EIS (HRM) - Module 2 HR Planning, Recruitment and Selection.pptx

Human Resource Management (HRM) compensation refers to the strategies and practices organizations use to determine employee pay and benefits. A well-defined compensation strategy is crucial for attracting, retaining, and motivating talent. It encompasses various elements, including base salary, bonuses, benefits, and non-monetary rewards.
Organizations typically adopt one of three main compensation strategies: leading, lagging, or meeting the market. A leading strategy offers salaries above the market average to attract top talent, while a lagging strategy pays below market rates, often seen in smaller organizations with limited budgets. Meeting the market involves aligning salaries with industry standards to ensure fairness and competitiveness.
Effective compensation strategies also include performance-based incentives, which reward employees for their contributions to organizational success. This can enhance motivation and productivity. Additionally, organizations must regularly assess their compensation structures to adapt to market changes and employee expectations.
Overall, a robust HRM compensation strategy not only reflects an organization’s values and culture but also plays a significant role in employee satisfaction and engagement, ultimately contributing to overall organizational success.HRM Compensation: Strategies, Practices, and Impact
Introduction
Compensation in Human Resource Management (HRM) is a critical component that influences employee satisfaction, motivation, and retention. It encompasses not only salaries but also bonuses, benefits, and non-monetary rewards. A well-structured compensation strategy aligns with organizational goals and fosters a productive work environment. This essay explores the fundamental aspects of HRM compensation, including its definitions, strategies, components, challenges, and best practices.
Understanding Compensation in HRM
Definition of Compensation
Compensation refers to the total rewards provided to employees in exchange for their labor. This includes both direct financial payments (such as wages and salaries) and indirect benefits (like health insurance and retirement plans). The overall compensation package is crucial for attracting and retaining talent in a competitive job market.
Importance of Compensation
Attraction and Retention: Competitive compensation packages are vital for attracting skilled candidates and retaining existing employees.
Motivation and Performance: Adequate compensation can motivate employees to perform better, leading to increased productivity.
Job Satisfaction: Fair and transparent compensation practices contribute to employee satisfaction and loyalty.
Organizational Culture: Compensation reflects an organization’s values and can shape its culture.
Components of Compensation
Compensation can be broadly categorized into several components:
1. Base Salary
The base salary is the fixed amount paid to employees for their work. It is typically determined by factors such as

1. Module 2 Human Resource Planning, Recruitment And Selection

2. Human Resource Management Numerous definitions, both normative and descriptive Karen Legge (1995) A n approach to employment management which seeks to achieve competitive advantage through the strategic deployment of highly committed and skilled workforce. Gary Dessler (1997 ) The policies and practices involved in carrying out the ‘people’ or human resource aspects of a management position, including recruiting, screening, training, rewarding and appraising. Wayne Mondy (1999) The utilisation of individuals to achieve organisational objectives. Boxall and Purcel (2011) All those activities associated with the management of work and people in organisations .

3. Common Human Resource Management Activities Design of formal systems to ensure effective and efficient use of human talent to accomplish goals (Determining the right organisational structure). D etermination of policies, procedures and organisational practices relating to all human resource aspects (Employee Relations Policy, Recruitment policy, Compensation policy, etc ). Process of acquiring, training, appraising and compensating employees and attending to their employee relations, health and safety needs having due regard to fairness and equity (HRM functions).

4. Human Resource Planning Recruitment & Selection Training & Development Compensation & Benefits Management Employee Relations Safety & Health HRM Policies Performance and Career Management Human Resource Information Systems Common Functions of HRM

5. Human Resource Planning Human Resource Planning The systematic process of matching internal and external supply of people with job openings present and anticipated in the organisation . Strategic level 3 rd Order (Functional level). Derives from 2 nd Order strategy (Business Level). Key aspects Job Planning (Job Analysis) – Focused on work and worker; and Manpower Planning – Focused on manpower requirements. Process Forecasting human resource requirements, Forecasting human resource availability and devising plans to address mismatches. Guiding philosophy Right number, right skills, right cost, right time and right place.

