0.1 A Basic Overview of Human Resources
Human resource management is the part of an organization that deals with people. This business function was once called personnel management. Calling it “human resources” acknowledges that the people involved in the organization―the employees―are a valued resource, not unlike the raw materials or technology necessary to its operations. Organizations use a variety of terms to refer to the human resource function. Some of these names are listed below.
Employee Experience
Employee Management
Employee Success
Employee Support
Human Capital Management
Human Relations
Partner Resources
People
People and Development
People Operations
People Resource Center
Talent Management
Talent Resources
Team Member Services
Organizations select a title for their human resource function that best reflects their culture and values. For the purposes of this course, the function will be referred to as human resources or HR.
The Employee Life Cycle
A good way to look at the activities that comprise human resources is by examining the employee life cycle. As shown in the exhibit below, an organization engages with people before they are hired and continues a relationship with them until their employment has ended, and potentially beyond.
The various activities illustrated in the employee life cycle are made up of interactions and transactions that need to happen in any organization that employs people. Managing these tasks is generally the responsibility of human resources, but these things need to happen even if the organization doesn’t have a formal HR role. In the absence of an HR manager, supervisors or line managers may perform these functions, and sometimes these activities are assigned to other departments or outsourced to other organizations.
Recruitment is the first activity in the employee life cycle. When organizations have job openings, they need to be able to attract a sufficient pool of applicants with the necessary skills.
The recruitment process begins with an analysis of the organization’s current and future employment needs based on the organization’s business strategy. Once employment needs have been determined, detailed job descriptions are developed listing the tasks, duties, and responsibilities associated with each particular job, along with job specifications, which identify the knowledge, skills, abilities, education, and experience required to perform the job.
With this information, a recruitment strategy is developed that outlines how to search for potential job applicants, how to attract them to apply for jobs, and how to maintain a pool of qualified applicants who can be considered for open positions.
Potential job applicants can be found both within and outside of the organization. Many organizations find new employees via the internet. Potential job applicants can also be found through colleges and universities, labor unions, trade and professional associations, employment agencies, and through traditional methods such as newspaper ads or help-wanted signs. Employers must be certain their employee recruiting practices comply with employment laws.
Recruiting is discussed in detail in Unit 1.
Selection
Once a sufficient pool of candidates has been attracted, employers must determine which of the applicants should be offered a job. This process is called selection and is the second activity shown on the employee life cycle. The steps in the selection process vary from one organization to another, but the end goal is the same: to identify the candidates who best meet the requirements of the job. The selection process may include an application blank, interviews, employment tests, reference checks, and drug testing.
Good information is essential for making good hiring decisions. Through the various steps of the selection process, employers collect data about the applicants. This information is only useful if it is reliable (consistent) and valid (accurate). Otherwise the selection procedure is a waste of time and money, leads to poor selection decisions, and could potentially be legally problematic.
Discrimination in employment on the basis of race, color, religion, sex, national origin, age, or disability is prohibited by federal, state, and local laws. These laws have a significant impact on an organization’s human resource practices, especially its employee selection procedures. Employers must not treat anyone differently because of these protected characteristics, either intentionally or unintentionally. To avoid discriminatory hiring practices, employment decisions must be based on valid, job-related criteria.
Employee selection is described in more detail in Unit 1.
Onboarding
New employees generally need help getting up to speed in their new roles and integrating into the organization. To accomplish this, many organizations have a formal onboarding process.
Onboarding is the process of integrating new employees into an organization and helping them fit into its culture. Through the onboarding process, new employees build relationships, develop skills, and learn the information they need to be successful. Most organizations provide a new employee orientation, which covers the basic information new employees need to know to begin work. If an organization has an onboarding process, new employee orientation is generally part of that process. Orientation may also be a stand-alone program.
Small organizations may not have a formal orientation or onboarding process, but new employees still must be successfully integrated into the organization, and managers need to see that this occurs. In larger organizations, HR managers are usually tasked with overseeing the orientation and onboarding process.
Onboarding is covered in Unit 2.
Position Training
In addition to general orientation, new employees need to receive training regarding their particular job functions. Position-specific training could be detailed in an employee’s onboarding process, or it might be a custom training plan created by the employee’s supervisor. Either way, the training should be based on an analysis of the employee’s specific training needs, with a focus on the gap between the new employee’s current abilities and the skills and knowledge required to perform the tasks associated with the new job.
