerging market related factors that impact on performance management within your organisation
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Human Resource Development
CHAPTER 4: COMPENSATION Specific Learning Outcomes The overall outcome for this part is that, on its completion, the learner should be able to demonstrate a broad understanding of the field of HRM and HRD. This overall outcome will be achieved through the learner’s mastery of the following specific outcomes, in that the learner will be able to: 1. Discuss the objectives of a compensation system. 2. Apply the steps of the model to design and implement a new compensation system for an organisation. 3. Debate the various emerging pay systems. 4. Explain when mandatory and voluntary benefits are used. 5. Compile a flexible benefits plan.
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Human Resource Development
ESSENTIAL READING Learners are required to read ALL of the textbook parts and journal articles listed below. Textbooks:
International Textbook Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M. (2015) Human Resource Management: Gaining a Competitive Advantage 9th Ed. McGraw-Hill
South African Textbook Nel, P.S., Werner, A., Botha, C., du Plessis, A., Mey, M., Ngalo, O., Poisat, P., van Hoek, L. (2014) Human Resource Management. 9th Edition. Cape Town: Oxford University Press Southern Africa.
Journal Articles & Reports
English, K.T. (2015) “Putting it all together: Benefits Integration Boosts Health, Productivity.” Benefits Magazine. 52 (10), pp 32-37 (available from ebsco)
Polk, L. (2015) “Considerations for Employee Benefit Programmes that benefit employers and employees.” Benefits Law Journal. 28(1) pp 45-52 (available from ebsco)
Grobler, P.A. & De Bruyn, A.J. (2011) “Flexible Work Practices (FWP) - An Effective Instrument in the Retention of Talent: A Survey of Selected JSE-Listed Companies.” South African Journal of Business Management. December, 42 (4), pp 63 – 78. (available from Sabinet)
Carr, S. C., McWha, I., MacLachlan, M. & Furnham, A. (2010) “International-Local Remuneration Differences Across Six Countries: Do They Undermine Poverty Reduction Work?” International Journal of Psychology. October, 45 (5), pp 321 – 340. (available from EBSCO).
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Human Resource Development 4.1 Introduction In the modern organisation, with a variety of costly employee benefit programmes, wage incentive programmes and structured pay scales, the compensation task is even more difficult and challenging for an HR specialist. Employees’ compensation affects their productivity and tendency to stay with the organisation. Employees’ need for income and their desire to be fairly treated by the organisation make developing the compensation programme very important for the HR department (Wärnich et.al., 2015).
4.2
Overview of Compensation
From the employers’ point of view, pay is a powerful tool for furthering the organisations strategic goals. First, pay has a large impact on employee attitudes and behaviours. It influences the kind of employees who are attracted to and remain with the organisation, and it can be a powerful tool for aligning current employees’ interests with those of the broader organisation. Second, employee compensation is typically a significant organisational cost and thus requires close scrutiny. Companies often look for ways to reduce labour costs without jeopardising their relationships with their workforces. From the employees’ point of view, policies having to do with wages, salaries and other earnings, affect their overall income and thus their standard of living. Both the level of pay and its seeming fairness compared with others’ pay are important (Noe et.al. 2015). 4.2.1
Objectives of a compensation system
Every company must be aware that the design of its rewards system rests largely on the objectives of its compensation management so there has to be a clear link between compensation and performance. It is clear that both employer and employee have to be satisfied in the employment relationship. The basis of employee pay satisfaction can be grouped according to Nel and Werner (2014) into four categories:
External equity – how the pay relates to other companies in the industry
Internal equity – how fair the pay is compared to the size and profitability of the company
Individual equity – measures the fairness of the pay based on the performance of individuals working the same job
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Procedural equity – measures the fairness of the decision-making process of pay distribution
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Human Resource Development 4.2.2 The design of a compensation system The modern view is that employees who work in a rewarding environment often tend to produce high degrees of performance output. The reward environment is the starting point for adding value to the organisation (Nel and Werner ,2014). 4.2.2.1 Value-added compensation Is a compensation system in which components of the compensation package (benefits, base pay, incentives and so on), both separately and in combination, create value for the organisation and its employees. 4.2.2.2
Total Compensation
Includes monetary and non-monetary rewards as well as direct and indirect rewards. This means that there are three components of total compensation; direct pay, performance-based pay and indirect pay. The elements of total compensation are depicted in the Table below: Table 4.1 The elements of total compensation Direct compensation
Other direct compensation
cash compensation
share options
basic salary
share ownership
deferred cash
restricted shares
Employee Benefits
Perquisites/fringe benefits
Retirement benefits
Cars
Death benefits
Holidays
Disability benefits
Loans
Medical benefits
Other
Other
Incentives
Bonuses
Profit sharing
Recognition
Nel and Werner (2014)
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Human Resource Development 4.2.2.3
Variable Pay
Variable pay plans are compensation systems that pay cash bonuses to a defined group of employees based on predetermined measures of group or organisational performance. Variable pay is attractive because it does not compound from year to year and the unspent funds can be reused each year, or can be returned to the budget cycle. There are four basic variable pay approaches based on the type of formula used:
Profit sharing
Gain sharing
Goal sharing
Combination plans
4.2.2.4
Purpose and importance of total compensation
To attract potential job applicants
To motivate employees
To retain good employees
To administer pay within legal constraints
4.2.2.5
A model for designing and implementing a new compensation system Analyse present compensation structure ↓ Formulate salary policies ↓ Select compensation system ↓ Develop implementation plan ↓ Evaluate and monitor
Figure 4.1 A model for a new compensation system (Nel and Werner, 2014)
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Human Resource Development 4.3
Emerging Pay Systems
Pay for Knowledge and skills
Pay for competencies
Performance-based pay
Incentive pay systems (Nel and Werner 2014)
4.4
Employee benefits
Mandatory Benefits - Benefits that must be provided by law in South Africa:
Unemployment insurance
Compensation for injuries and diseases
Voluntary Benefits – employees can rely on a number of benefits which are non-mandatory or voluntary benefits on the part of the employer. It should be noted that a number of the benefits discussed do have certain legislated minimums such as the number of days vacation leave, the number of paid public holidays, the number of days sick leave, and maternity leave benefits. In South Africa these minimums are legislated in the Basic Conditions of Employment Act (No.75 of 1997):
Vacation leave
Paid public holidays
Time for personal matters
Sick leave
Maternity leave
Health and life insurance
Medical aid schemes
Pension funds
Employee services
(Nel and Werner 2014)
4.5 Benefit planning and flexible benefit plans Today, although the tendency in bureaucratic –style organisations is still to dictate the terms of benefit packages, employers are starting to realise that the new deal in employer-employee relationship demands much more flexibility (Nel and Werner 2014).
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Human Resource Development According to (Nel and Werner 2014) the terms ‘flexible benefits plan’ and ‘Cafeteria benefits plan’ are generally used synonymously. The idea of cafeteria benefits allows the employee to put together his or her own benefits package, subject to two constraints:
the employers must limit the total cost for each total benefits package, and;
each benefit plan must include certain non-optional items, such as the mandatory benefits.
The philosophy behind flexible benefit plans is that no one knows the employees’ needs better than the employees themselves and their needs change through the years, so they can alter their benefits. Activity Despite the attractiveness of cafeteria benefits, what do you think are some of the limitations of cafeteria benefits plans Have You Completed the ‘Essential Reading’ for this Part? Now that you have been introduced to this part, source and work through the textbook parts and journal articles listed in the “Essential Reading” list at the beginning of this part. It is essential that you read all of the textbook parts and journal articles listed.
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QUESTIONS FOR REFLECTION After completing your study of this part reflect on the following questions. (To adequately address these questions you will need to have completed all the ‘essential reading’ lsted at the beginning of this part.) 1. Consider the compensation and benefits practices of the company for which you are currently employed at. To what extent do the compensation and benefits practices facilitate the attraction and retention of talent? 2. At the organisation in which you are employed, what component of the total compensation system is perceived to be most valuable to employees? Why do you think so? 3. To what extent are flexible benefit plans implemented within South African companies or the country you currently reside in 4. Discuss the benefits and potential limitations of flexible benefit plans
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Human Resource Development
CHAPTER 5: EMPLOYEE RELATIONS AND LEGISLATION Specific Learning Outcomes The overall outcome for this part is that, on its completion, the learner should be able to demonstrate a broad understanding of the field of HRM and HRD. This overall outcome will be achieved through the learner’s mastery of the following specific outcomes, in that the learner will be able to: 1. Explain the concept of employee relations. 2. Identify and discuss employee relations related legislation in South Africa. 3. Discuss and apply the purpose, role and function of the various employee relations related legislation in South Africa. 4. Discuss the function of SETAs, Learnerships and Workplace Skills Plans and their relationship to each other. 5. Discuss the collective bargaining process.
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Human Resource Development ESSENTIAL READING Learners are required to read ALL of the textbook parts and journal articles listed below. Textbooks:
Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M. (2015) Human Resource Management: Gaining a Competitive Advantage 9th Ed. McGraw-Hill
Nel, P.S., Werner, A., Botha, C., du Plessis, A., Mey, M., Ngalo, O., Poisat, P., van Hoek, L. (2014) Human Resource Management. 9th Edition. Cape Town: Oxford University Press Southern Africa.
Meyer, M. (2012) Managing Human Resource Development. A strategic learning approach. 4 th edition. Durban: Lexis Nexis
Wärnich, S., Carrell, M.R., Elbert, N.F., Hatfield, R.D (2015) Human Resource Management in South Africa. United Kingdom: Cengage Learning
Additional resources
www.labour.gov.za
5.1 Introduction Labour law governing employment relations derives its force and effect from a plethora of sources. With that being said, it would be almost impossible to set upon the task of understanding the multi-faceted content of this subject without first engaging in the hierarchy of law governing South Africa. In terms of the Constitution ‘fair labour practice’ has been recognised as a fundamental right and as such must be treated with the necessary attention and reverence. In line with the overall spirit of the Constitution, Part 1 sets out the manner in which this right must be interpreted. In looking at employee relations through the prism of various legislation, one must be sure to take in account the underlying values of the Constitution when interpreting such legislation. Thus in looking at any labour legislation, be it statute or precedent, it is mandatory to also consider,
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Human Resource Development International Law as well as foreign law; it is also a Constitutional imperative that South African common law, which includes labour law, be developed to bring it in line with the ethos of our Constitution, to the extent that it is inconsistent. It thus becomes clear, that when engaging in employee relations whereby the rights and regulations are governed predominantly by legislation, one needs to continuously question the validation of such provisions. However, to be in a position to evaluate the law, one is required to not only understand the hierarchy of labour law in South Africa but also keep abreast with international labour standards and developments in foreign countries. This part aims to provide a ‘catch all reference’ in terms of relevant governing legislation, as well as the parameters in which such legislation operates, in dealing with employee relations on a day to day basis 5.1.1 Overview of Employee Relations in South Africa Without sound labour relations or work employment relations South African organisations can forget about becoming more competitive. Whether you are self-employed, work for a company or are employed by the government, you will be working with people, and good relationships between people in the workplace are a key requirement for sound labour relations. It is important to note that the employment relationship is essentially a relationship between the employer (employers and employers’ organisations) and employee (labour and trade unions), as well as between employer/employee and the state, thus making it a tripartite relationship (Wärnich et.al., 2015).
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Human Resource Development 5.2 Sources of employment related law in South Africa
Levels of Employment Law in South Africa The Constitution Labour Relations Act (and agreements and determinations controlled by the Act)
Basic Conditions of Employment Act Occupational Health & Safety Act
Employment Equity Act Skills Development Act
Contracts of Employment Common Law
Figure 5.1 Levels of employment Law in South Africa (Nel et.al., 2011) 5.2.1 The Common Law and the Employment Contract The common law rules relating to labour law are not found in legislation but rather are derived from custom and practice. The employment contract may be defined as a contract between two persons, namely the employer and the employee, for the letting and hiring of the employees services. In this type of contract the employer has an obligation and duty to supervise and control the employee’s work (Nel and Werner, 2014). 5.2.2 The Basic Conditions of Employment Act (BCEA) (No. 75 of 1997) The BCEA is a vital component of South Africa’s protective labour law framework. The primary objective of the Act is to:
Stipulate and regulate relevant conditions of employment and the variation of such conditions
Contribute to the creation of a secure, equitable, non-exploitative and harmonious work climate
Give effect to and regulate fair labour practices as advocated in the Constitution (Nel and Werner, 2014)
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Human Resource Development 5.2.3 The Employment Equity Act (No.55 of 1998) (EEA) The EEA has two main elements:
The prohibition of discrimination by all employers
The duty placed on designated employers to implement affirmative action measures by means of employment equity plans (Nel and Werner, 2014).
5.2.4 Labour Relations Act (No.66 of 1995) (LRA) The Act seeks to advance economic development, social justice, labour peace and the participation of employees, as worthy stakeholders, in the workplace. Its primary objectives are the following:
To give effect to the rights and obligations of employees and their unions as well as employers and their organisations in accordance with the fundamental rights of the Constitution and international labour conventions,
To promote collective bargaining at sectoral level,
To promote employee participation at the workplace, and
To promote dispute resolution and labour peace
The Act is relevant to and has a considerable impact on a number of HRM key functions such as:
Performance appraisal and management
Training and development
Discipline management
Retrenchments
Collective bargaining and employee participation
Strike handling and dispute resolution (Nel and Werner, 2014)
5.2.5 The Skills Development Act (No. 97 of 1998) (SDA) The South African economy faces several challenges and skills development is one of those challenges. The Skills Development Act (No.97 of 1998), promulgated in 1999, makes provision for a new approach to skills development that compliments the formal education, to ensure that the country develops a strategic human development approach to improve its human capital (Nel and Werner et.al., 2014). It links skill formation to the requirements of a growing economy and extends education and training to people both within and outside formal employment. In tandem with the Skills Development Levies Act (No. 9 of 1999), the Skills Development Act places a legal obligation on all employers to improve the competency levels of their workforce.
