Every organization, large or small, uses a variety of capital to make the business work. Capital includes cash, valuables, or goods used to generate income for a business. For example, a retail store uses registers and inventory, while a consulting firm may have proprietary software or buildings. No matter the industry, all companies have one thing in common: they must have people to make their capital work for them. This will be our focus throughout this chapter: generation of revenue through the use of people’s skills and abilities.

What Is HRM?

(HRM) is the process of employing people, training them, compensating them, developing policies relating to them, and developing strategies to retain them. As a field, HRM has undergone many changes over the last twenty years, giving it an even more important role in today’s organizations. In the past, HRM meant processing payroll, sending birthday gifts to employees, arranging company outings, and making sure forms were filled out correctly—in other words, more of an administrative role rather than a strategic role crucial to the success of the organization. Jack Welch, the former CEO of General Electric and management guru, sums up the new role of HRM: “Get out of the parties and birthdays and enrollment forms.… Remember, HR is important in good times, HR is defined in hard times”.

It’s necessary to point out here, at the beginning of this chapter, that every manager has some role relating to human resource management. Just because we do not have the title of HR manager doesn’t mean we won’t perform all or at least some of the HRM tasks. For example, most managers deal with compensation, motivation, and retention of employees—making these aspects not only part of HRM but also part of management. As a result, the information in this chapter is equally important to someone who wants to be an HR manager and to someone who will manage a business.

Staffing

You need people to perform tasks and get work done in the organization. Even with the most sophisticated machines, humans are still needed (so far!). Because of this, one of the major tasks in HRM is staffing. Staffing involves the entire hiring process from posting a job to negotiating a salary package. Within the staffing function, there are four main steps:

1. Development of a staffing plan. This plan allows HRM to see how many people they should hire based on revenue expectations.
2. Development of policies to encourage multiculturalism at work. Multiculturalism in the workplace is becoming more and more important, as we have many more people from a variety of backgrounds in the workforce.
3. Recruitment. This involves finding people to fill open positions.
4. Selection. In this stage, people will be interviewed and selected, and a proper compensation package will be negotiated. This step is followed by training, retention, and motivation.

Development of Workplace Policies

Every organization has policies to ensure fairness and continuity within the organization. One of the jobs of HRM is to develop the verbiage surrounding these policies. In the development of policies, HRM, management, and executives (as well as employees) are involved in the process. For example, the HRM professional will likely recognize the need for a policy or a change of policy, seek opinions on the policy, write the policy, and then communicate that policy to employees. It is key to note here that HR departments do not and cannot work alone. Everything they do needs to involve all other departments in the organization. Some examples of workplace policies might be the following:

• Discipline process policy
• Vacation time policy
• Dress code
• Ethics policy
• Internet usage policy

Compensation and Benefits Administration

HRM professionals need to determine that compensation is fair, meets industry standards, and is high enough to entice people to work for the organization. Compensation includes anything the employee receives for their work. In addition, HRM professionals need to make sure the pay is comparable to what other people performing similar jobs are being paid. This involves setting up pay systems that take into consideration the number of years with the organization, years of experience, education, and similar aspects. Examples of employee compensation include the following:

• Pay
• Health benefits
• RRSP
• Stock purchase plans
• Vacation time
• Sick leave
• Bonuses
• Tuition reimbursement

Despite this, 90 percent of managers think employees leave as a result of pay (Rivenbark, 2010). As a result, managers often try to change their compensation packages to keep people from leaving, when compensation isn’t the reason they are leaving at all.

Training and Development

Once we have spent the time to hire new employees, we want to make sure they not only are trained to do the job but also continue to grow and develop new skills in their job. This results in higher productivity for the organization. Training is also a key component in employee motivation. Employees who feel they are developing their skills tend to be happier in their jobs, which results in increased employee retention. Examples of training programs might include the following:

• Job skills training, such as how to run a particular computer program
• Training on communication
• Team-building activities
• Policy and legal training, such as sexual harassment training and ethics training

Human resources people must be aware of all the laws that affect the workplace. An HRM professional might work with some of these laws:

• Discrimination laws
• Health-care requirements
• Compensation requirements such as the minimum wage
• Worker safety laws
• Labour laws

The legal environment of HRM is always changing, so HRM must always be aware of changes taking place and then communicate those changes to the entire management organization.