Training can occur either on the job, where employees receive training while performing their jobs, or it can be done off the job at a training center or using a vestibule or simulator. The success of the training program depends on the transfer of training, or the extent to which the knowledge and skills learned in training are appropriately applied to the actual work situation.
Training programs must be evaluated to ensure they are meeting both the needs of the individual trainees and the objectives of the organization. The criteria used to evaluate a training program are determined before the training program is designed and are based on the behavioral training objectives.
Training is explained in Unit 2.
Retention
The time and cost an organization expends in acquiring and training employees underscores the importance of keeping them around as long as they are working hard and producing quality work. Employee retention is a priority for both human resource professionals and business leaders.
One of the compelling reasons retention is a priority is that employee turnover is expensive. In addition to the administrative costs associated with an employee leaving, the organization incurs the cost of recruiting, selecting, and training a replacement. Also, there is often lost productivity from the time the employee leaves until the replacement is up to speed.
People leave their jobs for a variety of reasons, including job dissatisfaction, relocation, family circumstances, and better opportunities elsewhere. Some of these issues are inevitable, and not all turnover can or should be avoided. However, keeping the best-performing employees is a priority.
Employee retention is described in more detail in Unit 2.
Development
Employee training does not end with new employee orientation and initial position training; employees should be provided opportunities to develop their knowledge and skills throughout their time with an organization.
Continued employee development helps employees maintain the skills necessary to perform their jobs well and to acquire any new skills required by technological advancements or job responsibility adjustments. Employees who are given personal and career development opportunities are more likely to be engaged in their work and to be loyal to the organization. Employee development activities may include ongoing training programs, job rotations, educational seminars, college courses, and new work assignments.
An essential component of employee development is performance evaluation, which involves identifying performance criteria and developing a procedure for assessing how well employees meet the established standards. Where applicable, quantity and quality of performance are generally included in an employee evaluation. Other items often evaluated include attendance, initiative, attitude, cooperation, and enthusiasm. The results of performance evaluation drive human resource development initiatives. Where employees fall short of the established performance criteria, employee development activities are created to address those shortfalls.
Employee development and performance evaluation are explained in Unit 2.
Engagement
Engaged employees are committed to their jobs and the organization. They work hard and willingly help their coworkers. A highly-engaged workforce leads to better productivity and other positive organizational measures, such as employee retention. Employees are more likely to be highly engaged when they feel trusted and valued, when they have the resources and training they need, when they are recognized for their achievements, and when they are given training and career-development opportunities.
Organizations implement employee involvement programs in an effort to improve the quality of life and the level of employee engagement at work. These programs provide opportunities for employees to be more involved in deciding how the work is to be performed or how best to create a better product or service. The way a job is designed can have a significant impact on the quality of the work experience. Highly specialized jobs, where employees perform a small range of tasks over and over, can be boring and repetitive, and often make workers feel alienated. Job enrichment, on the other hand, seeks to make jobs more meaningful by adding variety, complexity, and autonomy.
Employee engagement is explained in Unit 4.
Compensation
The primary reason most people choose to work is to earn money. Even interesting jobs and pleasant coworkers are unlikely to keep employees around for long if the pay is awful. Compensation includes all that employees receive in exchange for performing their jobs. This can consist of base pay, incentive pay, and benefits.
Base pay is the minimum, fixed amount employees receive for their work at either a set hourly rate or as a weekly, monthly, or annual salary. A number of considerations contribute to determining what employees are paid, including pay rates for the same or similar work at other organizations, the organization’s internal pay structure, and the employees’ qualifications, experience, seniority, and performance.
While base pay is a fixed amount, incentive pay is variable and is generally based on performance. A sales commission, for example, is a form of incentive pay that is tied directly to an employee’s success in selling the organization’s products or services. Another form of incentive pay is a piece-rate plan, where employees are paid a certain amount for each item they produce. Employees may receive bonuses for outstanding performance, for completing projects, for acquiring new skills, for referring friends for employment, and for staying with the organization for a specified amount of time. Year-end or holiday bonuses are also common. An organization’s compensation system must balance base pay and incentive pay. If the incentive portion is too small, employees may not be adequately motivated. If the incentive portion is too large, employees may not have a sufficient level of security in their compensation.
Employee benefits are the non-financial compensation provided to employees in addition to their regular salary or wages. These benefits may include items such as paid holidays and vacations, pension plans, healthcare insurance, legal assistance, and tuition reimbursement. Some employee benefits are legally mandated. For example, employers are required to pay for Social Security, workers’ compensation, and unemployment insurance. Some employers are also required to provide healthcare insurance and medical leave. Other benefits are not expressly required by law, but are heavily regulated if they are provided, including pensions and other retirement plans.