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Human Resource Development The Skills Development Levies Act (No. 9 of 1999) imposes a skills development levy on most employers, and imposes government departments to allocate a percentage of their budget to skills development (Meyer et.al., 2012). As part of South Africa’s national skills development strategy, the Skills Development Act (No.97 of 1998) was enacted Nel and Werner (2014). The Purposes of the Act are:
To develop the skills of the South African workforce
To increase the levels of investment in education and training in the labour market and to improve the return on that investment
To encourage employers to: -
Use the workplace as an active learning environment
-
Provide employees with the opportunities to acquire new skills
-
Provide opportunities for new entrants to the labour market to gain work experience and
-
Employ persons who find it difficult to be employed
To encourage workers to participate in learnership and other training programmes
To improve the employment prospects of persons who were previously disadvantaged by unfair discrimination and to redress those advantages through training and education
To ensure the quality of education and training in and for the workplace
To assist:
-
Work-seekers in finding work
-
Retrenched workers in re-entering the labour market and
-
Employers in finding qualified employees and
To provide and regulate employment services
The Skills Development Strategy is based on the National Qualifications Framework Act (No. 67 of 2008), which makes provision for the National Qualifications Framework (NQF), established by the South African Qualifications Authority (SAQA) (Meyer et.al, 2012).
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Human Resource Development This body of skills development legislation has fundamentally changed the face of education and training in South Africa. The implications of these Acts for Human Resource Development (HRD) is important to provide guidelines for designing and implementing relevant organisational strategies (Meyer et.al, 2012). 5.2.5.1 Sector Education and Training Authorities (SETAs) There are various SETAs that have been established to cater for each national economy sector and these institutional bodies are expected to perform the following functions:
Strategic functions
Implementation functions
Communication and reporting functions
Quality assurance functions (Meyer et.al, 2012).
5.2.5.2 Learnerships and Skills programmes A substantial amount of the SETAs time is spent in handling matters relating to learnerships. (Nel and Werner , 2014). A learnership is a mechanism to link structured learning with work experience, leading to a qualification registered on the NQF as a reliable indicator of work readiness. (Meyer et.al, 2012). The structured learning part of a learnership has to include the unit standard categories required to make up a qualification:
Fundamental learning
Core learning
Specialisation
Skills programmes are another form of learning intervention to achieve the objectives of the Act, and is described as unit standard-based programmes that are occupationally based and presented by an accredited provider, and when completed, constitute a credit towards a qualification registered on the NQF (Meyer et.al, 2012).
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Human Resource Development 5.2.5.3 Workplace Skills Plan (WSP) A WSP is a strategic plan, approved by the SETA, which outlines the training and development requirements for an organisation for a minimum period of one year. The HR department needs to follow certain steps when developing and implementing a WSP (Nel and Werner, 2014). Guidelines for developing a WSP:
Step 1: Proper workplace planning
Step 2: Analysing jobs as an input to the workplace planning process
Step 3: identifying and defining the organisation’s skills requirements
Step 4: conducting a skills audit to determine the organisation’s current skills profile
Step 5: defining the organisation’s skills training priorities
Step 6: Identifying the appropriate skills programmes to address the organisation’s identified training needs
Step 7: Implementing the WSP
Step 8: Monitoring, evaluating and reporting on the WSP
Step 9: Establishing a quality assurance system to ensure effective and value-added skills training and development (Nel and Werner, 2014)
5.2.6 Collective Bargaining Collective Bargaining is a process in which representatives of employees and representatives of the employer (management) negotiate and otherwise interact in an attempt to reach agreements and to uphold these agreements regarding matters that relate to or may impact on the employment relationship. In terms of the LRA, employers are not compelled to enter into collective bargaining with employees. The Act does, however, strongly promote good faith collective bargaining – especially at a centralised level. For this reason it provides for bargaining and statutory councils and the conclusion of collective agreements on various matters of mutual interest between employers and employees. Collective bargaining takes place between employers (who may be represented by employers’ organisations) and employees (usually represented by trade unions). It may take place at various levels and different approaches to bargaining or bargaining styles can be used (Wärnich et.al, 2015).
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Human Resource Development 5.2.7 Occupational Health and Safety Act (No.85 of 1993) (OHSA) The aim of the OHSA is to establish institutions such as health and safety committees and the appointment of safety representatives at the workplace to promote and monitor health and safety in all areas where work is done. The Act introduces rules and standards by which organisations will be judged and the sanctions that they can expect when standards are breached (Nel and Werner, 2014) 5.2.8 Unemployment Insurance Act (No. 63 of 2001) (UIA) The Act was promulgated to establish the Unemployment Insurance Fund (UIF) which is entrusted to provide unemployment benefits, maternity and adoption benefits and dependent’s benefits related to the unemployment of such employees. Employees contribute the equivalent of 1 per cent of their remuneration which is matched by the employer in equal measures. 5.3 Conclusion The protective labour laws outlined provide the legal framework that underpins labour legislation in South Africa and guidelines for HRM and HRD practitioners. Have You Completed the ‘Essential Reading’ for this Part? Now that you have been introduced to this part. source and work through the textbook parts and journal articles listed in the “Essential Reading” list at the beginning of this part. It is essential that you read all of the textbook parts and journal articles listed.
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Human Resource Development QUESTIONS FOR REFLECTION After completing your study of this part reflect on the following questions. (To adequately address these questions you will need to have completed all the ‘essential reading’ listed at the beginning of this part.) 1. Provide a summary of the main provisions and purposes of the various labour laws that underpin labour legislation in South Africa.
2. Outline and apply the practical steps that should be applied in your workplace to ensure that HRD strategies are aligned with the skills development legislation.
3. Provide an analysis of your organisation’s business objectives and skills profile to identify strategic priorities for education and training.
4. Identify the steps in a project plan to develop a workplace skills plan (WSP) that would comply with the requirements of the Skills Development Act and its regulations and those set by your organisation’s SETA.
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Human Resource Development
CHAPTER 6: HR RISK MANAGEMENT Specific Learning Outcomes The overall outcome for this part is that, on its completion, the learner should be able to demonstrate a broad understanding of the field of HRM and HRD. This overall outcome will be achieved through the learner’s mastery of the following specific outcomes, in that the learner will be able to: 1. Explain the concept ‘risk management 2. Discuss the role of human resources in risk management and its application thereof. 3. Discuss the significance of the King III Code on Governance in South Africa in HR risk management. 4. Identify the various types of HR risks. 5. Discuss managers’ skills required for effective integration of risk management and HRM 6. Identify key strategies for managing risks.
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Human Resource Development ESSENTIAL READING Learners are required to read ALL of the textbook parts and journal articles listed below. Textbooks:
Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M. (2015) Human Resource Management: Gaining a Competitive Advantage 9th Ed. McGraw-Hill
Nel, P.S., Werner, A., Botha, C., du Plessis, A., Mey, M., Ngalo, O., Poisat, P., van Hoek, L. (2014) Human Resource Management. 9th Edition. Cape Town: Oxford University Press Southern Africa.
Meyer, M. (2012) Managing Human Resource Development. A strategic learning approach. 4 th edition. Durban: Lexis Nexis
Grobler, P., Bothma, R., Brewster, C., Carey, L., Holland, P., and Wärnich (2012) Contemporary Issues in Human Resource Management. South Africa: Oxford University Press
Journal Articles & Reports
Ervan, L.E. (2012) The Role of Human Resource Management in Risk Management. Available from: http://www.extension.org/pages/15506/the-role-of-human-resource-management-in-riskmanagement#.ViTHxGcaLIU.
Meyer, M., Roodt, G., Robbins, M. (2011) Human resources risk management: Governing people risks for improved performance. SA Journal of Human Resource Management. 9(1) pp 1-12
Goldberg, S. and Dyer, C. (2012) Reassessing HR Risk Management. Available from: http://hreonline.co./HRE?view?story.jhtml?id=534354685.
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Human Resource Development 6.1 Introduction Business leaders are starting to make strategic HR risk management a core part of their talent management agendas, from daily hiring activities to managing critical business events. Historically HR Risk Management has largely been a defensive and tactical domain, mostly centred on compliancerelated activities, programmes and accountabilities (Goldberg and Dyer, 2012). According to the National HR standard launched in 2013 HR Risk Management is a systematic approach of identifying and addressing people risks (uncertainties and opportunities) that can either have a positive or negative effect on the realisation of the objectives of an organisation (SABPP, 2015) and an HR risk is any people, culture or governance factor that causes uncertainty in the business environment that could adversely affect the company’s operations (Meyer, Roodt and Robbins, 2011). 6.2 Risk Management Businesses invest money to yield returns on the risks they take. Risks are ‘uncertain future events which, left unchecked, could adversely influence the achievement of a company’s objectives.’ Risk is a normal and unavoidable element in any business and entrepreneurs and investors pursue business opportunities despite the risks. Not dealing with risks can lead to business failure and even the collapse of the company. In essence the challenge is to identify the specific risks and to plan for any deviation from the expected. A business needs a risk management framework to provide assurance about the effectiveness of its operations and the validity of the findings of its risk management reporting. The framework should have a clear focus on the cost implications and effects of these factors on the business. The purpose of managing risk is to ensure the effectiveness and efficiency of operation 6.3
Overview of HR Risk Management
Human resources have two roles in risk management.
First, people are a source of risk, e.g., shortage of employees, people doing sloppy work, an employee refusing to take on additional responsibility, or a key employee leaving two months after completion of a one-year training program.
Second, people are important in handling risk, e.g., people using their ingenuity to solve unexpected problems, employees going the extra mile for the good of the organisation, a key employee redesigning her own job to avoid unnecessary delays in getting work done, or an employee persuading a talented friend to apply for a position in the business.
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Human Resource Development Like risk, human resources are pervasive in the business. Human resource management is most effective when integrated with decision making throughout the business. This leads to recognition that each production, financial and marketing decision has a human component or influence. Which choice is made, how the decision is carried out, the follow-up and monitoring depend on people. Isolating management team and employee issues from production, financial, and marketing management frustrates people and creates unnecessary risk in a business enterprise ( Ervan, 2012). 6.3.1
King III Report on Governance
At a local level, the King III Code on Governance in South Africa has been in effect from 01 March 2010. Given the important role of HR Directors in supporting King III, and the sound governance of South African organisations in particular, the Human Resource Research Initiative of SABPP identified the management of HR risk as one of the most important opportunities that HR practitioners have for adding value to the new governance dispensation in the country. Significantly the King III Report specifically mentions HR as an important area for identifying and reducing risk. 6.3.2
Interface between Human Resource Management and Risk Management
According to (Meyer, Roodt and Robbins, 2011) sometimes managers see training as a waste of time. This perception is a main source of HR’s credibility crisis: what is the contribution of HR directors to the success of a business? In order to meet this challenge, HR directors need to, amongst other things, identify and manage its risks effectively. To understand fully how human resource management and risk management are interrelated, one must understand human resource management. It is the staffing, training, development, motivation, and maintenance of employees to help accomplish organisational goals. Effective human resource management also helps employees accomplish their career goals. Human resource management is a process that can be broken down into specific activities and understanding these activities helps explain the relationship between human resources and risk. Failure to successfully carry out these activities increases risk and penalizes the business by not taking advantage of what its people could be contributing (Ervan, 2012). Managing risk should therefore form part of the strategic plan of the organisation where businesses take a more integrated and proactive approach to ensure that they become resilient and develop capacity to handle risks and disasters (Meyer, Roodt and Robbins, 2011).
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Human Resource Development 6.3.3
The Role of HRM in Risk Management
South African organisations need a more integrated approach to managing HR risks. HR risks need to be considered in every major business decision like opening a branch in a different province or country. Research has clearly shown that so-called ‘soft’ issues, like cultural incompatibility, have led to more major business failures during mergers, acquisitions and international joint ventures. Managing HR risk is a key element of HR governance. Proper HR risk management gives HR executives an opportunity to fulfil their fiduciary duties of care and sound financial management. HR risk management flows directly from external and internal stakeholder engagement. HR risk management addresses key HR risk issues like reducing risk, HR due diligence, the role of HR committees, implementing codes of ethics and fair labour practices. Companies should identify HR risks in different sites or countries and develop proactive risk-reducing plans to deal effectively with these risks. Consulting with different stakeholders is an important element of sound HR governance. The purpose of the seamless interfaces between the different stakeholders is to reduce the different risks and uncertainties that arise because of the interaction between them. Inevitably, the HR practitioner needs to work closely with the risk manager and risk committee to ensure that the overall risk management plan of the company includes HR risks (Meyer, Roodt and Robbins, 2011). 6.3.3.1 Applying risk management to HR HR ACTIVITY
POTENTIAL RISK
Compensation
Financial abuse
Who has signing authority? How many signatures are required? Are there checks and balances?
Discriminatory practices
Hiring unsuitable or unsafe candidates
"Wrongful" hiring
Was a complete screening completed on potential applicants? Were provincial human rights laws observed? Is there a set probationary period? Were promises made to the candidate that cannot be honoured? Did the employee sign off on the
and benefits Hiring
POTENTIAL CONSIDERATIONS
policies and contract of employment before being hired? Occupational Health and Safety
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Environmental, Personal injury or death
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Do we provide adequate training for staff? Do we ensure the use of appropriate clothing and safety equipment? Do we have adequate policies, procedures, and committee in place?
Employee supervision
Abuse
Reputation in the community
Release of personal information
Do we provide sufficient orientation and training? Do we provide adequate supervision (especially for activities that occur off-site or after hours)? Do we have a performance management system in place? Are personal information protection guidelines followed?
Employee conduct
Abuse
Reputation in the community
Do we have clearly written position descriptions for all positions? Do we follow up when the parameters of the job description are not respected? Do we provide thorough orientation and training? Do we provide an employee handbook? Do we have comprehensive policies and procedures? Do we provide ongoing training about our policies and procedures? Do we retain written records of performance issues? Do we ensure that organisational valuables are secure? Do we have cash management procedures? Do we have adequate harassment policies and procedures?
Exiting employee
Property
Reputation in the community Compensation
Do we retrieve organisational information and equipment that a dismissed employee used (especially from home)? Do we ensure that all access codes, passwords, etc are de-activated? Do we conduct an exit interview? Do we record lieu time and vacation balances?
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Human Resource Development 6.3.4
Types of Human Resources Risks Compliance with relevant legislation The typical HR risk here is non-compliance. HR managers should have a clear understanding of what each piece of legislation requires for compliance.
Understanding trends in the business environment and being able to convert them into business and HR strategies and policies. The typical HR risks here are the inability of senior managers, including HR managers, to analyse the internal and external business environment and understand what the key drivers of change are and the inability to convert them into business strategies.
People and corporate culture drive the implementation of the business’ strategies Typical HR risks here are:
-
Not having the right talent in the right places
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Not attracting and retaining key talent
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Performance that does not meet predetermined standards
-
Training and development interventions that do not improve performance
-
Absence of a constructive company climate.