Most companies need a human resource department or a manager with HR skills. The industries and job titles are so varied that it is possible only to list general job titles in human resources:

1. Recruiter
2. Compensation analyst
3. Human resources assistant
4. Employee relations manager
5. Benefits manager
6. Work-life coordinator
7. Training and development manager
8. Human resources manager
9. Vice president for human resources

This is not an exhaustive list, but it can be a starting point for research on this career path.

Technology

Technology has greatly impacted human resources and will continue to do so as new technology is developed. Through the use of technology, many companies have virtual workforces that perform tasks from nearly all corners of the world. When employees are not located just down the hall, the management of these human resources creates some unique challenges. For example, technology creates an even greater need to have multicultural or diversity understanding. Since many people will work with individuals from across the globe, cultural sensitivity and understanding is the only way to ensure the use of technology results in increased productivity rather than decreased productivity due to miscommunications.

Technology also creates a workforce that expects to be mobile. Because of the ability to work from home or anywhere else, many employees may request and even demand a flexible schedule to meet their own family and personal needs. Productivity can be a concern for all managers in the area of flextime, and another challenge is the fairness to other workers when one person is offered a flexible schedule. Many companies, however, are going a step further and creating virtual organizations, which don’t have a physical location (cost containment) and allow all employees to work from home or the location of their choice. As you can imagine, this creates concerns over productivity and communication within the organization.

The use of smartphones and social networking has impacted human resources, as many companies now disseminate information to employees via these methods. Of course, technology changes constantly, so the methods used today will likely be different one year or even six months from now.

The large variety of databases available to perform HR tasks is mind-boggling. For example, databases are used to track employee data, compensation, and training. There are also databases available to track the recruiting and hiring processes.

Of course, the major challenge with technology is its constantly changing nature, which can impact all practices in HRM.

A very real change toward HR is the needed knowledge and use of an HR software, this skill becomes even more crucial towards a large organization with a lot of people and data to manage (HRIS Technology).

Awareness of the diversity of the workforce is crucial. Diversity refers to age, disability, race, sex, national origin, and religion. Each of these components makes up the productive workforce, and each employee has different needs, wants, and goals. This is why it is imperative for the HRM professional to understand how to motivate the workforce while ensuring that no laws are broken. Another challenge, besides the lack of workers, is the multigenerational workforce. Employees between the ages of seventeen and sixty-eight have different values and different expectations of their jobs. Any manager who tries to manage these workers from varying generations will likely have some challenges. Even compensation preferences are different among generations. For example, the traditional baby boomer built a career during a time of pensions and strongly held values of longevity and loyalty to a company. Compare the benefit needs of this person to someone who is younger and expects to save through an RRSP, and it is clear that the needs and expectations are different (Capezza, 2010).

Ethics

A discussion of ethics is necessary when considering the challenges of human resources. Much of the discussion surrounding ethics happened after the early to mid-2000s, when several companies were found to have engaged in gross unethical and illegal conduct, resulting in the loss of billions of dollars from shareholders. Consider the statistics: only 25 percent of employees trusted their CEO, to tell the truth, and 80 percent of people said that employers have a moral responsibility to society (Strategic Management, 2011). Based on these numbers, an ethical workplace is important not only for shareholder satisfaction but for employee satisfaction as well. Companies are seeing the value of implementing ethics codes within the business.

Many human resource departments have the responsibility of designing codes of ethics and developing policies for ethical decision making. Some organizations hire ethics officers to specifically focus on this area of the business. Out of four hundred companies surveyed, 48 percent had an ethics officer, who reported to either the CEO or the HR executive (McGraw, 2011). According to Steve Miranda, chief human resources officer for the Society for Human Resource Management (SHRM), “[the presence of an ethics officer] provides a high-level individual with positional authority who can ensure that policies, practices, and guidelines are effectively communicated across the organization” (McGraw, 2011).

