US firms maintain their competitive advantages by holding on to resources their competitors cannot obtain. What do we mean by "resources?” The term "resources” can refer to anything from rights to a certain oil field, the patent on touchscreen technology, or an exclusive contract with the government. More often than not, however, a company's most valuable resources are its employees. Often, having the "right” employees - the individuals capable of developing iPhones or finding new oil fields - separates the highly successful firms from their less successful competitors. As you begin the journey of this course, you might be saying to yourself, "My company may say I am its most valuable resource, but it really do not treat me like I am valued.” This feeling is one of many elements associated with managing human capital.
In the United States, the subfield of Human Resource Management (alternatively known as Human Capital Management) has a history that dates back almost a century, but the most strategic components of this course emerged as a result of transitions in the workforce in the late 1960s. After the passing of Title VII of the Civil Rights Act of 1964, all organizations were mandated by the Federal Government to adhere to specific laws, which governed how an organization should respond to and treat their human capital. The transition of women and minorities into the workplace and their resulting contributions to business success incentivized organizations to develop a better understanding of how to integrate all employees into a culture that would reinforce and support the vision and mission of a business.
Human Resource Management refers to the practice of strategically allocating the most valuable resources - people - to the right areas of a firm. This practice involves careful strategizing, good leadership, and other solid business practices. Human Resource Management requires more than a strong human resources department; it requires smart, capable team managers working in conjunction with an HR department to carry out common goals.
The key to understanding and applying the concepts of this course revolves around learning how to become uncomfortable. What exactly does that mean? Every one of us has a core belief system shaped by our individual experiences, situations, and circumstances. This belief system informs and guides our perceptions (i.e. what we believe is or is not valid/applicable to the situation or circumstance with which we are dealing). We naturally gravitate towards those things with which we have some understanding, and we have an intrinsic bias against those things that do not make sense to us, that we perceive as unethical, or that make us uncomfortable. To effectively manage human capital, you have to learn how to step outside of your comfort zone and make strategic decisions in the best interest of the company, rather than those that make you "comfortable.”
You know the basics of managing human capital from your Principles of Management course (BUS208), but this course will introduce you to more advanced topics in the field. You will learn that identifying the best employees begins with identifying the firm's needs and carrying out a proper recruitment and selection process. Training, development, and performance evaluations can then shape the selected employee into an ideal firm resource. Finally, adequate and incentivizing compensation can keep those resources with the firm. This course will cover all these topics and more.
Though you may not be planning to pursue a career in human resource management, much of your career success will depend upon working with the right people. This course will help you appreciate and leverage this fact.
People are a firm's most valuable resource, and many of the most successful firms proudly profess this fact in recruitment materials, press events, and statements of their corporate values. Human Resource Management has been a focus in corporate strategy for the last half-century, especially in light of the emergence of a service-based economy (whereby most firms today provide services as opposed to the products produced by firms in the past).
In this unit, you will learn about the role that Human Capital Management plays within any organization. You will also review a variety of major topics pertaining to human capital, including the nature of HR management, strategies for HR management and planning, the legal framework for equal employment as it applies to managing diversity, and the application of affirmative action. Some of these subjects are so complex and diverse that they deserve their own courses. For example, the field of Managing Equal Employment and Diversity is so broad that the US federal government has created the Equal Employment Opportunity Commission (EEOC) to ensure that individuals receive equal treatment in employment-related activities. These topics will be touched upon in this unit to so that you can focus on the core of human capital management in the remaining units.
Completing this unit should take you approximately 13 hours.
Now that you understand the core components of strategy as applied to managing human capital, learn how to identify the right human capital by properly assessing and defining all of the jobs within an organization. Identifying the right people for a firm can be very difficult. To make things more challenging, job descriptions often do a poor job of detailing the employment environment. By conducting a proper job analysis of all roles within a firm, hiring managers can better identify the traits they need a future employee to possess for a specific job.
Employers seek employees with traits that fall into one of four categories: Knowledge, Skills, Abilities, and Other Characteristics. Collectively, these traits are referred to as KSAs. The keys to success lay not in an individual's experience with Microsoft Office or his or her ability to work in a high stress environment, but rather in his or her capacity to learn on the job, humility in admitting fault, and temperament in a stressful situation. In this unit, you will learn how to identify the true demands of a job and translate them into an accurate job description.
Completing this unit should take you approximately 10 hours.
Identifying the traits one will need for success in a position is relatively easy compared to the daunting task of identifying those traits within an applicant. Given the cyclicality of unemployment, you will likely receive a pile of resumes simply by posting an opening on a company website or job board. But how many of those resumes will be worth looking through? How many will be worth interviewing? And will any of them be the right person for the job? You do not want to just select the best person in the applicant pool; you want to find the best person for the job. Sometimes this means going beyond the normal labor market and recruiting people currently employed at other firms.