Implementing business strategy Typical HR risks here are that the business does not have a strategic or business plan that converts into different strategic objectives or projects and that the business has not spelt out the demands on, or implications for HR practitioners in terms of talent, policies, practices and procedures.
Carrying out operations – converting business or project plans into executable operations or tasks. Typical HR risks here are not having clearly defined operations and tasks or the right staff to execute them. (Meyer, Roodt and Robbins, 2011)
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Human Resource Development Activity Assume you are an HR Director at the organisation in which you are currently employed at;
Firstly, identify some of the HR risks evident and discuss whether you would take a proactive and aggressive approach to address the HR risks in your organisation or would you adopt a ‘wait and see’ attitude
Secondly , depending on your approach to risk management, discuss possible ways to respond to and address the risks with HR implications in your organisation applying the managers skills discussed below
6.3.5
Manager’s skills for effective integration of risk management and HRM Leadership responsibility Every human resource manager has leadership responsibility. Even though delegation of authority and responsibility and other tools for empowering employees decrease the need for leadership, some leadership is necessary. No group of people comes close to its potential without effective leadership
Communication Communication is an essential skill for effective human resource management. Sending clear messages, listening and use if feedback are essentially important
Training Training is helping people learn and effective training requires teaching skills, an understanding of how adults prefer to learn, patience, communication, a systematic approach, and evaluation of whether the training has been effective
Motivation Motivation of employees challenges every mananger. Employee motivation helps the organisation accomplish its goals while also helping workers accomplish their career goals.
Conflict Conflict is inevitable among employees, between employees and the management team, and among the management team. Managers must learn to deal with conflict rather than avoid it.
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Human Resource Development
Evaluation. Employees have a fervent desire for evaluation i.e., information about their performance and managers find it extremely difficult to share performance evaluations in an honest and helpful manner. Both supervisors and employees need training in evaluation for it to be useful and pleasant for both parties (Ervan, 2012).
6.3.6
Strategies for managing risks
Managers must Consider the most appropriate risk management strategies for each identified risk. The HR Council of Canada identified the following strategies for managing risks: Avoidance - Stop providing the service or doing the activity because it is too risky. Acceptance - Some risky activities are central to the mission of an organisation and an organisation will choose to accept the risks. Modification - Change the activity to reduce the likelihood of the risk occurring or reduce the severity of the consequences. Policies and procedures are an important part of this risk management strategy because they communicate expectations and define boundaries. Transfer or sharing - Purchase insurance or transfer the risk to another organisation through signing a contractual agreement with other organisations to share the risk (for example, having a contractual agreement with a bus company to transport clients rather than staff driving clients). Additional options for dealing with risks as described by Meyer, Roodt and Robbins (2011) include the following : Treat - introduce preventative actions to reduce the probability or effect if the risk occurs and maximise the potential for success. Transfer - share the exposure, totally or in part, with a partner or contractor, or with an insurer. Monitor any partnership carefully, as it may not be possible to transfer all risks.
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Human Resource Development Tolerate – the ability of an effective action against some risks may be limited or the cost of taking the action may be disproportionate to its potential benefits. Eliminate – decide not to undertake the activity that is likely to trigger the risk. Where the risk outweighs the possible benefits, eliminate the risk by doing things differently and removing the risk Have You Completed the ‘Essential Reading’ for this Part? Now that you have been introduced to this part, source and work through the textbook parts and journal articles listed in the “Essential Reading” list at the beginning of this part It is essential that you read all of the textbook parts and journal articles listed. QUESTIONS FOR REFLECTION After completing your study of this part, reflect on the following questions. (To adequately address these questions you will need to have completed all the ‘essential reading’ listed at the beginning of this part.) 1. Discuss the significance of business leaders starting to make HR risk management a core part of their strategic management process 2. Evaluate the role of human resources and human resource management in risk management 3. Identify the key drivers of change in your organisation and discuss the HR risk of the inability of HR managers to forsee their strategic implications. 4. Discuss how you would attempt to create a “risk culture” in your organisation in order to be able to manage risk more effectively
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PART 2: INTRODUCTION TO HUMAN RESOURCE DEVELOPMENT CHAPTER 7: INTRODUCTION TO HUMAN RESOURCE DEVELOPMENT
Specific Learning Outcomes The overall outcome for this part is that, on its completion, the learner should be able to demonstrate a broad understanding of the field of HRM and HRD. This overall outcome will be achieved through the learner’s mastery of the following specific outcomes, in that the learner will be able to: 1. Describe the nature of human resource development 2. Critically discuss the link between HRD and HRM and organisation.al strategy. 3. Identify local and international trends in HRD.
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Human Resource Development ESSENTIAL READING Learners are required to read ALL of the textbook parts and journal articles listed below. Textbook:
Meyer, M. (2012) Managing Human Resource Development. A strategic learning approach. 4th edition. Durban: Lexis Nexis
Millmore, M., Lewis, P., Saunders, M., Thornhill, A. and Morrow, T. (2007) Strategic Human Resource Management. UK: Pearson Education Limited
Journal Articles & Reports
Cascio, W.F. (2014) “Leveraging employer branding, performance management and Human resource development to enhance employee retention.” Human Resource Development International. 17(2) pp121-128 (available from ebsco)
Scully-Russ, E. (2012) “Human Resource Development and sustainability: beyond sustainable organisations.” Human Resource Development International. 15 (4) pp399-415 (available from ebsco)
Mackenzie, C.A., Garavan, T.N. and Carbery, R. (2012) “Through the looking glass: challenges for human resource development (HRD) post the global financial crisis – business as usual?
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Human Resource Development 7.1 Introduction The field of human resource development (HRD) in South Africa and abroad has evolved so rapidly over the past ten years that traditional training is under threat. Traditionally training has been seen as a tool to give employees knowledge and skills to perform their work more effectively. Today this view is changing. An increasing number of companies view HRD as an important business imperative to enhance competitiveness and overall business performance. South African companies that use HRD as a strategic business strategy are likely to outperform their competitiors who fail to do so (Meyer et.al, 2012). The role of HRD has broadened beyond training programme design. Effective instructional design remains important, but HRD practitioners are increasingly asked to create innovative systems and mechanisms to ensure performance improvement in the workplace. The HRD practitioner is no longer only a trainer, but becomes a consultant to the rest of the organisation in providing the support that enables the achievement of business objectives (Meyer et.al, 2012). Video link :
This video illustrates the link between HRD strategy and organisational needs as it supports the development of efficient and effective HRD program design and implementation. Ideas for video content related to organisational strategy and core competencies were drawn from Mathis and Jackson (2011); while content about HRD strategy and HRD programs were drawn from Werner and DeSimone (2012) https://www.youtube.com/watch?v=eHWDm0hgPPI
7.2 Overview of Human Resource Development More recently the term training and development has been replaced by human resource development (HRD). Whereas training and development is normally driven by top-down, planned interventions, HRD incorporates, in addition, a greater focus on individual and organisational learning that can give rise to accidental as well as planned changes to the skill, knowledge and attitude base of employees (Millmore, Lewis, Saunders, Thornhill and Morrow; 2007).
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Human Resource Development From a South African perspective HRD is increasingly influenced by the new skills development system based on skills development within occupations which is to be driven by the quality councils and in particular the Quality Council for Trades and Occupations (QCTO). In this new paradigm, the emphasis is on what the learner must be able to apply in the workplace as a result of learning. HRD is also a key element of the National Skills Development Strategy and other supporting government initiatives aimed at alleviating poverty and improving our competitiveness as a nation (Meyer et.al, 2012). 7.3 International Trends in HRD A global revolution is taking place in the field of workplace learning driven by the requirements of the information explosion, increased globalisation, the changing nature of work and business, as well as changing learner needs and aspirations. The following international trends and developments in the field of HRD have evolved and should be internalised by South African organisations if they want to become competitive in the global world: 7.1.1
Globalisation
7.1.2
Strategic HRD and talent management
7.1.3
Electronic learning
7.1.4
Management development
7.1.5
Performance consulting
7.1.6
Career and performance management
7.1.7
Proactive needs identification
7.1.8
Training design
7.1.9
Evaluation of training
7.1.10 Employment equity and diversity training 7.1.11 Learning organisation (Meyer et.al,2012) 7.4 Local Trends in HRD Local trends in HRD are driven by training legislation and national HRD needs. For the first time in history we have a national HRD strategy driven by government. Although South African organisations should implement the international HRD trends as referred to above, the underdeveloped nature of our human resources requires additional interventions. Most of these interventions, such as the Skills Development Act and Skills Development Levies Act, necessitate a broader approach to HRD. From an HRD perspective two important phases have emerged:
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Training legislation – training legislation in South Africa regulates the training that takes place in organisations. The three main laws are the National Qualifications Framework (NQF), the Skills Development Act (No.97 of 1998) and Skills Development Levies Act (No. 9 of 1999). Companies and providers can no longer do what they want to do. Have You Completed the ‘Essential Reading’ for this Part? Now that you have been introduced to this part, source and work through the textbook parts and journal articles listed in the
“Essential Reading” list at the beginning of this part. It is essential that you read all of the textbook parts and journal articles listed.
QUESTIONS FOR REFLECTION After completing your study of this chapter” reflect on the following questions. (To adequately address these questions you will need to have completed all the ‘essential reading’ listed at the beginning of this part.)
1. Provide an analysis of the readiness of South African organisations to adapt to recent trends and developments in the field of HRD 2. To what extent would you say, the organisation at which you are employed in, is in a position to adapt to these recent trends of HRD ?
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CHAPTER 8: A STRATEGIC APPROACH TO HUMAN RESOURCE DEVELOPMENT (HRD)
Specific Learning Outcomes The overall outcome for this part is that, on its completion, the learner should be able to demonstrate a broad understanding of the field of HRM and HRD. This overall outcome will be achieved through the learner’s mastery of the following specific outcomes, in that the learner will be able to: 1. Describe the strategic context, role and responsibilities of HRD. 2. Describe the strategically oriented cycle of HRD activities. 3. Discuss the link and integration between the organisational strategic context and HRD 4. Develop a strategic HRD plan for an organisation
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Human Resource Development ESSENTIAL READING Learners are required to read ALL of the textbook parts and journal articles listed below. Textbooks:
Meyer, M. (2012) Managing Human Resource Development. A strategic learning approach. 4th edition. Durban: Lexis Nexis.
Millmore, M., Lewis, P., Saunders, M., Thornhill, A. and Morrow, T. (2007) Strategic Human Resource Management. UK: Pearson Education Limited.
Journal Articles & Reports
Alagaraja, M. (2013) “Mobilising organisational alignment through strategic human resource development.” Human Resource Development International. 16(1) pp74-93 (available from Ebsco).
Clardy, A. (2008) “The strategic role of human resource development in managing core competencies.” Human Resource Development International. 11(2) pp183-197 (available from Ebsco).
Chabok, M., Javadi, M., Jafari, A., Yousefi, S., & Mousavi, S. (2013) “New Strategies for Human Resource Development in Organisations”. Interdisciplinary Journal of Contemporary Research in Business. Vol. 5, No. 1, pp 1122- 1125. (Emerald).
8.1 Introduction In order to ensure their survival, organisations need to create a strategic architecture, support processes and learning mechanisms that facilitate continued learning and strategic renewal (Meyer et.al. 2012). Arguably SHRD represents the latest extension of the training and development lineage where training and learning are strategically integrated, vertically to an organisation’s strategic goals and horizontally to other HR activities. This moves training and development from a process that is largely directed at solving specific gaps in HR competences as they are identified to a potentially proactive activity directed at improving corporate effectiveness (Millmore et.al. 2007).
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Human Resource Development In light of the above, HRD managers are challenged to internalise the seventh critical outcome of the NQF which states that the learner must be able to demonstrate an understanding of the world as a set of inter-related systems by recognising that problem-solving contexts do not exist in isolation. This is essentially what SHRD is all about (Meyer et.al. 2012).
8.2 Overview of Strategic Human Resource Development HRD needs to be viewed not only from a reactive provision of training perspective but also to be perceptually repositioned within the organisation which should result in HRD being considered a strategic-partner entrusted with the joint responsibility of improving organisational performance as well as organisational effectiveness. This would result in HRD extending and having a broader influence as well as a renewed sense of purpose. For HRD and its practitioners to be both successful as well as effective in transitioning to a strategic partner, HRD needs to :
Interpret and understand the trends and commensurate practices in corporate strategy formulation
Align and link HRD processes and practices to the external, competitive marketplace
Adopt a high value-added agenda, which creates and ensures a competitive customer focused culture
Design and develop a range of deliverables which contribute to improving the organisation’s capability not to just respond to discontinuous change but to innovate strategically
Focus on organisational performance issues
Strategically integrate HRD through ensuring that both strategies and interventions are designed to fit internally with the organisation’s mission, vision, values, structures, procedures and management systems as well as leadership policies and practices.
Develop the commensurate individual level competencies within the organisation’s staff which will ensure that the staff are not only equipped to perform but to excel
Define and create learning systems which encourage and sustain change, and which enhance personal as well as organisational learning and growth
Provide for the development, deployment and leveraging of business unit level capabilities, enabling the business unit to distinguish itself within the marketplace
Contribute significantly towards the galvanisation of organisational culture in order to provide legendary high performance
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Human Resource Development Achieving all the aforementioned through a high degree of collaboration with all relevant stakeholders will ensure that the HRD architecture is so well established as to literally enable the organisation to execute and accomplish its strategy (Meyer et.al. 2012). Case study - Example The Use of SHRD to support a hotel’s customer service strategy René Angoujard, general manager of the Novotel London West Hotel, challenges the commonly held view that training is a waste of time and money because it leads to staff leaving once trained. He presents a stark alternative: ‘What if you don’t train them and they stay?’ For him, training was at the heart of a culture change programme prompted by: client dissatisfaction; poor staff morale; a staff turnover rate of 78 percent; and the need to profit from a major refurbishment programme and market repositioning of the hotel from a tourist to business customer base. The hotel had, in his opinion, lost sight of its service ethic and a ‘comprehensive customer service strategy’ was used to forge a service culture. HRD interventions included formal training around a set of core service behaviours and the use of selected staff drawn from all levels of the hotel’s hierarchy to act as on-the-job exemplars and coaches. Initial returns on HRD investment include: a 92 percent drop in customer complaints; a 10 percent increase in sales; achievement of a repeat booking level of 70 percent; winning a number of training and customer service awards; and reducing staff turnover by over half to 34 percent (Millmore et.al. 2007). 8.2.1
A strategically Oriented cycle of HRD activities
Muhlemeyer and Clarke (1997) (cited in Millmore et al., 2007:364) hold that their interpretation of the training cycle (Figure 10.2) encapsulates a strategic orientation. This can be found particularly in their emphasis on the whole cycle being driven by organisational needs and securing knowledge transfer, and its exploitation, throughout the whole organisation. Their emphasis on knowledge transfer prevents HRD outputs being simply locked up in the heads of those directly involved in the training intervention and makes them available for others to utilise.
