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HUMAN RESOURCE MANAGEMENT Human Capital Management - introduction Dr. Marian Krupa agenda 1. Introduction to General Management (GM) 2. Human Resources Management (HRM) – overview 3. HRM and Business Cycles 1. Introduction to General Management (GM) Key Questions What is (HR) management? Who are (HR) managers? What do (HR) managers do? What is organization? Why study (HR) management? ? What is management? Coordinating work activities so that they are completed efficiently and effectively with and through other people. Robbins, Coulter, Management, Pearson/Prentice Hall, USA 2005, p. 7. Wealth creating activity. The art of using human and material resources to produce and market goods and services Archer, An Introduction to Canadian Business, McGraaw-Hill Ryerson Ltd, Canada 1982, p. 450. What is management? Efficiency and effectiveness ? Efficiency is „doing things right”. Effectivness is „doing the right things right”. Efficiency – ability to achieve high levels of output with a given resources. Effectivness performed efforts support the stated goals of the business. R. Schulteis, M. Sumner, Management Information Systems, Irwin, USA 1989, p. 68. What is management? Objectives All about decisions Risk taking Problem solving Asking right questions Satisfying people Planning, organizing, directing & controlling Robbins, Coulter, Management, Pearson/Prentice Hall, USA 2005, p. 9. Who are managers? Persons who are capable of asking right QUESTIONS! What is management? Someone who works with and through other people by coordinating their work activities in order to accomplish organizational goals. Robbins, Coulter, Management, Pearson/Prentice Hall, USA 2005, p. 5. Someone who works with people through people for people. What do managers do? ? What do managers do? Make decisions – solve problems Take risk – create value Learn and teach others Deliver customers’ satisfaction Work and communicate with people Create and implemment business strategies Plan, organize, direct & control What do managers do? Managers Profiles? Functions Personality Roles (Mintzberg) Values Skills Experiences What do managers do? SKILLS - Conceptual skills ? - Communications skills - Effectivness skills - Interpersonal skills Robbins, Coulter, Management, Pearson/Prentice Hall, USA 2005, p. 12-13. What is organization? ? What is organization? Deliberate arrangement of people to accomplish some specific purpose. Robbins, Coulter, Management, Pearson/Prentice Hall, USA 2005, p. 16. Every organization is defined by: Purpose, Integration, Cooperation, Border, Recurrence A. Bednarski What is organization? ? The External Environment What is organization? © Prentice Hall, 2002 What is organization? 2 1 4 ? 3 Why study management? Passion – it is your hobby Vision, new business idea Business experience Universality of management principles ? Why study management? © Prentice Hall, 2002 Rewards of Being a Manager create an environment that allows others to do their best work provide opportunities to think creatively help others find meaning and fulfillment meet and work with a variety of people © Prentice Hall, 2002 ? Why to work as a manager – Why to be in the business? BAD REASONS: GOOD REASONS: No other choice Passion To be your own boss Access to the market To be a rich person Excellent new idea Personal savings Investment capital Tradition (family) Opportunity (?) ? ? Planning labor needs and production process development Practice Graph 1. The Technological Process INPUT Raw materials OUTPUT Workplace A (12 pieces) Workplace B (3 pieces) Workplace C (6 pieces) Workplace D (12 pieces) Final product Table. Production costs – labor costs (salaries): Work station A B C D Rate [$/hour] 4 2 6 4 Labor hours 8 8 8 8 TOTAL: Total [1 shift] 32 $ 16 $ 48 $ 32 $ 128 $ Table 2. Gantt’s Charts – real production performance Time/h Wrkstation 7 - 8 - 9 - 10 - 11 - 12 - 13 - 14 - 15 - 16 - 17 - 18 - 19 - 20 - 21 - 22 - 25 25 25 25 25 0 0 0 25 25 25 25 25 0 0 0 0 100 100 100 100 100 0 0 0 100 100 100 100 100 0 0 A % B % C % 0 0 50 50 50 50 50 0 0 0 50 50 50 50 50 0 0 0 0 25 25 25 25 25 0 0 0 25 25 25 25 25 D % In Search of the New Economy Universal / Contemporary Management ? In Search of the New Economy PRIORITIES! People Money Conflict Ethics Information Value Competition Profit Organizations Communication Technology Skills Management Innovation Decisions Risk Transport Planning Motivation Culture Taxes Recources Control Capital In Search of the New Economy Knowledge Illustration. Impact on the Knowledge