For example, the insurance company Allstate recently hired a chief ethics and compliance officer (CECO) who offers a series of workshops geared toward leaders in the organization, because they believe that maintaining high ethical standards starts at the top of an organization. In addition, the CECO monitors reports of ethics complaints within the organization and trains employees on the code of ethics or code of conduct (McGraw, 2011). A code of ethics is an outline that explains the expected ethical behaviour of employees. For example, General Electric (GE) has a sixty-four-page code of conduct that outlines the expected ethics, defines them, and provides information on penalties for not adhering to the code. The code of conduct is presented below. Of course, simply having a written code of ethics does little to encourage positive behaviour, so many organizations (such as GE) offer stiff penalties for ethics violations. Developing policies, monitoring behaviour, and informing people of ethics are necessary to ensure a fair and legal business.

The following is an outline of GE’s code of conduct (The Spirit, 2011):

• Obey the applicable laws and regulations governing our business conduct worldwide.
• Be honest, fair, and trustworthy in all your GE activities and relationships.
• Avoid all conflicts of interest between work and personal affairs.
• Foster an atmosphere in which fair employment practices extend to every member of the diverse GE community.
• Strive to create a safe workplace and to protect the environment.
• Through leadership at all levels, sustain a culture where ethical conduct is recognized, valued, and exemplified by all employees.

Networking for HR

Network effects are sometimes referred to as “Metcalfe’s Law” or “Network Externalities.” But don’t let the dull names fool you—this concept is rocket fuel for an organization. Bill Gates leveraged network effects to turn Windows and Office into virtual monopolies and in the process became the wealthiest man in America. Mark Zuckerberg of Facebook, and Pierre Omidyar of eBay, all of these entrepreneurs have built massive user bases by leveraging the concept. When network effects are present, the value of a product or service increases as the number of users grows. Simply, more users = more value. Of course, most products aren’t subject to network effects—you probably don’t care if someone wears the same socks, uses the same pancake syrup, or buys the same trash bags as you. But when network effects are present they’re among the most important reasons you’ll pick one product or service over another. You may care very much, for example, if others are part of your social network if your video game console is popular if the Wikipedia article you’re referencing has had prior readers. And all those folks who bought HD DVD players sure we’re bummed when the rest of the world declared Blu-ray the winner. In each of these examples, network effects are at work. In the case of HR, we want to use a platform with said network effect to find the right people to hire for our organization.

Progress in Communication Technology

Communication is an essential part of Human Resources, and with modern technology, communication has been greatly enhanced. People have communicated at a distance using fires, smoke, lanterns, flags, semaphores, etc. since ancient times, but the telegraph was the first electronic communication technology. Several inventors developed electronic telegraphs, but Samuel Morse’s hardware and code (using dots and dashes) caught on and became a commercial success. Computer-based data communication experiments began just after World War II, and they led to systems like MIT’s Project Whirlwind, which gathered and displayed telemetry data, and SAGE, an early warning system designed to detect Soviet bombers. The ARPANet, a general-purpose network, followed SAGE. In the late 1980s, the US National Science Foundation created the NSFNet, an experimental network linking the ARPANet and several others – it was an internetwork. The NSFNetwork was the start of today’s Internet. Improvement on the Internet illustrates communication technology progress. There are several important metrics for the quality of a communication link, but speed is basic. Speed is typically measured in bits per second – the number of ones and zeros that can be sent from one network node to another in a second. Initially, the link speed between NSFNet nodes was 64 kilobits per second, but it was soon increased to 1.5 megabits per second then to 45 megabits per second and now some of the fastest speed we have in Canada is around 120 megabits per second (Griffith, 2019).

Software Progress

The hardware progress we have enjoyed would be meaningless if it did not lead to new forms of software and applications. The first computers worked primarily on numeric data, but early computer scientists understood their potential for working on many types of applications and data. By 1960, researchers were experimenting non-numeric data like text, images, audio and video; however, these lab prototypes were far too expensive for commercial use. Technological improvement steadily extended the range of affordable data types. Let us consider the evolution of software development and distribution platforms from batch processing to time-sharing, personal computers, local area networks, and wide-area networks.