6. Human Resource Planning – Key Components Job Planning Systematic process of gathering, analysing and determining the duties and responsibilities and the skills and knowledge required to perform the job (Job Design / Job Analysis). Manpower Planning Systematic process of matching the internal and external supply of people with job openings anticipated in an organisation over a specified period of time.

7. Job Planning / Analysis Demand Forecasting Supply Forecasting Corrective Actions Gap Analysis Demand Exceeds Supply Supply Exceeds Demand Demand Equals Supply Auditing Current Capacity Human Resource Planning – A Generic Process

8. Job Analysis Systematic way of gathering and analysing information about a job (context, content & human requirements) to facilitate greater understanding and to determine specific duties and responsibilities and the skills and knowledge required to perform it and to present such information in a systematic and concise manner. Job Description Statement describing the duties and responsibility of a job, reporting relationships, key result areas and key performance indicators Job Specification Statement describing skills, knowledge, competencies and experience required to do the job

9. Planning the Job Analysis Identify objectives of Job Analysis Obtain top management support Preparing for Job Analysis Select representative job and Information gathering methodology Review existing documents Convey intention to employees Conducting Job Analysis Gather and analyse job information Verify job data with job holder’s superior Developing and Presenting information Draft Job descriptions and specifications Review drafts with managers and employees Finalise job descriptions Maintaining and Updating information Update job descriptions and job specification as organisation changes Review jobs periodically Job Analysis Process

10. Job Analysis – Collecting Information Several methods to collect information. Both qualitative and quantitative. Common Qualitative Methods : Interviews, Questionaire , Observation, Log Books/Diary. Common Quantitative method : Position Analysis Questionaire . Useful for quantifying each job’s relative worth. Approach : Can use a combination of methods.

11. Interviews Most popular method to obtain information relating to the job where interviewer (job analyst) asks several questions to the interviewee (job holder) on tasks usually performed. Information obtained is then verified with supervisors. Questions may be unstructured (open-ended) or structured (pre-prepared detailed questionnaire). Common questions: - What is your job? - What are your major duties? - What exactly do you do? - What skill and experience do you need to do this job? - What are the physical, emotional and mental demands of the job? - Are you exposed to hazards or dangerous situations? - Are the performance standards reasonable?

12. Questionaire Another commonly used method where shortlisted employees (Sampling) are required to fill out structed questionaire to describe their job–related duties and responsibilities; Quick and easy way of obtaining required information but needs to be verified by superior. Usually has open-ended questions (Describe your major duties) as well as structured questions. Downside : - Employees may exaggerate their responsibilities - Preparing and testing questionaire may be time consuming - Employees may lack verbal skills

13. Observation Analysts observes employee performing job to record information on knowledge and skills required. More suited for jobs that emphasizes manual/ physical activities (assembly line workers). May not be appropriate if too much mental activity. Common problem is Reactivity (Employee performs better under observation). Usually not used in isolation. Most common approach is to combined observation with interviews and questionaires .

14. Log Book / Diary Selected employee records their activities in a log book on a daily basis with details on the activity performed and time taken. Information needs to be verified with supervisors. Usually used together interviews and observations.

15. Job Analysis – Quantitative Method Quantitative Technique (Position Analysis Questionaire ) Questionaire used to obtain quantifiable data concerning duties and responsibilities of a job. Ratings on different activities such as performing skilled activities, decision making and communication, physical activities, operating equipment and processing information.

16. Job Descriptions Job Description Statement describing the duties and responsibility of a job, reporting relationships, key result areas and key performance indicators. No standard format but usually includes:- - job identification (job title and grade); - job summary (essence of job in a few lines); - listing of each major duties and responsibilities; - reporting relationship (may be matrix); - level of authority; - expected performance standards; - working conditions ( hazards,etc )

17. Job Specifications Job Specification Statement describing skills, knowledge, competencies and experience required to do the job. Usually a section of the Job Description but can be a separate document. Must list out the minimum acceptable skills, human traits and experience needed to perform the job in accordance with expected standards (Setting ideal requirement as the acceptable standard makes it difficult to source candidates). Key challenge is determining the required qualifications.