Economy. [Source: Jürgen Kreuziger, Solutions for the Knowledge Worker, The my SAP Business Intelligence Conference, Hamburg 2000]. In Search of the New Economy Knowledge Value (Intangible) Illustration . Evolution of Corporate Value. [Source: Jürgen Daum, Value Based Management for the New Economy, The my SAP Business Intelligence Conference, Hamburg 2000]. In Search of the New Economy Knowledge Value (Intangible) Electronic Market E-commerce Government-to-Business (G2B) All transactions between companies and government agencies Business-to-Business (B2B) All transactions between a company and its suppliers E-Commerce Business-to-Consumer (B2C) Electronic retailing Consumer-to-Consumer (G2C) Electronic markets formed Illustration. The New Economy is Radicly Altering Value Chains. Source: Jürgen Daum, Value Based bymyWeb-based auctionsConference, Hamburg 2000. Management for the New Economy, The SAP Business Intelligence In Search of the New Economy Knowledge Value (Intangible) Electronic Market Customer/ Branding Illustration. Value Networks Decapitalize the Traditional Business Model. [Source: Jürgen Daum, Value Based Management for the New Economy, The my SAP Business Intelligence Conference, Hamburg 2000]. In Search of the New Economy Knowledge Value (Intangible) Electronic Market Customer/ Branding Networking (Global) Illustration. The Big Picture of the e-Buisness in the XXI Century. [Source: Oliver Edinger, Managing External Communities with mySAP Workplace, The my SAP Business Intelligence Conference, Hamburg 2000]. In Search of the New Economy Knowledge Value (Intangible) Electronic Market Customer/ Branding Networking (Global) People (Cultures) http://www.sap.com What makes the difference? 7 As 1. Ability to attract knowledge (Customer/Branding) 2. Ability to create VALUE from human innovation (CREATIVITY) 3. Ability to built long lasting business networking 4. Ability to think internationally / globally 5. Ability to communicate within cross-culture organizations 6. Ability to implement information technology 7. Ability to promote „human touch” environment 2. Human Resources Management (HRM) - overview HRM – definition? HRM – KEY FUNCTIONS: practices and polices you need to carry out the people and personnel aspects of your management job. ? Conducting job analysis Planning labor needs Selecting, recruiting job candidates Orienting and training new employees Managing (negotiating) wages and salaries Appraising performance, providing incentives and benefits Communicating Training, developing, building employee commitment G. Dessler, Human Resources Management, Prentice Hall Int., New Jersey, USA, p. 2. HRM – definition? Why is HR management Important to Business? G. Dessler, Human Resources Management, Prentice Hall Int., New Jersey, USA, p. 2. Hire a wrong person for a job Experience high turnover Find your people not doing their best Waste time with useless interviews Have your company taken to court because of your discriminatory actions Have your company cited under national occupational safty law for unsafe practices HRM – definition? Why is HR management Important to Business? (2) Have some of your employees think their salaries are unfair and inequitable relative to others in the organization Allow a lack of training to undermine your department’s effectiveness Commit any unfair labor practices ? G. Dessler, Human Resources Management, Prentice Hall Int., New Jersey, USA, p. 3. Method and techniques of HR Management Method METHOD - a particular way of doing sth: a reliable / effective / scientific method of data analysis. - A new way of solving the problem - The best solution for arriving at an accurate prediction of the costs. Oxford Advanced Genie Technique TECHNIQUE - a particular way of doing sth, especially one in which you have to learn special skills. Oxford Advanced Genie Principle PRINCIPLE – a moral rule or a strong belief that influences your actions; a belief that is accepted as a reason for acting or thinking in a particular way; a general or scientific law that explains how sth works or why sth happens. Oxford Advanced Genie Methodology METHODOLOGY - a set of methods (techniques) used to perform a particular activity. Oxford Advanced Genie Scientific method SCIENTIFIC METHOD - In science in general, method is a codified series of steps taken to complete a certain task or to reach a certain objective, see also algorithm, methodology. http://en.wikipedia.org Scientific method SCIENTIFIC METHOD - Scientists use observations, hypotheses, and logic to propose explanations for natural phenomena