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Figure 8.1 A strategically-oriented cycle of HRD activities (from Millmore et.al., 2007) 8.2.2
Strategy Formulation
McCracken and Wallace (2000) (cited in Millmore et al., 2007:355) develop Garavan’s nine characteristics of strategic HRD to arrive at a revised definition and model of SHRD. They present their construct of SHRD as being very strategically mature and compare and contrast this with HRD and training where, in their view, strategic maturity progressively decreases. In this sense their ideas on the development of SHRD can be presented as a continuum, working through training and HRD to the fullest expression of strategic maturity represented by SHRD as depicted in Figure 8.2
Figure: 8.2 A Continuum of Strategic Maturity (from Millmore et.al., 2007) 8.2.3 Characteristics of strategically mature HRD McCracken and Wallace (in Millmore et.al., 2007) argue that: 1. True strategic integration arises only when SHRD shapes and influences an organisation’s missions and goals as well as supporting their effective implementation
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Human Resource Development 2. Top management support is too passive to fully enact SHRD and that what is required is top management leadership. 3. Consistent with this leadership role and as part of its environmental scanning responsibilities, senior management should assume responsibility for analysing the HRD implications of external and internal environment changes and take over this role from HRD specialists. 4. The formulation of HRD plans and policies, although strategically oriented, reflects an operational emphasis. To achieve a more strategic focus requires the development of HRD strategies from which the policies and plans would flow. 5. Line manager commitment and involvement, while necessary, is insufficient to achieve true integration of HRD into their broader managerial responsibilities. To achieve this integration requires closer collaboration with HRD specialists and the development of strategic partnerships between them. 6. Similarly, the existence of complementary HRM activities is insufficient in that it downplays the need for their close integration under the SHRM umbrella. This makes more explicit the necessity to ally vertical integration with horizontal integration and anticipates the development of strategic partnerships between HRD specialists and their other SHRM colleagues. 7. The expanded role for HRD specialists needs to be further extended to elevate their facilitation of organisational change function to a leadership of change role. 8. Similarly, the HRD function needs to extend its recognition of organisational culture, where training activities are shaped, in part, by an awareness of the current cultural context, to a position where it actively influences culture and, when necessary, plays a central role in culture change. 9. That the emphasis on evaluation needs to be interpreted more rigorously to include a harder, quantifiable edge, where HRD activities are evaluated in terms of their cost-effectiveness. Activity Develop a comprehensive definition of Strategic Human Resource Development (SHRD)
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Have You Completed the ‘Essential Reading’ for this Part? Now that you have been introduced to this part, source and work through the textbook parts and journal articles listed in the “Essential Reading” list at the beginning of this part.It is essential that you read all of the textbook parts and journal articles listed.
QUESTIONS FOR REFLECTION After completing your study of this part, reflect on the following questions. (To adequately address these questions you will need to have completed all the ‘essential reading’ listed at the beginning of this part.) 1. Consider the Human Resource Development function implemented by the organisation for which you work. Would it be justifiable to position the HRD function implemented by the organisation for which you work at the SHRD end of the HRD strategic maturity continuum? 2. Suppose you have been appointed as a group HRD manager at the organisation which you work for. Develop a strategic HRD plan for the company. 3.
Then develop a plan to measure the effectiveness of the strategic HRD plan once it has been implemented
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CHAPTER 9: TALENT MANAGEMENT STRATEGY Specific Learning Outcomes The overall outcome for this part is that, on its completion, the learner should be able to demonstrate a broad understanding of the field of HRM and HRD. This overall outcome will be achieved through the learner’s mastery of the following specific outcomes, in that the learner will be able to: 1. Provide a definition and overview of talent management. 2. Describe a managers’ talent management perspective. 3. Understand talent management as a strategic context for career development. 4. Understand the link between HRD and talent management.
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Human Resource Development ESSENTIAL READING Learners are required to read ALL of the textbook parts and journal articles listed below. Textbooks:
Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M. (2015) Human Resource Management: Gaining a Competitive Advantage 9th Ed. McGraw-Hill
Nel, P.S., Werner, A., Botha, C., du Plessis, A., Mey, M., Ngalo, O., Poisat, P., van Hoek, L. (2014) Human Resource Management. 9th Edition. Cape Town: Oxford University Press Southern Africa.
Meyer, M. (2012) Managing Human Resource Development. A strategic learning approach. 4 th edition. Durban: Lexis Nexis
Journal Articles & Reports
Björkman, I., Ehrnrooth, M., Mäkelä, K., Smale, A., & Sumelius, J. (2013) “Talent or not? Employee reactions to talent identification”. Human Resource Management. Vol. 52, No. 2, pp 195-214. (emerald)
Botha, A.; Bussin, M. and de Swardt, L. (2011) “An employer brand predictive model for talent attraction and retention”. South African Journal of Human Resource Management. Vol 9, No. 1(emerald)
Dave, U. (2006) “Human Resources: The Value Proposition”. Management Today, Vol. 22, No. 3, pp 8-10 (emerald)
(2013) "Talent show: Training workers for a high-tech world". Human Resource Management International Digest. Vol. 21, No. 3, pp.22 - 25
https://www.youtube.com/watch?v=zJLiNKV_Oso
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Human Resource Development 9.1 Introduction The importance of managing HRD from a strategic point of view has evolved rapidly over the past five years. It is now more difficult than ever to strategically plan HRD over the long term. The changes in the business environment are so rapid and unpredictable that strategic HRD must be aligned on a more regular basis. This means that strategic HRD plans must be flexible enough to accommodate changes in the environment. In addition, major strategic decisions, such as whether to outsource the organisation’s training activities wholly or partially, have to take costs savings and business improvements into consideration. Moreover, the worldwide skills gaps have forced companies to institute aggressive talent management strategies to attract, develop and optimise the available talent in both the broader marketplace and specific industries (Meyer et.al.; 2012). Video link :
https://www.youtube.com/watch?v=VfgmIEBZG3A https://www.youtube.com/watch?v=vxuxmUZfmpI
9.2 Overview of Talent Management When a manager takes a talent management perspective, he or she: 1. Understands that the talent management tasks (such as recruiting, training, and paying employees) are parts of a single interrelated talent management process. For example, having employees with the right skills depends as much on recruiting, training and compensation as it does on applicant testing. 2. Makes sure talent management decisions such as staffing, training, and pay are goal-directed. Managers should always be asking, “What recruiting, testing, or other actions should I take to produce the employee competencies we need to achieve our strategic goals?” 3. Consistently uses the same “profile” of competencies, traits, knowledge, and experience for formulating recruitment plans for a job as for making selection, training, appraisal, and payment decisions for it.
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Human Resource Development For example, ask selection interview questions to determine if the candidate has the knowledge and skills to do the job, and then train and appraise the employee based on whether he or she shows mastery of that knowledge and skills. 4. Actively segments and proactively manages employees. Taking a talent management approach requires that employers proactively manage their employees’ recruitment, selection, development and rewards. As one example, many employers pinpoint their “mission-critical” employees, and manage their development and rewards separately from the firms’ other employees. 5. Integrates/coordinates all the talent management functions. Finally, an effective talent management process integrates the underlying talent management activities such as recruiting, developing and compensating employees. For example, performance appraisals should trigger the required employee training. Case study - Example Talent management at Qualcomm At Qualcomm, a San Diego company, talent management is organised around core values that emphasise recruiting smart, motivated employees and creating a work environment that allow them to innovate, execute, partner and lead. When Qualcomm wanted to introduce technology for its performance management process human resources generalists worked together with organisational development and information technology specialists to ensure that what employees were being evaluated on (performance management) and what employees were paid and rewarded for (compensation and rewards) were aligned. HR trained managers to use the performance management system and now focus on identifying employee skills gaps to identify opportunities to improve performance (Noe et. al., 2015). The case study above recognises that all HR practices are inter-related, aligned with business needs, and help the organisation manage talent to meet business goals. Approach to Talent Management Building information-rich HR practices such as succession planning and creating talent grids is important in the challenging times South African organisations are facing at present. A focused approach to talent management implies taking control by, amongst others, asking “what we can do with what we have?”
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Human Resource Development Empowering employees through effective talent management means entrusting to them the accountability and ownership of individual and team achievements, which is a step in the right direction to also apply talent branding appropriately. Because of the skills shortages that exist in South Africa it is crucial for organisations’ HR practitioners to be aware of this within the context of Talent Management (TM) in order to attract and retain talent in order to contribute to an organisation’s bottom line (Nel and Werner, 2104). 9.3 Talent Management: The strategic context for career development Talent management can be broadly defined as the implementation of integrated strategies or systems designed to increase workplace productivity by developing improved processes for attracting, developing and utilising people with the required skills and aptitude to meet current and future business needs.(Meyer et.al. 2012) Four diverse talent management activities emerge from the above definition
Recruitment
Performance management
Leadership development
Organisational strategy;
with the following roles to be performed by HR
Focusing on scarce skills and fitting talented people to required roles or positions
Safeguarding key business capabilities
Accelerating leadership development
Providing full business exposure to rising stars in the organisation
Avoiding loss of key talent
Selecting successors with leadership abilities
Focusing on senior managements’ commitment to development and performance standards
The aim of career management within a talent management perspective is thus to plan and shape the progression of the employee within the organisation in accordance with, firstly, the organisational needs and goals and secondly, the employee’s performance potential and personal preferences and aspirations.
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Human Resource Development Have You Completed the ‘Essential Reading’ for this Part? Now that you have been introduced to this part, source and work through the textbook parts and journal articles listed in the “Essential Reading” list at the beginning of this part. It is essential that you read all of the textbook parts and journal articles listed. QUESTIONS FOR REFLECTION After completing your study of this part, reflect on the following questions. (To adequately address these questions you will need to have completed all the ‘essential reading’ listed at the beginning of this part.) 1. Discuss why it is important for managers to view recruiting, training, appraising and paying employees as a talent management process. 2. Explain to the head of the HR department in your organisation how he/she could use the talent management approach to improve the organisation’s performance 3. Describe the link and the role of Human Resource Development (HRD) in career management. 4. Provide a discussion on the aim of career management within a talent management perspective.
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CHAPTER 10: THE LEARNING ORGANISATION Specific Learning Outcomes The overall outcome for this part is that, on its completion, the learner should be able to demonstrate a broad understanding of the field of HRM and HRD. This overall outcome will be achieved through the learner’s mastery of the following specific outcomes, in that the learner will be able to: 1. Provide an overview of the Learning Organisation. 2. Discuss the differences between traditional training and the learning organisation. 3. Describe and apply the characteristics of organisational learning within an organisation. 4. Develop a plan to transform an organisation to a learning organisation.
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Human Resource Development ESSENTIAL READING Learners are required to read ALL of the textbook parts and journal articles listed below. Textbooks:
Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M. (2015) Human Resource Management: Gaining a Competitive Advantage 9th Ed. McGraw-Hill
Nel, P.S., Werner, A., Botha, C., du Plessis, A., Mey, M., Ngalo, O., Poisat, P., van Hoek, L. (2014) Human Resource Management. 9th Edition. Cape Town: Oxford University Press Southern Africa.
Meyer, M. (2012) Managing Human Resource Development. A strategic learning approach. 4 th edition. Durban: Lexis Nexis
Millmore, M., Lewis, P., Saunders, M., Thornhill, A. and Morrow, T. (2007) Strategic Human Resource Management. UK: Pearson Education Limited
Journal Articles & Reports
Tiwari, A., Prabhu, K., Doshi, R. (2015) “Transforming BASF into a Learning Organisation, Linking the Present with the Future.” Business Perspectives and Research. 3(1) pp66-80 (available from ebsco)
Shipton, H., Zhou, Q., and Mooi, E. (2013) “Is there a global model of learning organisations? An empirical cross-nation study. 24(12) 2278-2298 (available from ebsco)
10.1 Introduction Learning occurs at individual, work group and organisational levels and a key focus of SHRD is the creation of a learning environment and structural design, which promotes learning and development for performance improvement and competitiveness. This positions learning as an organisational capability such that those organisations that are able to learn more quickly than their rivals secure significant competitive advantage. It is this premise that has led to interest in the concept of the ‘learning organisation’ (Millmore et.al., 2007).
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Human Resource Development 10.2 Overview of the Learning Organisation The recent elevation in the status of learning can be attributed to a least two particular lines of argument. First is the notion that, to maintain a competitive advantage, organisations through collective interactions of their employees need to learn faster than the rate of change and faster than their competitors. Second is the notion that learning itself is one of the main sources, if not the main source of competitive advantage (Millmore et.al.;2007). The learning organisation learns from the environment, but actively encourages learning within the work environment. The learning environment encompasses the culture of the organisation. Learning occurs in all activities of the members of the organisation. From this perspective it is evident that the learning organisation represents major challenges for HRD in organisations (Meyer et.al; 2012). It is important then to consider those organisational practices and support mechanisms that help build towards a learning organisation. These frequently collate around:
The creation of a learning culture where learning and experimentation are actively promoted, as evidenced through such things as the resources allocated to learning and development activities.
Structural mechanisms to support organisational learning, such as routines for collecting, analysing, disseminating and applying information, and identifying and addressing learning and development needs as well as the organisation structure itself
The importance of evaluation as a continuous process that not only underpins the principle of the learning organisation and knowledge management but informs organisational investment in HRD/SHRD; and
The psychological maturity of an organisation’s human resources such that, for example, employees at all levels are receptive to the greater levels of accountability, autonomy and responsibility that underpin the construct of the learning organisation (Millmore et.al.; 2007).