There are a number of methods of recruiting the right talent. Some firms prefer to use specialized recruiting firms, while others ask their current employees for recommendations. The point is that a firm needs to cast the widest net possible in order to secure a large applicant pool.
Then, the firm must face the challenge of selecting the right applicant by determining whether he or she possesses the KSAs discussed in the last unit. Like it or not, the interview method of selection is one of the weakest forms of selection. Critics argue that it is too subjective. While subjectivity is not a bad thing, it must be paired with the right objective measures. This unit will cover a number of such measures that can be useful in identifying candidates. Please note that interviews are still very important and that there are "right” and "wrong” ways to conduct interviews, all of which will be addressed here.
One of the key points to remember when recruiting and selecting human capital is that you should identify individuals who share the company's ideas about the goals and objectives of its business. You should work to identify unique individuals with shared and complementary skill sets in order to build an effective team. Recruiting and selecting human capital should be carried out in order to provide the organization with a strategic advantage.
Completing this unit should take you approximately 7 hours.
Once you have completed the recruitment process, it is crucial that you properly train and develop your human capital. As you go through this unit, think of training as a process used to inform new members of the specifics associated with the jobs that they have assumed. Development should be thought of as a continuous process of improvement and as an opportunity to provide human capital with the updates and insight needed to be successful on the job. Career planning refers to the process of mapping the career growth of your human capital and building strong relationships between human capital and the management team. Note: Career planning is sometimes referred to as succession planning.
Completing this unit should take you approximately 4 hours.
In the last unit, you learned about human capital development and training. Mastering and applying this information is crucial to helping you become more effective at identifying and creating a performance management and measurement system. Firms often use performance management systems in order to properly identify the success of their employees. "Success” in the workplace is often defined by an individual's ability to live up to the demands of his or her position. With proper job analysis, it should be easy to quantify the level of success or failure that each employee has reached. However, it is important to recognize that all humans are subject to certain biases - leniency and the halo effect are good examples - when asked to provide feedback. (Leniency refers to a manager's tendency to be "too nice” out of fear of hurting the feelings of his or her employee. The halo effect refers to a situation in which a manager focuses on one positive aspect of an employee's performance as opposed to the performance as a whole over the evaluation period. The manager might, for example, fixate on the fact that an employee obtained a high-profile client or made a profitable sale, despite poor performance in all other aspects of the job.) Employees should be made aware of such tendencies in order to strive toward a more balanced evaluation process.
Meanwhile, in a performance appraisal, one employee (frequently a manager) reviews the performance of another employee. Many successful firms (including Infosys, one of the largest IT companies in India) use what are known as "360 degree reviews.” In the 360 degree review, the employee also reviews the manager. Firm managers should explore various types of appraisal systems in order to determine which fits best with the firm's culture and strategy.
Completing this unit should take you approximately 4 hours.
When an employer is making a hiring decision, he or she must consider a number of factors, including the cost of compensating human capital. In most cases within a business, this is the highest overhead cost consumed by an organization. Because poor financial planning is one of the top 10 risk factors associated with business failure, it is extremely important that an employer understands the many elements associated with the development and application of a compensation program. An employer must also be aware of compensation, as it is a tool used to attract and retain human capital. At different stages of an employee's life, he or she will have different workplace needs. An organization may have some employees who value direct financial compensation and others who have an immediate need for other, more indirect benefits, like tuition reimbursement or child care. The key is to understand the dynamics of a compensation program and develop an organizational program that serves the needs of the organization, as well as the human capital employed by the organization.
In times of recession, there is usually a larger labor force in search of work. This gives employers leverage when hiring; some can drive down the associated human capital cost of employment due to the high supply of labor. However, the key to retaining good people in any environment, including in periods of high growth, is usually compensation. Compensation is not just about a salary or bonus - it is about work/life balance, perks, and contentment. The happiest employees are not necessarily the ones in the highest pay grade. Often times, the most successful companies pay less than their competitors because they have created an environment that is pleasant to work in.
Much of the chatter surrounding compensation today revolves around executive pay, as the disparity between executive pay and employee pay has grown dramatically over the decades. This widening gap is largely due to the fact that firms have been aligning executive compensation with firm performance. For publicly traded companies, performance is often measured in terms of profitability or stock price performance. This system is problematic in that it incentivizes executives to take on too much risk, as they are guaranteed compensation no matter what happens. This unit will explore this issue as well as others pertaining to compensation and benefits.
Completing this unit should take you approximately 6 hours.