18. Uses of Job Analysis Information Job Analysis Job Description (Duties & Responsibilities Job Specification (Knowledge, Skills & Abilities Recruitment And Selection Performance Appraisal Compensation and Benefits Training and Development Employee Relations Safety and Health Career Management

19. Human Resource Planning – A Strategic View External Environment Internal Environment Strategic Planning 2 nd order – Business Level ) Human Resource Planning 3 rd Order – Functional level ) Forecasting Requirements Comparing Requirements And availability Forecasting Availability Demand = Supply No action Supply exceeds Demand Early retirement Downsizing Lay-offs Demand exceeds Supply Recruitment And Selection

20. Manpower Planning Comparing requirements and availability in terms of numerical and skills / abilities gap External Environment Internal Environment Strategic Planning Human Resource Planning Forecasting Requirements Comparing Requirements And availability Forecasting Availability

21. Bottoms Up Approach Each makes the estimate of his man needs for all levels, starting from the lowest level and working upwards to each successive level and ultimately providing an aggregate forecast of manpower needed Based on the belief that the unit manager is most knowledgeable about his requirements Forecasting Requirements – Three Common Techniques Zero base Forecasting Using the current level of employment as a starting point to determine future needs Line managers must justify need for additional manpower In instances of retirement, vacancies usually not filled (unless justified) but work is spread out Trend Analysis An approach in which past employment needs are studied over a fixed period to determine future needs Data must also take into consideration changes in sales volume, competition level, etc

22. Forecasting Requirements - Other Techniques Ratio Analysis Determining future staff needs by using ratios, Eg Sales volume vs number of manpower needed Scatter Plot Graphical method to identify relationship between two variables ; Simulation Experimenting with a real world situation using a mathematical model Computerised Forecasting Determination of future needs by projecting sales, production volume and number of manpower required to sustain this volume vide the use of software.

23. Forecasting Availability – Internal Sources Management / Skills Inventory Using the HR database of existing employees to identify persons with the required skills set. Most organisations have successfully employed HRIS to manage the qualification and skills inventory of existing employees. Succession Planning Identifying and grooming existing employees to fill potential vacancies. 23

24. Comparing Requirement and Availability – External Sources Labour market. Educational institutions. Professional organisations . Job fairs.

25. Shortcomings of the Traditional Approach Traditional approaches are simplistic and HR activities to address mismatches are stand alone initiatives (not system-wide). HR strategy is downstream of corporate strategy. Ignores the notion that HR can be a source of competitive advantage.

26. The Way Forward The Way Forward Facilitating intervention at strategy setting stage vide dialogue with strategy makers and other initiatives enables easier change of strategies and therefrom initiatives when environmental factors change. Both quantitative analysis (organisational design, HR strategy, resource allocation, employee commitment, learning approaches) and qualitative analysis (culture, learning organisation, approaches to knowledge management). Strategic Human Resource Planning R ecognises contribution of HR to long term strategy direction. Gives HR due attention in strategy making, enables detailed audit of organisation’s human capital, facilitates gap analysis to address mismatches and generates a variety of HR solutions, thereby reducing the risk of implementation failures due to the lack of competencies. 26

27. The Way Forward The Way Forward Facilitating intervention at strategy setting stage vide dialogue with strategy makers and other initiatives enables easier change of strategies and therefrom initiatives when environmental factors change. Both quantitative analysis (organisational design, HR strategy, resource allocation, employee commitment, learning approaches) and qualitative analysis (culture, learning organisation, approaches to knowledge management). Strategic Human Resource Planning R ecognises contribution of HR to long term strategy direction. Gives HR due attention in strategy making, enables detailed audit of organisation’s human capital, facilitates gap analysis to address mismatches and generates a variety of HR solutions, thereby reducing the risk of implementation failures due to the lack of competencies. 27

28. Comparing Requirement and Availability Requirement more than Availability Recruitment (External and Internal). Job redesign (Enlargement) (increasing tasks of existing jobs). Training (equipping unemployable individuals with requisite skills). Reengineering (redesign of business process to reduce demand for man needs). Availability more than Requirement Restricted hiring. Reduced working hours. Downsizing (Restructuring or Right sizing). Early retirement. Outplacement.