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Human Resource Development While a learning organisation cannot exist in its idealised form, and is better viewed as an aspirational vision than can at best be pursued as a never-ending journey, some organisations will exhibit some of the characteristics of learning organisations (Millmore et.al.2007). 10.3 Characteristics of the Learning Organisation A learning organisation is different from the traditional organisation in that the culture is dynamic and requires that certain elements be entrenched in the culture. These characteristics according to Meyer et.al (2007) are as follows: 10.3.1 Flat organisational structure 10.3.2 Open communication 10.3.3 Teamwork 10.3.4 Empowerment 10.3.5 Inspired leadership 10.3.6 Innovation and change 10.3.7 Shared vision of quality 10.3.8 Systems approach 10.3.9 Job satisfaction and commitment 10.3.10 People –oriented and talent focus 10.3.11 External focus 10.3.12 Technology –driven 10.3.13 Learning opportunities 10.3.14 Action and results focus 10.3.15 Customer-orientated Activity Research the characteristics of learning organisations, and then determine whether you would consider the organisation in which you are employed a ‘learning organisation’ or one that is aspiring towards a ‘learning organisation’
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Human Resource Development 10.4 Learning Organisation Implementation Plan The learning organisation is an ideal organisation which means that no pure learning organisation exists. If a company actively encourages the characteristics of the learning organisation, such a company may be termed a learning organisation. Organisations must discover their own situations and decide which strategies and plans can be used in becoming a learning organisation. The generic model of the phases in creating a learning organisation depicted in Figure 10.1 can be adapted by organisations Assess learning culture ↓ Analyse results ↓ Communicate and disseminate results ↓ Present results to top management ↓ Create a knowledge management system ↓ Develop learning strategies ↓ Market and communicate learning ↓ Implementation ↓ Evaluation Figure 10.1 Generic model of learning organisation Implementation (Meyer et.al; 2012) Activity The management team of the organisation at which you are employed have realised the need to become a learning organisation in order to keep abreast of technological developments. Using the generic model of learning organisation implementation, develop a plan to transform your organisation into a learning organisation.
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Human Resource Development 10.5 Conclusion The concept of the learning organisation constitutes a new approach to learning and workplace performance that requires a new way of managing organisations. Not only does it necessitate changes to education, training and development interventions, but it also encompasses a totally new way of managing people, processes and systems in the modern organisation. A change in organisational culture is therefore needed in order to effect the change from a traditional organisation to a learning organisation. Learning is no longer restricted to an individual experience. Learning becomes a team and organisational process which requires new and innovative ways of learning and managing performance improvement. Learning becomes part of a continuous process of sharing information with people and the environment. To be of value to organisations, organisational learning must be encouraged, nurtured and managed for the improvement of performance. Have You Completed the ‘Essential Reading’ for this Part? Now that you have been introduced to this part, source and work through the textbook parts and journal articles listed in the “Essential Reading” list at the beginning of this part, It is essential that you read all of the textbook parts and journal articles listed.
QUESTIONS FOR REFLECTION After completing your study of this part, reflect on the following questions. (To adequately address these questions you will need to have completed all the ‘essential reading’ listed at the beginning of this part.) Read the case study below taken from Meyer et.al. (2012) and answer the questions that follow: Martex is an oil refinery with several plants throughout South Africa. The East London plant had found a new way of processing waste material. This processing is more efficient than what other refineries are using. Moreover, the process meets all environmental regulations. The parent company situated in Richards Bay saw the obvious benefits of getting the other refineries in Cape Town, Saldanha, Port Elizabeth, George and Durban to adopt this new process. If used in all refineries, it could save approximately R65 million a year.
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Human Resource Development The operations director, Zodwa Dlamini, gathered all the plant managers and chief engineers together to share information about how the new process works. All members agreed that it was a breakthrough, but only the Saldanha plant managed to follow the example set by the East London refinery. This was due to regular contact between these two refineries on the implementation of the new system. After a year Zodwa realised that only two plants were productive as a result of implementing the new system. After an investigation, she realised that most people, had more disincentives than incentives for adopting new processes. Each refinery had plenty of other things on its plate. This new procedure required installing some new equipment , and it meant changing some things that had been in place or a long time. Most supervisors and employees resisted any change to new procedures and technology. 1. Which characteristics of the learning organisation are evident at the East London plant? 2. Which characteristics of the learning organisation are absent at Martex? 3. How can resistance to the new procedures and technology be broken down? 4. Develop a management plan to move Martex from a traditional organisation to a learning organisation.
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CHAPTER 11: ORGANISATIONAL DEVELOPMENT (OD) Specific Learning Outcomes The overall outcome for this part is that, on its completion, the learner should be able to demonstrate a broad understanding of the field of HRM and HRD. This overall outcome will be achieved through the learner’s mastery of the following specific outcomes, in that the learner will be able to: 1. Provide an overview of Organisation Development (OD). 2. Describe the major characteristics of OD. 3. Discuss the link between OD, Strategy and Change. 4. Apply the 8-step process for leading organisational change. 5. Apply the model of the total organisation development process within an organisation. 6. Critically discuss the integration between HRD and OD activities.
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ESSENTIAL READING Learners are required to read ALL of the textbook parts and journal articles listed below. Textbooks:
Brown, D.R. (2014). An Experiential Approach to Organisation Development. England: Pearson New International Edition.
Blanchard and Thacker (2010) Effective Training. Systems, strategies, and Practices. Fourth Edition. New Jersey: Pearson Education
Meyer, M. (2012) Managing Human Resource Development. A strategic learning approach. 4th edition. Durban: Lexis Nexis
Journal Articles & Reports
Berner, A., Van Tonder, C.L. (2003) “The postmodern consumer: implications of changing customer expectations for organisation development in service organisations.” SA Journal of Industrial Psychology. 29(3) pp1-10 (sabinet)
Ortlepp, K., Kinnear, L. and Karadis, A. (2013) “Leadership coaching as a driver of successful organisational change in small businesses: a case study.” Journal of Contemporary Management Vol 10, pp 479-497 (sabinet)
Van Tonder, C. (2004) “Organisational development: purposefully engaging change.” Management Today. 20 (8) pp20-23 (sabinet)
11.1 Introduction Organisational Development (OD) is an effort planned, organisation-wide, and managed from the top, to increase organisation effectiveness and health through planned interventions in the organisation’s ‘processes’, using behavioural science knowledge. Organisational development or renewal is a series of techniques and methods that managers can use in their action research to increase the adaptability of the organisation (Nel et.al.,2014).
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Human Resource Development 11.2 Overview of Organisation Development Change becomes necessary when there is a noticeable gap between what an organisation is trying to do, and what it is actually accomplishing. It occurs when positive steps are taken to reduce this disparity. Change, and therefore renewal, is any alteration in the status quo. Without renewal efforts an organisation is often threatened by short-term shifts in market demands (Nel et.al. 2014). Organisational development is a change process through which employees formulate the change that’s required and implement it, often with the assistance of trained consultants. OD has several distinguishing characteristics: 1. It usually involves action research, which means collecting data about a group, department, or organisation, and feeding the information back to the employees so they can analyse it and develop hypotheses about what the problems might be. 2. It applies behavioural science knowledge to improve the organisation’s effectiveness. 3. It changes the organisation in particular direction – toward empowerment, improved problem solving, responsiveness, quality of work, and effectiveness (Dessler , 2013). Organisation development is an emerging discipline aimed at improving the effectiveness of the organisation and its members by means of a systematic change programme. A truly effective organisation is one in which both the organisation and the individual can grow and develop. An organisation with such an environment is a “healthy” organisation. The goal of organisation development is to make organisations healthier and more effective (Brown, 2014).
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Human Resource Development 11.2.1 The Characteristics of OD Table 12.1 Major Characteristics Characteristics 1. Change
Focal Areas
OD is a planned strategy to bring about organisational change.
Change
effort
aims
at
specific
objectives and planned by managers to achieve goals 2. Collaborative approach
Involves a collaborative approach to change
Includes involvement and participation of the organisation members most affected by the changes
3. Performance orientation
OD programmes include an emphasis on ways to improve and enhance performance and quality
4. Humanistic Orientation
OD relies on a set of humanistic values about people and organisations
Emphasis on increased opportunity and use of human potential
5. Systems approach
OD represents a systems approach concerned with the interrelationship of divisions, departments, groups and individuals as interdependent subsystems of the total organisation
6. Scientific method
OD is based upon scientific approaches to increase organisation effectiveness
Scientific approaches supplement practical experience
Source : (Brown, 2014)
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Human Resource Development 11.2.2 MANAGING ORGANISATIONAL CHANGE PROGRAMMES The planning and implementation of strategy involves change – both in the way the organisation interacts with its external environment, and in how it manages its internal operation. OD deals with creating and implementing planned change. Thus, strategic planning and OD should go hand in hand (Blanchard and Thacker, 2014). 11.2.2.1
OD, STRATEGY and CHANGE
Organisational change is an inherent part of the process of developing and implementing strategy (Blanchard and Thacker, 2014). Organisational turnarounds often start with a change in the firm’s strategy, mission and vision – with strategic change (Dessler, 2014) The field of OD can help organisations manage change effectively. OD techniques provide methods for change to occur in an objective, goal-directed manner that addresses the needs of both the organisation and the employees affected by the change (Blanchard and Thacker; 2014). The strategic planning process, if done properly, is an OD approach to change. The first step, establishing a compelling need for change, occurs in strategic planning during the environmental scanning phase. The need for change is made apparent when the strategic planners identify the threats and opportunities in the external environment and compare that information with what the organisation is currently doing. A need for change is established when a gap exists between what the organisation is doing and what the external environment requires (or will require). Next, the company’s business objectives are set. The company’s current strengths and weaknesses are analysed to determine what internal changes are necessary. This information provides the compelling need for internal change, and internal strategic objectives are developed for these areas. The rest of the steps in the change model concern the development of tactical activities to achieve the strategic objectives (Blanchard and Thacker, 2014).
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Human Resource Development 11.2.2.2
Lewins Change Process
Psychologist Kurt Lewin formulated a model to summarise what he believed was the basic process for implementing change with minimal resistance. To Lewin, all behaviour in organisations was a product of two kinds of forces: those striving to maintain the status quo and those pushing for change. Implementing change thus means reducing the forces for the status quo or building up the forces for change. Lewin’s process consisted of three steps: 1. Unfreezing means reducing the forces that are striving to maintain the status quo, usually by presenting a provocative problem or event to get people to recognise the need for change and to search for new solutions 2. Moving means developing new behaviours, values and attitudes. The manager may accomplish this through organisational structure changes, through conventional training and development activities, and sometimes through the other organisational development techniques (such as team building) 3. Refreezing means building in the reinforcement to make sure the organisation doesn’t slide back into its former ways of doing things. (Dessler, 2014). 11.2.2.3
Leading Organisational Change
Managing change is important in today’s challenging environment. Professor Edward Lawler says that as more employers face rapid competitive change, “focusing on strategy, organisation development, and organisational change is a high payoff activity for the HR organisation. (Dessler, 2014). The case of Nokia below illustrates an organisation faced with the decision about what to change. Case Study - Example: NOKIA A few years ago, Nokia was the worldwide leader in handsets and smartphones. Then Apple introduced its first iPhone. Within a year, Nokia’s smartphone market share plummeted, and its sales increasingly relied on low-price handsets. By 2010, Nokia’s board knew something had to be done. It appointed a new CEO with Silicon Valley experience, Stephen Elop. He knew Nokia faced pressing problems. Its smartphone share was down, and it was losing low-cost handset business to Asian competitors.
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Human Resource Development Nokia’s R&D was behind the times. Its Symbian mobile operating system couldn’t handle many of the leading applications that Apple’s and Microsoft’s systems could. Stephen Elop had to jumpstart Nokia. Faced with situations like these managers like Stephen Elop can change one or more of five aspects of their companies – their strategy, culture, structure, technologies, or the attitudes and skills of the employees. Elop embarked on a strategy to renew Nokia by streamlining Nokia’s product development process and by entering into a partnership with Microsoft with the aim of introducing a new Microsoft-based smartphone within a year. In terms of structure Nokia split responsibility for its smartphones and handsets into two new units. He replaced managers in Nokia’s mobile phones unit and markets unit. In technology, Elop reduced the Symbian operating system’s central role in its smartphones replacing it with Microsoft’s mobile operating system. With its culture, Elop had his new management team change the firm’s culture, for instance, by impressing on Nokia’s employees the need to eradicate bureaucratic decision making and to execute on Nokia’s new strategy. (Dessler, 2014) 11.2.2.4 An 8-step process for leading organisational change A CEO needs a process for leading change such as that demonstrated in the case of Stephen Elop at Nokia. 1. Establish a sense of urgency. This often requires creativity. 2. Mobilise commitment through joint diagnosis of problems. Having established a sense of urgency the leader may then create one or more task forces to diagnose the problems facing the company. Such teams can produce a shared understanding of what they can and must improve and thereby mobilise commitment. 3. Create a guiding coalition. Most CEO’s create a guiding coalition of influential people. They work together as a team to act as missionaries and implementers
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Human Resource Development 4. Develop and communicate a shared vision. For example, in the case of Nokia’s CEO at the time, Stephen Elop’s vision was of a streamlined Nokia moving fast to build advanced smartphones based on Microsoft’s operating system, using multiple forums such as emails, formal and informal interaction. 5. Help employees make the change. Help employees address any impediments to change if any. For example, Elop quickly replaced many of Nokia’s top and middle-level managers. 6. Consolidate gains and produce more change. Aim for attainable short-term accomplishments. Use the credibility from these to change the remaining systems, structures, and policies that don’t fit well with the company’s new vision. 7. Reinforce the new ways of doing things with changes to the company’s systems and procedures. For example, use new appraisal systems and incentives to reinforce the desired behaviours. Reinforce the new culture by ensuring that the firm’s managers role-model the company’s new values. 8. Finally, the leader must monitor and assess progress. This involves comparing where the company is today with where it should be based on measurable milestones. At Nokia for instance, “How many new products has the company introduced?” What is our smartphone and handset market shares?” (Dessler, 2014) Activity Assume that the organisation at which you are currently employed is affected by rapid technological, social, economic or some sort of organisational change. Using the 8-step process for leading change, discuss how you as an HRD manager would lead the organisational change process at your organisation.
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Human Resource Development 11.2.2.5
A MODEL FOR ORGANISATIONAL DEVELOPMENT
OD programmes are based upon a systematic analysis of problems and a top management actively committed to the change effort. The purpose of such a programme is to increase organisational effectiveness by the application of OD values and techniques. Many Organisational Development programmes use the action research model. Action research involves collecting information about the organisation, feeding it back to the client system, and developing and implementing action programmes to improve system performance. The manager also needs to be aware of the processes that should be considered when one is attempting to create change (Brown, 2014). Figure 11.1 depicts a five-stage model of the total organisation development process.