Organizations must comply with compensation and benefits laws that are applicable in their location. In larger organizations, human resource departments ensure that their companies comply with these regulations. In smaller organizations, the responsibility falls on business executives and managers. Most employers must comply with laws requiring a minimum wage, overtime premiums, workers’ compensation, and unemployment insurance. Laws also prohibit discriminatory compensation practices, regulate employee benefits, and require income taxes.
Employee compensation is discussed in detail in Unit 3.
Work Environment
All organizations should provide a safe and healthy work environment for their employees. This means the workplace should be free from unnecessary hazards, harmful substances, undue stress, and any kind of discrimination or harassment. In addition to keeping their employees out of peril, many organizations strive to provide a warm, inclusive, and enriching workplace, where people feel respected and valued, in addition to feeling safe.
Employee Safety and Health
Organizations are expected to comply with laws and regulations that require safe and healthy working conditions for their employees. Safety laws may include regulations on facility hygiene, safe operating procedures, safety training, and management of hazardous substances. Employees should be protected from preventable workplace injury, illness, and disease. Organization leaders, including HR managers, must be aware of any potential hazards within their own workplaces and ensure that the organization complies with all applicable health and safety laws.
Organizations often go far beyond the basic requirement of providing a workplace that is free from known dangers and toxic materials. Many organizations design programs to improve both the physical and mental health of their employees. An employee assistance program (EAP) helps those who are dealing with personal problems, such as alcohol or drug abuse, stress, anxiety, depression, financial difficulties, or marital discord. Many organizations also provide employee wellness programs, designed to keep their employees healthy and well by providing physical fitness facilities and equipment, health screenings, weight management plans, smoking cessation programs, and stress management courses. Employees may receive incentives for participating in employee wellness activities.
Employee safety and health is discussed in Unit 5.
Employee and Labor Relations
Employee relations is the area of human resource management that focuses on the organization’s relationship with its employees. Most organizations see the value in having happy, productive workers. However, an organization’s relationship with its workers can, at times, be rocky, and in some cases, the relationship is best characterized as adversarial. In some organizations, employees are members of a labor union, an organization that represents the workers in negotiations with management. In unionized workplaces, employers cannot make unilateral decisions regarding wages, work schedules, working conditions, and many other employment-related issues, but are instead required to negotiate with union representatives to create a labor agreement. Union leaders also represent individual employees, or groups of employees, in disputes with management over a variety of issues, including discipline, work rules, and interpretation of the labor agreement.
Employee and labor relations are influenced significantly by labor laws that restrict the activities of both organizations and unions, whether the organization is formally unionized or not. Running afoul of the law can be very costly, so organizations need to have managers well-versed in labor laws.
Employee and labor relations is explained in Unit 4.
Diversity, Equity, and Inclusion
In some organizations, people from various protected classes (defined by race, sex, or other characteristics) are underrepresented, and diversity programs seek to improve the representation of these groups. Diversity programs may include targeted recruiting, special training opportunities, and preferential treatment for underrepresented groups. For these diversity programs to be effective, they must occur within a culture of inclusion, where employee groups targeted by the diversity initiatives are able to fully integrate into the organization. Sometimes creating an inclusive culture requires policy changes, such as anti-discrimination and anti-harassment policies, with clear guidelines regarding acceptable behavior. Perhaps more important are self-awareness interventions that help employees recognize their own biases and their behaviors that may be perceived as exclusive rather than inclusive.
Diversity, equity, and inclusion are discussed in Unit 4.
Succession
When employees leave their jobs, whether they exit the organization or are transferred or promoted, their absence creates a disruption. If the organization anticipates a change and prepares for the transition, the job vacancy is less disruptive.
An effective succession plan prepares potential replacements for all key jobs. The practice of promoting current employees provides incentive for those working at lower levels in the organization. Filling a vacancy at a higher-level management position may cause a domino effect that necessitates multiple changes on the organizational chart.
Succession planning is described in Unit 1.
Separation
Separation is the process of terminating an employee’s relationship with the organization. This process is sometimes referred to as organizational exit or offboarding.
An employee’s exit from an organization may be voluntary (the employee initiates the departure) or involuntary (the organization terminates the employment). In either case, the organization should have an established procedure for managing the employee’s departure so the process is fair, compassionate, and legal.
Separation (organizational exit) is explained in Unit 4.