29. What is Recruitment? The process of attracting individuals on a timely basis, in sufficient numbers and with the right qualifications to apply for jobs within an organisation. Easy to do but difficult to undo. Importance of recruitment Recruitment and selection are practices that can provide an organisation with a powerful basis for influencing and organising human behaviour in line with the strategic direction of the organisation (Sparrow and Hiltrop, 1994). From Manpower Planning to Recruitment

30. Overtime Most commonly used alternative to recruitment, especially in instances of short-term fluctuations; In reality, employers paying more for less and also problem of fatigued employees; Favoured by serving employees due to increased income; Employees may pace themselves to ensure overtime; and May become accustomed to higher income and attempts by companies to limit overtime has negative consequences. Contingent workers Temporary or part-time workers. Alternatives to Recruitment (1) 30

31. Outsourcing Hiring external providers to undertake work previously done internally. Initially only peripheral activities but scope has widened in recent times. Does provide employers with flexibility – Numerical, Functional (Cognitive) and Financial. Employee Leasing Manpower provided by labour suppliers. Alternatives to Recruitment (2) 31

32. Recruitment and Selection Process Pre-Recruitmen t Job Analysis Job description Job Specification Employee Requisition Based on HR Plan derived from Business Plan Internal sourcing Evaluate advantages and disadvantages Recruitment Proper Recruitment sources Advertisement Interviews (Many types) Selection Tests Post Recruitment Orientation Job Placement On Job Training Pre-recruitment Planning Forecasting external sources

33. Advantages Good public relations Morale building Encouragement of ambitious employees Ample information on existing employee performance Cost savings Ease of orientation Opportunity to develop mid level managers Internal recruitment – Advantages & Disadvantages Disadvantages Possible inferiority of internal candidates Infighting and morale problems Potential inbreeding

34. Internal recruitment Initiatives Job Posting Publicising vacancies to serving employees through internal mediums of communication such as notice boards and internal circulars. Job Bidding Organisation has a procedure that allows employees who believe that they have the required qualifications to apply for a higher position within the organisation . Promotion from Within Policy of filling positions above entry-level positions with serving employees. Succession Planning Identifying and developing existing employees for higher positions. Usually for senior management positions.

35. Common External Recruitment Methods Open market Most common approach. Undertaken by placing advertisements in selected medium and encouraging persons to apply. Direct Competitors Known as employee poaching, it is common in specialised jobs and for specific talents. Agencies Government ( Jabatan Tenaga Kerja / Perkeso ). Executive search firms (Retained / Contingency), Job Fairs / Event recruiting (Corporate bodies / Government agencies). Educational institutions Internships (Practical training). Placement fairs.

36. Advertisements Important to chose the right medium, right date and right page. Choice of media usually dependent on the position to be filled. Example: Local newspapers for lower-level positions and professional journals for specialised skills. Important to use the four-point AIDA guide. A = Attention (use of right design, images and words) I = Interest (using aspects of the job. Eg. Location, challenging, etc ) D = Desire ( Eg : Opportunity to travel) A = Action (Call today) Goes beyond advertising the vacancy. Can be used to promote the organisation or brand image.

37. Selection The process of choosing from a group of applicants the individual best suited for a particular position within the organisation. Both over-qualified and underqualified persons will probably leave the organisation. Importance of Effective Selection Productivity and Profitability : Performance of organisations is dependent on the performance of individual employees. One study in US indicated that 20% of hires are wrong hires. Competent people are vital for organisational success. Costs: Costs involving in recruitment and selection (RAT Costs) are high and wrongful selection can have severe financial implications. Legal obligations : Several countries have legal obligations governing recruitment that needs to be complied with. From Recruitment to Selection

38. Type of organisation The type of organisation (Government vs Private sector, Big vs Small) affects the applicant pool. O rganisational policies and procedures HR functions do not operate in isolation but are affected by organisational policies and procedures. Eg : If the company pays relative inferior compensation, then it would be difficult to source good talent. Legal considerations Some countries have laws and/or policies that affect the choice of candidates. Eg Affirmative Action policies, Non-discriminatory policies, etc. Applicant pool Effective selection can only be effective if there are a significant number of qualified applicants. Speed of decision making Time taken to make selection decisions impact the selection process. Highly bureaucratic organisations take a relatively longer time to make decisions and applicants may be taken up by other organisation . Factors affecting the Selection process