Figure 11.1 Organisation Development’s Five Stages Source : (Brown, 2014) Each stage of the process is dependent on the preceding one, and successful change is more probable when each of these stages is considered in a logical sequence.
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Human Resource Development Activity Refer to the text, Brown (2014) Experiential Approach to Organisation Development. 8 th edition. Pearson Research the VW scandal dubbed the “diesel dupe” and the resignation of Martin Winterkorn, the CEO, at the time of the scandal and discuss, using the organisation development model in the text stated above, how VW would apply an organisation-wide approach to the structural changes they faced 11.2.2.6
INTEGRATING HRD AND OD ACTIVITIES
The most effective way to ensure the seamless implementation of performance improvement plans is to integrate HRD and OD. Trainers and OD professionals interests are intimately connected. Each provide a valuable service to the other. Trainers and OD professionals have differences in the nature of the change they are responsible for. One reason for the division between them is that companies typically organise around their different functional activities, and OD and HRD departments are often separated. This separation increases the differences in perspective, role, value of service, clients, etc. A solution would be to house them together in the form of a performance improvement department within HR. This would be an example of a structural change to align the organisation’s internal structure with its strategic direction (Blanchard and Thacker, 2014).
Have You Completed the ‘Essential Reading’ for this Part? Now that you have been introduced to this part, source and work through the textbook parts and journal articles listed in the “Essential Reading” list at the beginning of this part. It is essential that you read all of the textbook parts and journal articles listed.
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Human Resource Development QUESTIONS FOR REFLECTION After completing your study of this part, reflect on the following questions. (To adequately address these questions you will need to have completed all the ‘essential reading’ listed at the beginning of this part.) 1. Discuss the link between OD, strategy and change and then discuss how HRD may be integrated into OD activities.
2. Analyse the HRD environment at which you are currently employed at and discuss whether there exists a distinct link between HRD and OD activities or whether these departments operate separately
3. Assume you are the HRD manager at the organisation at which you are employed. Consider the competitive strategy of your organisation and provide recommendations on the integration of OD activities into the organisations strategic plan.
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CHAPTER 12: HUMAN RESOURCE TECHNOLOGY Specific Learning Outcomes The overall outcome for this part is that, on its completion, the learner should be able to demonstrate a broad understanding of the field of HRM and HRD. This overall outcome will be achieved through the learner’s mastery of the following specific outcomes, in that the learner will be able to: 1. Distinguish between HRIS, E-HRM and E-learning. 2. Discuss the benefits and types of e-learning methods. 3. Develop a comprehensive management plan for the implementation of e-learning within an organisation. 4. Explain how social media can be used as an option for e-learning.
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ESSENTIAL READING Learners are required to read ALL of the textbook parts and journal articles listed below. Textbooks:
Meyer, M. (2012) Managing Human Resource Development. A strategic learning approach. 4th edition. Durban: Lexis Nexis
Wärnich, S., Carrell, M.R., Elbert, N.F., Hatfield, R.D (2015) Human Resource Management in South Africa. United Kingdom: Cengage Learning Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M. (2015) Human Resource Management: Gaining a Competitive Advantage 9th Ed. McGraw-Hill
Nel, P.S., Werner, A., Botha, C., du Plessis, A., Mey, M., Ngalo, O., Poisat, P., van Hoek, L. (2014) Human Resource Management. 9th Edition. Cape Town: Oxford University Press Southern Africa.
Journal Articles & Reports
Bothma, R. (2015) “Five trends that will transform technology: technology upgrade – word of mouse” HR Future. July. Pp34-35 (sabinet)
Jackson, H.G. (2015) “HR Technology: The future is Here” HR Magazine. 60(8) pp6-6 (ebsco)
Lovely, K. (2014) “Delivering on the Promise of Improves HR Service Delivery: Why the core HRMS is not enough.” Workforce Solutions Review. 4(6) pp 4-7 (ebsco)
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Human Resource Development 12.1 Introduction HR is increasingly playing a strategic role as business partner in the organisation and as such, adds value through making high impact decisions. HR stays the custodian of HRM functions, policies, systems and processes, but it also acknowledges the role others play in the collaborative effort of attaining strategic goals. It provides HR executives, line managers, and employees with HR information and knowledge that enable them to make sound decisions. The devolution of the HR function and dissemination of HR knowledge throughout the organisation with complete online support for improved decision-making is labelled E-HRM (Nel et. al., 2014).
12.2 Overview of HRIS, E-HRM and E-Learning One of the most significant issues faced by modern organisations is the use of technology to streamline activities, cut costs, improve connectivity and efficiency and increase business effectiveness, thus moving from labour intensive to technology-intensive activities. Coupled to this are the ever-changing environment and a workforce who have different expectations and needs; in this era where they are more connected via social media than ever before (Warnich et.al., 2015). Greater use of technology has led to the use of human resource management systems (HRMS), also called human resource information systems (HRIS), which are integrated systems providing information used by HR managers in decision-making. Sophisticated HRIS keep track of employee information, such as who’s doing what jobs and where, what are they paid and what training they have already had. The delivery of some HR services online through Web-based HR home pages has led to the development of what may be termed E-HR (or E-HRM) (Warnich et.al, 2015). 12.3 Distinction between E-HRM and HRIS Confusion can arise concerning the distinction between E-HRM and HRIS. Warnich et.al.(2015) defines HRIS as an electronic system used to acquire, store, manipulate, analyse, retrieve and distribute information regarding an organisation’s human resources. Electronic human resource management, or E-HRM reflects a philosophy for the delivery of HR; it uses information technology, particularly the Web, as the central component of delivering efficient and effective HR services. 105
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Human Resource Development Organisations embracing E-HRM do not simply use technology to support HR, rather they see technology as an enabler for things to be done differently in the HR function by changing the manner in which information flows and how social interaction and communication take place. 12.4 Electronic Learning (E-Learning) Technological applications have become a necessity in society and the modern business environment. All jobs and functions are affected by information technology. How does technology affect training in the workplace and are HRD practitioners equipped to deal with the technology revolution (Meyer et.al., 2012). In response to the technology challenge, some companies have started to make use of technologybased training or electronic learning (e-learning), the application of electronic technological systems to support the learning process (Meyer et.al., 2012). E-learning, commonly used interchangeably with computer-based training (CBT), online learning, and web-based training refers to instruction and delivery of training by computer through the Internet or Web. To enhance learning all of these training methods can include and integrate into instruction text, interaction using simulations and games, video, collaboration using blogs, wikis, and social networks, and hyperlinks to additional resources. The training programme can be accessed using a password through the public Internet or the company’s private intranet (Noe et.al., 2015). There are many potential features that can be included in online learning to help trainees learn and transfer training to their jobs. For example, online programmes that use video may make it an interactive experience for trainees. That is, trainees watch the video and have the opportunity to use the keyboard or touch the screen to answer questions, provide responses to how they would act in certain situations, or identify the steps they would take to solve a problem. Interactive video is especially valuable for helping trainees learn technical or interpersonal skills.(Noe et.al.,2015)
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Human Resource Development Case Study - example Sanofi-Aventis U.S. was behind its competition in product knowledge within the diabetes sales force. The company needed a training solution that the sales force could complete in the field or while traveling. As a result, the company developed a self-paced e-learning solution – a virtual campus called Diabetes University-
where learners can be guided through the campus by a “professor” and
participate in different types of learning activities including games, videos, and narrated text.
12.4.1 Benefits of E- Learning
Course administration
Financial management
Management reports
Resource management
Cost savings
Learner needs
Effective learning
Evaluation
12.4.2 Types of e-learning methods
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Interactive multimedia
Web-based training
Video conferencing
Internet
Intranet
EPSS
Social learning
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Human Resource Development 12.4.3 E-Learning Implementation process 1
2
E-learning needs analysis
E-learning platform and design
Select analysis methods
Assign project team
Assess training needs
Review needs analysis report
Assess learner profile
Design a project team
Conduct cost-benefit analysis
Acquire e-learning resources
Obtain management support
Develop e-learning system and platform
Train e-learning staff
Market e-learning system
5
3
E-learning improvement
E-learning delivery
Review evaluation reports
Revise project plan
Compile improvement plans
Assign responsibility
Communicate to whole organisation
Present programme
4 Evaluation
Reaction
Learning
Behaviour
Results
Figure 12.1 E-Learning implementation Process (Meyer et.al, 2012) The implementation of e-learning should be carefully planned and managed to ensure effective training and transfer of skills. When making decisions regarding e-learning, the phases and sub-steps indicated in Figure 12.1 should be used. By implementing e-learning and accelerating learning in and outside the workplace by means of mlearning, and s-learning, progressive South African organisations can gain a competitive edge if they deliver to their customers quality products and services better than those of and more quickly than their competitors.
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Have You Completed the ‘Essential Reading’ for this Part? Now that you have been introduced to this part, source and work through the textbook parts and journal articles listed in the “Essential Reading” list at the beginning of this part. It is essential that you read all of the textbook parts and journal articles listed. QUESTIONS FOR REFLECTION After completing your study of this part, reflect on the following questions. (To adequately address these questions you will need to have completed all the ‘essential reading’ listed at the beginning of this part.) 1. Prepare a presentation for the top management at your organisation to convince them about the benefits of E-learning for your organisation 2. Include in your presentation the various types of e-learning methods and highlight the method/s that would be most suitable to your organisation 3. Suppose you were tasked to implement e-learning in the organisation at which you are currently employed. Discuss the process you would follow and the factors you would consider when planning and designing e-learning implementation. 4. Consider the benefits of e-learning for your organisation.
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CHAPTER 13: HUMAN RESOURCE MEASUREMENT Specific Learning Outcomes The overall outcome for this part is that, on its completion, the learner should be able to demonstrate a broad understanding of the field of HRM and HRD. This overall outcome will be achieved through the learner’s mastery of the following specific outcomes, in that the learner will be able to: 1. Understand HR measurement. 2. Apply HR metrics in the correct context. 3. Discuss and apply and calculate the various types of HR metrics. 4. Critically discuss the application of HR metrics in its contribution towards organisational goals.
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Human Resource Development ESSENTIAL READING Learners are required to read ALL of the textbook parts and journal articles listed below. Textbooks:
Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M. (2015) Human Resource Management: Gaining a Competitive Advantage 9th Ed. McGraw-Hill
Nel, P.S., Werner, A., Botha, C., du Plessis, A., Mey, M., Ngalo, O., Poisat, P., van Hoek, L. (2014) Human Resource Management. 9th Edition. Cape Town: Oxford University Press Southern Africa.
Meyer, M. (2012) Managing Human Resource Development. A strategic learning approach. 4 th edition. Durban: Lexis Nexis
Journal Articles & Reports
Lawler III, Edward, E., Levenson, A., Boudreau, J.W. (2004) HR Metrics and Analytics: Use and Impact. Human Resource Planning. 27 (4) pp27-35 (sabinet)
Douthitt, S., Mondore, S. (2013) “Creating a Business-Focused HR Function with Analytics and Integrated Talent Management.” People and Strategy. 36 (4) pp 16-21(Ebsco)
(2009) “Metrics and Analytics Star in HRIT Initiatives this Year.” HR Focus. 86(1) pp10-11
13.1 Introduction HR departments are continually under pressure to illustrate the financial value that they add to the organisation which is expressed as ROI (return on investment). The HRIS enables the HR department to determine the baseline and cost of many activities, behaviours and programmes in the organisation, such as labour turnover, absenteeism or training interventions. This constitutes HR metrics, which is information expressed in quantities, such as percentages, ratios or rand value, used to highlight HR trends and measure the impact of HR processes and interventions. An example of a HR metric is the percentage of newly appointed employees who leave the company within six months due to performance (Nel and Werner, 2014). 111
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Human Resource Development 13.2 Overview of HR Measurement Being able to measure what you are doing is a big part of human resource management today and being able to measure what you are doing is an integral part of the HR strategy process. First, management translates its strategic plan into workforce requirements, in terms of measurable worker competencies and behaviours (such as outstanding service). Given these workforce requirements, the human resource manager then formulates supportive HR strategies, policies, and practices (such as new training programmes), intended to produce these workforce competencies. Finally, the HR manager picks measures by which to gauge whether his or her new policies and practices are producing the required employee competencies and behaviours. The measures (or “metrics”) you use may be broad organisational measures such as ROI and profit margins or they may focus narrowly on specific human resource management and activities (such as “hours of training per employee”) The bottom line is that measuring “how we’re doing, and why” is important for managing one’s human resources (Dessler, 2014). 13.3 HR Metrics It is important that we measure the impact of HR initiatives and projects in terms of the cost and the impact they have on the company. This should be done using different types of measurements known as HR metrics and may include:
Diagnostic measures
Evaluative measures and
Human capital measures
Each of these are used for different purposes. Diagnostic measures can be used for simple calculations of employee turnover and the number of applications received for each vacancy, among other things. Diagnostic measures can also be used for compensation-related measurements such as the calculation of overtime costs or for training and development for the calculation of the total cost per employee for training. In general, diagnostics measures are used to generate regular reports that management can use to measure a variety of HR initiatives.
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Human Resource Development Evaluative measures mainly focus on the measurement of effectiveness. This is usually done by means of quantitative data, for example when companies determine the reduction in recruitment costs for jobs vacated by retirees to measure the effectiveness of the use of internal staffing and succession planning, or qualitative data, for example the measurement of the impact of good communication in an organisation on the level of employee engagement. Human Capital metrics includes looking at the metrics of the business that have an impact on the whole business, for example the impact of management practices on the workforce. Human capital metrics measure value more than cost whilst HR metrics focus more on costs The important aspect is that the correct measures are used for the particular aspect that you want to measure (Wärnich et.al., 2015). 13.3.1 Types of HR metrics used to drive organisational strategy 13.3.1.1
HR metrics in staff acquisition
During HR planning, previous levels of supply and demand are used to estimate future talent requirements. In recruitment, different supply channels are compared. For example, how many applicants applied via the graduate recruitment programme and how many via the Internet recruitment programme? What percentage of those who applied was short-listed, what percentage of those short-listed was selected and how many of those selected accepted the offer? The cost of recruitment can be determined by taking overall recruitment costs and dividing it by the number of people recruited. The yield: cost ratio shows the most effective and efficient recruitment method. The average time taken to fill positions can also be determined by dividing the number hired into the total days taken to fill a job. During selection, psychometrics, which is just another form of HR metrics, gives a quantitative indication of an applicant’s abilities and aptitude. Each selection criteria, such as experience and presentation skill, can be given a weight in terms of importance and each applicant can be rated on each criteria and a final score determined (Nel and Werner, 2014).