By now, you should more fully understand the significance of managing human capital as a strategic part of any business platform. It is important that you recognize how all of the human capital management concepts come together to support an organization that enjoys a competitive advantage over others within its market. It is also important that you understand that the employer is responsible for making the job attractive to potential human capital candidates and enticing them with an environment that incentivizes employees to work and grow with the organization. While you have covered a lot as this course has progressed, there are still some key factors to be addressed as you develop an understanding of how to manage human capital. One of those key areas is the safety and health of human capital.
At a most basic level, the employer is responsible for sending its employees home in the same manner in which they arrived. The concept of safety is so important that the government has created a special department - the Occupational Safety and Health Administration (OSHA) - whose sole focus is the safety and well-being of employees within the workplace. Every single workplace environment must comply with OSHA regulations.
Employers must also be concerned with the health of their human capital. Healthy employees boost workplace performance and productivity, use fewer sick day benefits, and are more likely to build stronger and longer-lasting relationships with their employers. When an employee or potential employee sees that an employer is concerned about his or her personal well-being, he or she is more likely to become and remain a part of that organization. Note: Employee Health is sometimes referred to as employee wellness.
Completing this unit should take you approximately 6 hours.
In this final unit of the course, we will discuss labor and employee relations and conclude with a brief perspective on how ethical concerns pervade all aspects of human resource management. As mentioned earlier in the course, an employer wants to create an environment that is attractive to potential and current employees. As you have already learned, the relationship between employer and employee can be a bit tricky. The employer has specific expectations when it makes the decision to bring a new employee on board. The employee has or should have an expectation of the employer when he or she decides to join and/or stay with an organization. Sometimes, there are significant discrepancies between what the employer needs/wants and what the employee needs/wants. In these situations, labor relations - or more specifically, labor unions - can help strengthen the employer/employee relationship.
Labor relations is a subfield of Human Capital Management concerned with labor unions in the workplace. Labor unions are independent third parties that represent the collective interest of the employees within a particular industry. Just as a marriage counselor serves as a mediator between a husband and a wife, a labor union seeks to balance the differences between employer and employee.
Employee relations is a subfield of Human Capital Management concerned with the prevention and/or resolution of workplace problems. This subfield encompasses poor performance and disciplinary action, the identification and promotion of policies/procedures, and the communication and promotion of awareness of the laws and legislation that impact the managing of human capital. These activities ensure that efficiency, equity, and voice can be achieved in the workplace for both the employer and the employee. But what exactly do we mean by efficiency, equity, and voice?
Efficiency relates to the ability to achieve a workplace goal with a minimal or minimized investment of resources. An employer seeks to achieve efficiency by engaging the most productive human capital and using the least amount of business resources. An employee seeks to achieve efficiency by asking for a specific balance between his or her time contributions to the organization and the economic outputs provided by the employer. Both an employee and an employer want workplace processes to be structured in such a way that each feels there is value for what they are contributing. Efficiency addresses the questions of: am I getting an equal or opposite response to the amount of work I am putting in? Are you motivated to help me be successful? Can I trust that within our relationship, you have my best interest in mind?
Equity relates to the partnership ideal in the relationship between the employer and the employee. The key to understanding equity is identifying with the fact that the business environment is typically not a democracy. An employer creates and enforces the workplace rules and processes that it considers necessary to conducting business. If an employee works for this organization, the anticipation is for them to comply, as employers typically make them aware of these expectations. Is the workplace environment stable and fair? Is there room to grow and do more? Am I treated like a subordinate or a true partner? These are just some of the questions asked when assessing the equity in the relationship between the employer and the employee.
In personal relationships, there are times when one person feels that the other is not listening. The same applies to the relationship between employer/employee. Employees typically want to work for an employer who enables them to be heard and to contribute to the functioning of the organization. An employer wants an organization in which employees have actively listened to and engaged in the proper application of any workplace rules, processes, and procedures, with minimal to no infraction. In both cases, the employee and employer are looking to "achieve voice” in their organizations. Most, if not all, organizations try to assist in the achievement of voice by providing hotlines for employees to communicate, implementing suggestion boxes for the anonymous submission of ideas or comments about the workplace environment, and establishing an open door policy. Because the employer is the more dominant partner in this relationship, the balance between efficiency, equity, and voice can appear to be a bit one sided; this is where labor and employee relations step in.
Ethical conduct requires us to ask difficult questions. Firms need to make the distinction between legal compliance and ethical decision making. Ethical lapses have been responsible for U.S. companies losing billions of dollars in class action law suits. Individual employees must also take responsibility to adhere to their firms' codes of conduct, codes of ethics, and various policies written to protect the employee, the company, the community and other entities their organization serves Articles below describe some of the issues and challenges faced by human resource professionals today to ensure these codes of conduct, codes of ethics and company policies are disseminated, acknowledged and followed and accurately reflect the values and mission of their firms.
Completing this unit should take you approximately 11 hours.