39. The Selection Process External Environment Internal Environment Review of Resumes Selection tests Preliminary Interview Selection interview Pre-employment screening / Background checks Selection decision Medical Examination Employment Offer R e j e c t e d c a n d I d a t e

40. Probably the first stage in the selection process for most organisation . At this stage, the organisation carries out the initial screening by rejecting candidates who obviously do not meet the minimum standards required for the job. Some organisation may require applicants to fill up an application form prior to the interview. A well-designed application form can be very useful as the required information in a standardized format helps determine whether or not there is a match between the applicant and the position. Other organsiations only require the application form at a later stage. Initial screening is done based on the submitted resumes. Initial Screening - Review of Resumes / Application Forms

41. Career objective : Good resumes start with the career objective. Skills and Competencies : Test of relevancy. Sell yourself strongly by stating the skills and competencies you have that are necessary for the successful accomplishment of the job. Do not include information that has no relevance to the job. Be truthful : Do not misrepresent the truth. Avoid exaggeration : Present your self in a positive light but do not exaggerate excessively. Previous job history : Pay attention to the accuracy of the dates. If there are lapses in your employment record, explain them. Also explain reasons for leaving previous jobs. Expected salary: How to decide??? Resumes - Contents Guidelines

42. Another tool commonly used to screen and short-list applicants is the use of selection tests. Traditional selection tools (resumes / interviews) have several short-comings. They may be able to accurately predict an individual’s ability but not his attitude. Notwithstanding its reliability and ability to accurately predict his on the job behaviour , such tests cannot be used as the sole tool. It is used together with other selection tools. The common factors tested are Abilities, Aptitude, Attitude and Motivation. The more common tests are cognitive abilities/ intelligence tests, physical abilities test, psychomotor tests, aptitude tests, work related tests and personality tests. Shortlisting Candidates vide Selection Tests

43. Cognitive abilities / Intelligence tests - To test mental calibre and individual’s ability to learn and perform job by measuring his reasoning ability, memory, numerical flexibility, vocabulary and verbal fluency - Used to identify applicants with extensive knowledge bases as this facilitates quick adaptation to technological advancements and job changes Psychomotor test - To measure an individual’s strength, co-ordination, dexterity, etc - Especially important now due to miniaturization Aptitude tests To test aptitude such as vocational interest and inclination such as mechanical, mathematical, musical, construction, etc Common Selection Tests (1)

44. Job Knowledge / Work related tests Designed to test the knowledge of applicants regarding the duties of the job and the ability to do the required tasks (Work sampling) Vocational Interests test Test used to determine the occupations the applicant are most likely to be interested and the one which will give them the most satisfaction Personality tests To measure individual’s degree of motivation, emotional stability, social attitudes, team spirit, temperaments and disposition Common Selection Tests (2)

45. Relatively stable pattern of behaviours and consistent internal states that explain a person's behavioural tendencies or the sum total of ways in which an individual reacts and interacts Examples of Personality traits Reserved vs Outgoing Affected by feelings vs Emotionally stable Submissive vs Dominant Serious vs Happy Go lucky Expedient vs Conscientious Timid vs Venturesome Tough minded vs Sensitive Trusting vs Suspicious Practical vs Imaginative Forthright vs Shrewd Self Assured vs Apprehensive Conservative vs Experimenting Group dependent vs Self sufficient Uncontrolled vs Controlled Relaxed vs Tense Personality

46. Openess Conscientiousness Extraversion Agreeableness Neuroticism Addresses one’s range of interests and fascinations with novelty. Open people (Explorer) – Creative, open minded and intellectual. Preserver - Unimaginative, disinterested and narrow minded. Is conventional and finds comfort in familiarity Measure of reliability. Focused - Responsible, organised dependable and persistent. Flexible – Frivolous, irresponsible, disorganised . More suited for researchers Dimension that captures one’s comfort level with relationships : Eg : Extroverts (gregarious, assertive, sociable) or Introverts ((Reserved, timid, quiet) One’s propensity to defer to others. Highly agreeable (Adapter) – Cooperative, warm and trusting. Challenger – Cold, disagreeable and antagonistic Measure a person’s ability to withstand stress. Positive stability (Resilient) – Calm, self-confident, secure Negative (Reactive) – Nervous, anxious, depressed Argues that a person’s job performance is influenced by his personality traits. Model identifies 5 traits clusters (each with 6 traits) Example of a Personality Model – The Big Five Model