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Human Resource Development 13.3.1.2
HR metrics in employment equity
The Employment Equity Act requires that employers prepare and implement an employment equity plan that complies with the new regulations published by the Department of Labour in 1999. These regulations stipulate the exact manner in which designated employers must analyse their workforce and the relevant information that must appear in their equity reports. The online Employment Equity Report is available on the Department of Labour website (labour.gov.za). The report is divided into sections that allow reporting on the organisation’s progress regarding its business’ goals when it comes to recruitment, promotion, skills development and other elements of the organisation’s Employment Equity Plan. (Nel and Werner, 2014) 13.3.1.3
HR metrics in absenteeism management
Absenteeism is defined as the non-attendance of an employee when scheduled to work (Nel and Werner, 2014). Whatever the reason for absence there is no doubt that it impacts on the organisation’s ability to meet its objectives and puts pressure on those who have to cover the extra workload. The costs of unacceptably high levels of absence are normally expressed financially, and are based on calculating the value of lost production and sick payments. These financial measures also include:
The costs of additional staffing levels and overtime working to cover anticipated absences;
The cost of replacement labour;
Costs associated with delayed production and disruptions to planning schedules;
Costs associated with loss of quality or service levels;
Costs resulting from low morale and dissatisfaction (Banfield and Kay, 2008).
Monitoring absence rates forms a key element of absence management and most organisations track absenteeism on a weekly, or monthly basis to monitor the effectiveness of absence management strategies. This often involves calculating absence using a formula and comparing the resultant figure with an internal or external benchmark standard (Banfield and Kay, 2008). Two sets of HR metrics are generally used to measure absenteeism:
The total time lost or gross absence rate (GAR) gives the percentage of work time lost owing to absenteeism (Nel and Werner, 2014).
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It is calculated as follows:
Total time lost =
total number of days lost owing to absence over the period _____________________________________
X 100 %
Average number of employees x total workdays over the period
Example: A team of five people who each work five days a week , less bank holidays, can work a total of (365 – 104 – 8) 253 days each, making a team total of 1265 potential working days. If 50 days were to be lost through absence, the team’s absence rate would be: 50 Total time lost =
_________
X 100
5 x 253 =
3.95%
The international benchmark for absenteeism is three percent. It is unlikely that an organisation can drive absenteeism down to 0 percent as people do get sick. However, competitive organisations strive to bring the absenteeism rate down to less than three percent. (Nel and Werner, 2014).
One of the limitations of the lost time rate calculation is that it cannot distinguish the pattern of absence in terms of whether few employees are taking long periods of absence or whether many employees have infrequent bouts of absence. (Banfield and Kay, 2008). Consequently the calculation of Absence frequency gives an indication of the number of absence incidents per employee. An incident is one spell of absence, irrespective of the number of days involved. A high absence frequency rate suggests that absence incidents are of a shorter duration, and thus more disruptive to the organisation.
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Human Resource Development It is easier and less costly to make contingency plans when it is known that an employee will be absent for a longer period than for short, unexpected absence incidents. The absence frequency rate is calculated as follows and expressed as a ratio:
Number of absence incidents over the period
Absence frequency Rate (AFR) =
_____________________________________
X 100
Average number of employees employed over the period
13.3.1.4
HR metrics in labour turnover and retention
Labour turnover is considered as the permanent withdrawal from the work situation and can be disruptive and costly to an organisation. Therefore the retention of key talent in organisations has become a major challenge for many organisations, especially with regards to valued employees with scarce skills.(Nel and Werner, 2014). It is inevitable, that, from time to time, employees will choose to leave and either pursue careers elsewhere, retire, take a career break or return to education (Banfield and Kay, 2008) It is important that employers find out what the reasons are why employees are leaving so that effective strategies can be implemented to retain them. A certain amount of labour turnover can be beneficial, as long as it provides the organisation with new, enthusiastic employees who bring creative ideas with them (Banfield and Kay, 2008). However, high turnover rates create particular pressures for the HR department, which is primarily responsible for replacing those who leave, but also for line managers who face disruption to production and service standards (Banfield and Kay, 2008). Labour turnover, according to (Nel and Werner, 2014) is divided into controllable and uncontrollable labour turnover, depending on management’s ability to prevent it or not.
Controllable labour turnover : Voluntary resignations – can be controlled if management provides better leadership, wages, opportunities, working conditions, and so on. Dismissals – can be prevented through proper employment, training, policies, and procedures. Only controllable labour turnover is included in the measurement of labour turnover
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Uncontrollable labour turnover: Includes death, permanent illness, pregnancy, retirement and retrenchment. These are recorded, but not included, in the measurement of labour turnover, as no reasonable action from management can reduce or prevent them.
HR metrics for labour turnover: Labour turnover is usually measured over a 12 month period to smooth out seasonal differences to make comparison possible (Nel and Werner, 2014), but can be tracked weekly or monthly to provide a more detailed and contemporary understanding of labour turnover (Banfield and Kay, 2008). Labour turnover (LTO) may be calculated as follows: V + D (voluntary resignations and dismissals)
LTO =
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X 100 %
Average number of employees over a period
Example: (Banfield and Kay, 2008) If 25 people left over the last 12 months and the current number of employees is 275, then turnover would be calculated as: 25)
LTO = =
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X 100 %
275 9.09 %
The above analysis provides an indication of the course of action that should be taken in order to reduce labour turnover. If a high percentage of employees leave the organisation voluntarily soon after employment, the employment, induction, and placement practices should be re-evaluated. If many employees are dismissed, employment practices as well as training should be reconsidered. Employees who leave after reasonable time periods often feel that they have started to stagnate and leave for better opportunities or more challenges. 117
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Have You Completed the ‘Essential Reading’ for this Part? Now that you have been introduced to this part. source and work through the textbook parts and journal articles listed in the “Essential Reading” list at the beginning of this part. It is essential that you read all of the textbook parts and journal articles listed. QUESTIONS FOR REFLECTION After completing your study of this part, reflect on the following questions. (To adequately address these questions you will need to have completed all the ‘essential reading’ listed at the beginning of this part.) Read the case study below taken from Nel and Werner (2014) and answer the questions that follow: HR problems at Petal Engineering Petal Engineering, an established engineering and construction company, has recently won a tender to build a primary health care clinic, library and nursery school in a local community. A few project teams were put together to do the planning: Environmental studies were required, building plans had to be drawn up, extensive quantitative surveying was required, community leaders had to be involved and construction had to be organised. After a few months, the following problems surfaced:
The company struggled to attract and retain employees with scarce skills
Recruitment and selection was slow and ineffective
Many engineers threatened to resign
Absenteeism levels in the company increased rapidly
The skill levels of construction workers proved to be inadequate
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Human Resource Development The company contracted an HR consultant to assist them with addressing these problems. The HR consultant introduced the management of Petal Engineers to the use of metrics as a diagnostic tool and assisted them in collecting information about their HR processes. The analysis revealed that it took approximately three months to fill an engineering position in comparison to eight weeks average for project leaders. Of the engineers recruited through employment agencies, only 40 per cent stayed in the company. Exit interviews with engineers who resigned and a focus group discussion with existing engineers revealed that they were mostly dissatisfied with their remuneration. The HR consultant also assisted the company in determining the number of construction workers and the level of skill required for specific projects and a gap analysis was done. A link between skill levels and lost time injuries were also established. The cost of training employees in the company versus sending employees to an external training provider was determined. The GAR for the company as well as for different groupings of employees was calculated. It was found that absenteeism was exceptionally high (13 percent) among construction employees belonging to Project team 3. This was also the team experiencing the highest turnover among engineers. Once all the figures were presented to senior management, they understood their HR problems better and were better able to decide what interventions to take, and how their decisions would affect the long-term direction of the company, 1. Discuss how Petal Engineering can use HR Metrics to address the attraction and retention of employees. 2. Discuss how HR metrics in absenteeism management may be used to assist Petal Engineering to address their absenteeism levels in the company. 3. Analyse the labour turnover at Petal Engineering and discuss the use and significance of HR metrics as applied to this situation. 4. Discuss the overall contribution that the HR department can make, by use of HR metrics, to the overall attainment of organisational goals.
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BIBLIOGRAPHY In addition to the texts referenced under “Essential Reading” at the beginning of each part of this Study Guide, the following additional texts were utilised in the preparation of this Study Guide:
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(2013) "Talent show: Training workers for a high-tech world". Human Resource Management International Digest. Vol. 21, No. 3, pp.22 – 25
Alagaraja, M. (2013) “Mobilising organisational alignment through strategic human resource development.” Human Resource Development International. 16(1) pp74-93 (available from ebsco)
Ammons, D. (2015) “Getting Real about Performance Management.” Public Management. 97(11) pp8-11(available from ebsco)
Arachchige, B.J.H. (2014)”Absence of Induction and its impact on the organisation.” IUP Journal of Management Research. 13(2) pp7-16(available form ebsco)
Berner, A., Van Tonder, C.L. (2003) “The postmodern consumer: implications of changing customer expectations for organisation development in service organisations.” SA Journal of Industrial Psychology. 29(3) pp1-10 (sabinet)
Bielski, L. (2007) “Getting to “yes” with the right candidates.” ABA Banking Journal 99 (3) pp 30-51 (available form Ebsco)
Björkman, I., Ehrnrooth, M., Mäkelä, K., Smale, A., & Sumelius, J. (2013) “Talent or not? Employee reactions to talent identification”. Human Resource Management. Vol. 52, No. 2, pp 195-214. (emerald)
Blanchard and Thacker (2010) Effective Training. Systems, strategies, and Practices. Fourth Edition. New Jersey: Pearson Education Botha, A.; Bussin, M. and de Swardt, L. (2011) “An employer brand predictive model for talent attraction and retention”. South African Journal of Human Resource Management. Vol 9, No. 1(emerald)
Bothma, R. (2015) “Five trends that will transform technology: technology upgrade – word of mouse” HR Future. July. Pp34-35 (sabinet)
Bourne, A. and Haddon, D. (2010) "An evidence-based approach to developing HR strategy: transformation in Royal Mail". Strategic HR Review, Vol. 9, No.1, pp.10 – 16
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Bracken, D.W. and Church, A.H. (2013) “The ‘NEW” Performance Management Paradigm: Capitalising on the unrealised potential of 360 degree feedback.” People and Stratgey. 36(2) pp34-40 (available from ebsco)
Brown, D.R. (2014). An Experiential Approach to Organisation Development. England: Pearson New International Edition.
Buckingham, M. and Goodall, A. (2015) “Reinventing Performance Management.” Harvard Business Review. 93(4) pp40-50 (available from ebsco)
Carr, S. C., McWha, I., MacLachlan, M. & Furnham, A. (2010) “International-Local Remuneration Differences Across Six Countries: Do They Undermine Poverty Reduction Work?” International Journal of Psychology. October, 45 (5), pp 321 – 340. (available from EBSCO).
Cascio, W.F. (2014) “Leveraging employer branding, performance management and Human resource development to enhance employee retention.” Human Resource Development International. 17(2) pp121-128 (available from ebsco)
Chabok, M., Javadi, M., Jafari, A., Yousefi, S., & Mousavi, S. (2013) “New Strategies for Human Resource Development in Organisations”. Interdisciplinary Journal of Contemporary Research in Business. Vol. 5, No. 1, pp 1122- 1125. (emerald)
Clardy, A. (2008) “The strategic role of human resource development in managing core competencies.” Human Resource Development International. 11(2) pp183-197 (available from ebsco)
Dave, U. (2006) “Human Resources: The Value Proposition”. Management Today, Vol. 22, No. 3, pp 8-10 (emerald)
De Waal, A.A. (2007) “Is Performance Management Applicable in Developing Countries?: The Case of a Tanzanian College.” International Journal of Emerging Markets. 2 (1), pp 69 – 83. (available from Emerald).
Dessler, G. (2014) Human Resource Management. Fourteenth edition. England: Pearson Education Limited
Douthitt, S., Mondore, S. (2013) “Creating a Business-Focused HR Function with Analytics and Integrated Talent Management.” People and Strategy. 36 (4) pp 16-21(Ebsco)
English, K.T. (2015) “Putting it all together: Benefits Integration Boosts Health, Productivity.” Benefits Magazine. 52 (10), pp 32-37 (available from ebsco)
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Ervan, L.E. (2012) The Role of Human Resource Management in Risk Management. Available from: http://www.extension.org/pages/15506/the-role-of-human-resource-management-inrisk-management#.ViTHxGcaLIU.
Faragher, J. (2015) “How to find talent on a budget…without cutting corners.” People Management. Pp 44-47(available form ebsco)
Goldberg, S. and Dyer, C. (2012) Reassessing HR Risk Management. Available from: http://hreonline.co./HRE?view?story.jhtml?id=534354685.
Grobler, P., Bothma, R., Brewster, C., Carey, L., Holland, P., and Wärnich (2012) Contemporary Issues in Human Resource Management. South Africa: Oxford University Press
Grobler, P.A. & De Bruyn, A.J. (2011) “Flexible Work Practices (FWP) - An Effective Instrument in the Retention of Talent: A Survey of Selected JSE-Listed Companies.” South African Journal of Business Management. December, 42 (4), pp 63 – 78. (available from Sabinet)
Gubman, E. (2004) “HR Strategy and Planning: From Birth to Business Results.” Human Resource Planning. 27(1), pp13-23 (available from Ebsco)
https://www.youtube.com/watch?v=zJLiNKV_Oso
Jackson, H.G. (2015) “HR Technology: The future is Here” HR Magazine. 60(8) pp6-6 (ebsco)
Jana, F. and Jan, R. (2015) “Get strategic Human resource Management Really Strategic: Strategic HRM In Practice.” International Journal of Management Cases. 17 (4) pp148-155 (available from Ebsco)
Katz, L.M. (2015) “Cool and Competent) HR Magazine. 60(2) pp 56-60 (available form ebsco)
Kramer, R. (2014) “Beyond Strategic human resource management:is sustainable human resource management the next approach?” International Journal of Human Resource Management. 25(8) pp1069-1089 (available from Ebsco)
Lawler III, Edward, E., Levenson, A., Boudreau, J.W. (2004) HR Metrics and Analytics: Use and Impact. Human Resource Planning. 27 (4) pp27-35 (sabinet)
Lovely, K. (2014) “Delivering on the Promise of Improves HR Service Delivery: Why the core HRMS is not enough.” Workforce Solutions Review. 4(6) pp 4-7 (ebsco)
Mackenzie, C.A., Garavan, T.N. and Carbery, R. (2012) “Through the looking glass: challenges for human resource development (HRD) post the global financial crisis – business as usual?