47. Standardisation The need for uniformity of procedures and conditions. Organisations must ensure that all applicants undertake the same test and under identical conditions, including the physical environment. Objectivity Condition that is achieved when everyone taking the test scores the same outcomes. Either right or wrong, Hence the preference for objective style multiple choice tests. Norms Frame for comparing applicant’s performance with that of others. A score by itself is insignificant. It becomes meaningful only when compared other applicants scores. Reliability Extent to which the test provides consistent resuts . Inconsistent reliability often reflects a poor predictor. Validity (Job Relatedness) Extent to which the test measures what it is supposed to measure Characteristics of Properly Designed Tests

48. Test Validity Accuracy and extent to which tests actually measures what it is supposed to measure. Performance on the test is an accurate predictor of subsequent performance. Construct Validity Extent to which tests actually measures traits / qualities important for job. Usually the Job Analysis would have identified the key traits (courtesy, aggressive, creativity, etc ) required for the job Content Validity Extent to which tests actually contains a fair sample of tasks and skills needed for the real job (Information obtained from Job Description) Criterion Validity Extent to which the tests measures test scores with a pre-determined aspect of job performance Validating Testing (Types of Validation Tests)

49. A goal-oriented process by which the interviewer and applicant exchange information through oral questions and oral responses. Notwithstanding several studies that indicate interviews are not valid predictors of actual job performance, it is still the most widely used selection tool. Many different types of interviews, namely Unstructured Interviews, Structured Interviews, Behaviourial Interviews Common problems are untrained interviewers, interviewers misunderstanding job requirements, inappropriate questions, negative emphasis, hallo effect, snap judgments, personal prejudice, bias, emphasis on non-job related matters and contrast errors. Stage 3 – Selection Interviews

50. Types of Interviews Unstructured Interviews Where interviewer asks open-ended and probing questions in which the applicant is encouraged to do most of the talking. Common questions “Tell me about yourself” “ What are your strengths” “ What are your weakness” “ how will we benefit from employing you”. Time consuming but able to solicit much information. Structured Interviews Interviewer asks each applicant the same set of pre-prepared job-related questions. Common questions are situational (pose typical job situation to see how applicant handles it), Job Knowledge (related to basic education skills to test academic background), Job sample simulation (applicant required to answers questions related to performance of a task) and Worker Requirement (questions to determine willingness to conform to job requirements) Behaviourial Interviews Structured interviews where applicants are asked to relateactual incidences from the past that are relevant to the job sought

51. Interviewing Methods One on One Most common method which allows for effective exchange of information due to the less intimidating environment Group Several applicants interact with each other in the presence of a few interviewers or company representatives. Usually used in situations where there is a need to assess the interpersonal competence of the applicants. Panel An increasing popular method wherein the applicant is interviewed by a few interviewers. Interviewers are usually cross-functional – HR, department head and neutral department

52. To verify information submitted such as padded CVs, overstating of qualifications, false testimonials, previous employment history to identify gaps, health and medical condition, personal references and credit history Sources : Educational institutions, previous employers, government agencies and referees Stage 4 – Background / Reference Checks

53. Most job offers are contingent on the selected individual passing the required medical examination. To determine whether applicant is physically and otherwise capable of performing the work. Must be careful to avoid allegations of discrimination. Stage 5 – Medical Examination

54. Orientation Procedure for providing new employees with background information about the organisation , its culture, the activities of the various departments and prevailing rules and regulations. Objectives Make employee feel welcome and at ease. Facilitate understanding of the organisation (past, present, culture, vision, policies, procedures) Clarity on what is expected in terms of work and work behaviours First socialisation process into organisation’s ways of doing things Process Varies from organisations to organsiations May be few hours or few days with briefing at the different departments Employee Orientation

55. Next Module Module 3 Compensation Management And Performance Management