Macleer, B. and Shannon, J. (2003) “Does HR Planning Improve Business Perofrmance.” Industrial Management 45(1) (available from Ebsco)
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Marler, J.H. (2012) “Strategic Human Resource Management in Context: A Historical and Global Perspective.” Academy of Management Perspectives. 26(2) pp6-11 (available from ebsco)
Meyer, M. (2012) Managing Human Resource Development. A strategic learning approach. 4th edition. Durban: Lexis Nexis
Meyer, M., Roodt, G., Robbins, M. (2011) Human resources risk management: Governing people risks for improved performance. SA Journal of Human Resource Management. 9(1) pp 1-12
Millmore, M., Lewis, P., Saunders, M., Thornhill, A. and Morrow, T. (2007) Strategic Human Resource Management. UK: Pearson Education Limited
Nel, P.S., Werner, A., Botha, C., du Plessis, A., Mey, M., Ngalo, O., Poisat, P., van Hoek, L. (2014) Human Resource Management. 9th Edition. Cape Town: Oxford University Press Southern Africa.
Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M. (2015) Human Resource Management: Gaining a Competitive Advantage 9th Ed. McGraw-Hill
Ortlepp, K., Kinnear, L. and Karadis, A. (2013) “Leadership coaching as a driver of successful organisational change in small businesses: a case study.” Journal of Contemporary Management Vol 10, pp 479-497 (sabinet)
Othman, A.E.A (2009) “Strategic Integration of Human Resource Management Practices: Perspectives of Two Major Japanese Electrical and Electronics Companies in Malaysia.” Cross Cultural Management: An International Journal. 16 (2), pp 197 – 214. (available from Emerald)
Peiperl, M.A. (2001) “Getting 360 degree feedback right.” Harvard Business Review.” 79(1) pp142-147 (available from ebsco)
Polk, L. (2015) “Considerations for Employee Benefit Programmes that benefit employers and employees.” Benefits Law Journal. 28(1) pp 45-52 (available from ebsco)
Scully-Russ, E. (2012) “Human Resource Development and sustainability: beyond sustainable organisations.” Human Resource Development International. 15 (4) pp399-415 (available from ebsco)
Shipley, F and Golden, P. (2013) “How to analyse and address your organisation’s learning needs.” Training and Development” 67(3) pp29-31(available form ebsco)
Shipton, H., Zhou, Q., and Mooi, E. (2013) “Is there a global model of learning organisations? An empirical cross-nation study. 24(12) 2278-2298 (available from ebsco)
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Tiwari, A., Prabhu, K., Doshi, R. (2015) “Transforming BASF into a Learning Organisation, Linking the Present with the Future.” Business Perspectives and Research. 3(1) pp66-80 (available from ebsco)
Ulrich, D., Brockbank, W. & Johnson, D. (2009) “The Role of Strategy Architect in the Strategic HR Organisation.” People & Strategy. 32 (1), pp 24 – 31. (available from EBSCO).
Van Tonder, C. (2004) “Organisational development: purposefully engaging change.” Management Today. 20 (8) pp20-23 (sabinet)
Wärnich, S., Carrell, M.R., Elbert, N.F., Hatfield, R.D (2015) Human Resource Management in South Africa. United Kingdom: Cengage Learning
www.labour.gov.za
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APPENDIX A: CASE STUDY 1: PART 1 – HRM RECRUITMENT – A SPECIALIST RECRUITER’S PERSPECTIVE Recruitment agencies/firms could broadly be categorised into three categories – general recruiters, specialist recruiters and search firms/head hunters. I founded of the most specialised investment banking and investment management recruitment firms in South Africa and what differentiates us from other agencies is the fact that we exclusively recruit within the fields of investment banking and investment management, whereas the vast majority of financial services recruiters cover the financial services sector as a whole. Our clients include some of the top investment banks and investment managers in SA. My definition of a specialist recruiter is someone who has the appropriate theoretical foundation / qualifications coupled with the practical experience to enable him or her to accurately interpret job descriptions and CVs of candidates operating with its chosen field/industry of specialisation. In my case I have six years front-office financial markets experience (excluding recruitment experience) coupled with a post-graduate commerce degree and professional qualification in investments Our recruitment approach is a sharp shooter approach, as opposed to a shot-gun approach used by many recruiters, so for most vacancies we rarely introduce more than three candidates and in many cases we only introduce one candidate. Normally the recruitment process kicks off with the receipt of a job description of a new vacancy from a client, but it should be noted that we are also expected by our clients to introduce top talent on an unsolicited basis, as and when we come across these top candidates in the market place. On receipt of a job description form the HR department, I normally ask for additional information pertaining to the remuneration range offered for this role; information pertaining to particular team’s make-up; whether it is a newly created vacancy or resignation and whether the role is earmarked for Employment Equity candidates only. From time to time I may also request a telephonic /in-person discussion with the line manager, should the job description be unclear. Once I have a proper grasp of the role, I draft a much shorter, more generic job description, which I use to advertise the vacancy. The reasons for not just using the official job description are mainly to disguise who the employer is, so that candidates do not contact the employer directly, and also to better explain the job functions requirements. I then follow a two-pronged approach: a more passive recruitment approach where I load the vacancy on the job portals I use and then review applications; and a more active approach where I literally 125
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A lack of knowledge/understanding by clients and HR practitioners: In most cases direct contact with the line manager would be a much more effective means of contact for both myself and the manager, as generally HR practitioners just do not have a strong enough technical understanding of investment management to be in a position to accurately assess a candidate’s level/degree of fit. I have experienced many instances where I introduce a candidate to the HR person, who then through a lack of understanding deems the candidate unsuitable. When I then get an opportunity to speak to the line manager and provide an overview of the rejected candidate’s profile, he or she shows a keen interest and in the very least asks to see the candidates CV.
Unethical behaviour by other recruiters: Some recruiters will introduce the candidates to employers without the candidate’s consent, or without providing the candidate with sufficient information about the employer and vacancy to enable the candidate to make an informed decision. In such cases it becomes a significant problem when I then follow all the necessary steps, obtain the candidate’s consent and introduce the candidate, only to be informed that the client has already received the candidate’s application through another agency.
Unethical behaviour by candidates: Candidates will at times act unethically by overstating their technical expertise, over-stating their current remuneration package and trying to apply for a vacancy for which they have been turned down via another agency.in most cases these candidates are identified before submission to the client and a note is made in our internal database warning us not to have contact with this candidate in future. As a specialist recruiter I have accurately identified numerous candidates over the years who have overstated their technical expertise and by doing so saved my client valuable time. (Nel and Werner, 2014)
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CASE STUDY 1: PART 1 – HRM RECRUITMENT - A SPECIALIST RECRUITER’S PERSPECTIVE Instructions to Learners This case study is to be analysed and prepared in your Study Groups. Your Study Group is required to present the analysis of this case study at Workshop 2. Your presentation should not be longer than 15 minutes. The questions that you are required to address in analysing the case study are: 1. Based on the given perspective of the recruiter’s perspective, compile a recruitment policy for this organisation 2. Provide recommendations to the recruiter on some of the current and future trends in recruitment. 3. Considering the common problems that are experienced, provide suggestions and recommendations to how this recruiter can improve the way he addresses these problems 4. Discuss the nature of an induction and socialisation programme that would be beneficial should a candidate from the case described above be appointed in an organisation
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APPENDIX B CASE STUDY 2: PART 2 - HRD INA BEARING COMPANY INA Bearing Company is a medium-sized manufacturer of high-precision engine components for the automotive industry. Based in Llanelli, South Wales, it is one of a number of manufacturing companies across Europe owned by the multi-national Schaefler Group. In 2001 the company was facing a crisis. Its market position had been declining rapidly since the late 1990s as a result of orders being switched to low-cost producers in eastern Europe. This period resulted in successive reductions in the worforce from around 860 to 360 jobs. In 2001 prospects looked bleak. INA’s German parent had plans to switch even more production capacity to units in eastern Europe which, if implemented would have resulted in the loss of a contract accounting for around half the plant’s output and further job losses of 120. Faced with this bleak scenario, the personnel manager led a strategy workshop to reformulate the best way forward. It was accepted that competing with its European counterparts on the basis of cost was not a viable option. Instead INA decided to compete on the basis of quality with a vision to become the group’s preferred location for high-tech production work. At the same time, it was recognised that this transformation in production orientation could not be achieved without radical realignment of the company’s skill base. This led INA to a commitment to compete on the basis of workforce capability. Investment in machinery was to be switched to investment in human capital with the clear intent of building an employee skills base, developing a continuous improvement culture and building towards a learning in order to realise the company’s vision. In effecting this transformation, INA had to confront a number of potential obstacles. The demands of continuous production severely limited the time available for staff development. The failure of previous turnaround initiatives had left the workforce cynical about management’s intentions. Over time, the demands of production had resulted in the HR roles of managers, supervisors, and team leaders becoming diluted. Team leaders spent too much time helping out with production, meaning that the management hierarchy was becoming distorted as supervisors operated as team leaders and managers as supervisors. The grape vine was rife and the works council operated more as a forum for discussing housekeeping issues.
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Human Resource Development Previous attempts to build skills through NVQ (Nationa Vocational Qualifications) programmes had foundered because of lack of time and commitment among supervisors to undertake the necessary assessments of employee competences. The workforce was characterised by long-serving employees who had received little task-based HRD. Lastly employee relations had deteriorated to the point that some unresolved issues had prompted strike ballots. In addressing these potential obstacles, INA took two early important steps towards facilitating the desired learning culture where survival was seen to depend on learning faster than the rate of change. First, one-to-one meetings were held with every employee to explain the company’s vision, and signal management’s commitment to that vision. The emphasis was on communicating the company’s position honestly, whereby if the company failed to achieve its vision, its decision to base its strategy around HRD investment would have at least resulted in employees having been equipped with highlevel, portable skills that would significantly enhance their employability. The second was to forge a partnership agreement with the trade union Amicus. This resulted in the union signing up to the change programme and securing funding for significant investment in the company’s learning centre. These two interventions have changed the employee relations climate and opened up a genuine twoway dialogue. The individual meetings allowed employees to share their perceptions on obstacles to the development of a learning culture. They particularly stressed the importance of a unified team. This resulted in the harmonisation of terms and conditions, the introduction of an inflation-linked pay system and the re-alignment of the works council. Shop stewards now report that collaboration has replaced confrontation, evidenced by the way that the works council now plays a key role in developing strategy. Also the council’s sub-committees have been charged with leading important initiatives. These include a review of internal communications and the development of systems to support company financed individual learning plans (similar to EDAPs) The platform for skills development was the relaunch of the NVQ programme. This time around, the roles of managers, supervisors, and team leaders, have been redefined to enable them to commit to their HRD responsibilities. This surfaced a number of management skills gaps among these groups, such as communication, and led to the introduction, of an NVQ level 3 in business improvement techniques for supervisors and an NVQ level 3 in management for team leaders. To reinforce their commitment to HRD, senior managers assist in customising training to meet INA’s context and participate in its delivery to those with leadership roles.an NVQ level 2 programme in performing manufacturing operations is being delivered in collaboration with a local college. This is being taken by all the company’s production operators, some of who are now progressing through levels 3 and 4 of the programme.
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Human Resource Development For some operators, gaining the NVQ award represents the first ever external qualification. However, NVQ’s while addressing identified skills gaps, represent only one step in the direction of forging a learning culture. The development of the learning centre represents a significant milestone in this journey. Computerised learning facilities provide a network of HRD possibilities for all staff and so far, for example, 100 employees have signed up for the government-initiated Learndirect courses. In-house continuous improvement courses further reinforce the focus on learning which is increasingly being supported by those already trained becoming involved as coaches, mentors, and NVQ assessors in order to help cascade the outputs of the various training programmes throughout the organisation. As roles are redefined, HRD support is offered to help facilitate changes. For example, programmes to develop meeting skills have supported the now active engagement of employees in the works council and its sub-committees. The trade union, Amicus, appoints and sponsors four learning representatives and uses TUC courses to support their role development. The company’s investment in individual learning plans is yet another step along INA’s journey towards internalising a learning culture throughout the company. Although some of the HRD outcomes of these plans involve employees attending non-work related study in their own time, the message the company wishes to communicate is that learning is valuable for its own sake. This process of transformation has already yielded substantial benefits. The works council has reported that the grapevine is now regarded as the least reliable information source by employees. Labour turnover has fallen form an alreadymlow8.1 percent in 2001 to 2.5 percent and absence rates have been reduced by 50 percent. Cost-reduction projects have produced savings in excess of £324,000, alongside improvements in productivity and the company’s health and safety record. The company’s efforts have also received external recognition, including a number of HR accolades. The company was named ‘Welsh people development company of the year’ in 2003 and shortlisted for CIPD’s annual People Management Award in both 2003 and 2004. Despite this progress, and representations made by employees to the German parent, by the end of 2003 INA did not know whether all of this would turn around its fortunes within the Schaeffler Group. However, the vision of becoming the Group’s production location of choice’ took a large step towards becoming reality when in 2004 it was announced that Llanelli plant would not only retain production of the ‘at risk’ component but would also be commissioned to produce a new high-tech engine component for a prestigious car manufacturer. Source : (Millmore et.al. 2007)
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CASE STUDY 2: PART 2 - HRD Instructions to Learners This case study is to be analysed and prepared in your Study Groups. Your Study Group is required to present the analysis of this case study at Workshop 3. Your presentation should not be longer than 15 minutes.
The questions that you are required to address in analysing the case study are: 1. Discuss whether INA has been successful in their attempt to create a learning culture towards building a learning organisation 2. Despite the important roles employees, line managers and senior managers have in contributing to SHRD, analyse the extent to which these stakeholders represent obstacles to the development of SHRD at INA and discuss how these obstacles may be addressed 3. In terms of INA’s HRD activities, justify the position of INA on the strategic maturity continuum and provide recommendations to help INA move further towards HRD strategic maturity on the continuum
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