in the form of theories. Predictions from these theories that can be reproducibly tested by experiment are the basis for developing new KNOWLEDGE (technology). http://en.wikipedia.org Methods and Techniques - definition Method vs Technique: Method Level of perception Technique X Model (theory) X Concept, principle, rule X X Means X X Tools X X Procedure X X „Best practices” Means – the way that any given problem can be solved – concept implemetation – e.g. a table, graph. Tools – physical thing that implements the mean – e.g. a paper, pencil, computer, software, calculator. Methods and Techniques of HR Management http://www.valuebasedmanagement.net ISHIKAWA Diagram ISHIKAWA diagram ISHIKAWA diagram is a graphical method (technique) for finding the most likely causes for an undesired effect. The method was first used by Kaoru Ishikawa in the 1960s. http://en.wikipedia.org ISHIKAWA diagram ISHIKAWA diagram the fishbone diagram is a technique used in a root cause analysis. Because of its shape, it is also known as the fishbone diagram. http://en.wikipedia.org ISHIKAWA diagram http://silosandsmokestacks.org ISHIKAWA diagram MANAGEMENT PURCHASING Lack of competent translator Low level of IT support Management is not interested in complaints monitoring Resources Problems with business partner’s communication Work overload PERSONNEL Lack customers’ needs knowledge Low level of product quality Unappropriate transport Lack of product knowledge Holidays Late orders fulfilment Lack of monitoring of sales Others SALES Partner Loyalty Late deliveries by foreign partners MARKET Problems with SALES ? ISHIKAWA diagram Road map description / procedure: 1. Define the problem (100%) 2. Present key factors of the problem (weights/%) 3. Define detail characteristics of all key factors 4. Deliver the solution for any given problem 5. Present your diagram graphicly Communication and HRM ISHIKAWA Diagram – Voyant Technologies case PROJECT – questions? Communication barriers at Voyant 1. What barriers to communication were evident at Voyant? 2. What other communication barriers likely existed? 3. What and why were the structural changes important to the success of the communication changes? Robbins, Coulter, Management, Pearson/Prentice Hall, USA 2005, p. 927. Project ISHIKAWA DIAGRAM - cause & effect 0% 0% 0% Communication barriers 0% 0% 0% 0% Project ISHIKAWA DIAGRAM - cause & effect 20% 100% MARKETING 25% LOGISTICS FINANCE 10% 5% a 5% f 5% k 25% b 25% g 25% l 35% c 35% h 35% m 5% d 5% i 5% n 30% e 100% 30% j 100% 30% o KEY problem 100% 5% p 100% 5% x 100% 5% qq 100% 25% r 25% y 25% rr 35% s 35% z 35% tt 5% t 5% xx 5% vv 30% w 30% zz 30% bb 25% INNOVATION 15% PRODUCTION 5% ADMINISTRATION 3. HRM and Business Cycles How Business cycles impact HR decisions? 1. What is the level of employment? 2. What is a strategy of wage increase? 3. What is the training policy? 4. What is nonfinancial benefits package strategy? Business Cycles – background Background A free market economy does not grow at a constant rate. It goes through a series of booms and busts called the business cycle. http://www.cssd.ab.ca Background http://www.digitaleconomist.com/ Background http://ingrimayne.saintjoe.edu/ Background http://www.hm-treasury.gov.uk Background The key questions ? What makes the economy to fluctuate? What are the main reasons for that? How business cycles impact HR decisions? Business Cycles basic definitions Definitions Business Cycles – expansions and contractions in the volume of economic activity. Bronfenbrenner, Sichel, Gardner, Economics, Houghton Miffilin Company Boston, 1987, p. 184 The Business Cycle (economic cycle) refers to the ups and downs seen somewhat simultaneously in most parts of an economy. http://en.wikipedia.org/wiki/Business_cycles Background The Business Cycle refers to the continuous ebb and flow of business activity that occurs around any long-term trend after seasonal patterns have been removed. Lipsey, Purvis, Steiner, Economics, Harper & Row, New York 1985, p. 552 Background The Business Cycle model consists of four stages: • Recession • Depression • Recovery • Prosperity (Growth) Business Cycles (Joseph Schumpeter) Recession Depression http://en.wikipedia.org/wiki/Image:Business_cycle_01.png Recession Demand for goods and services is falling down Production and employment is falling as well Households’ income is decreasing Profits of business activity are smaller / many bankruptcies No more investment to new venture Stock in warehouses is growing General economic instability Falling Currency Falling consumers’ confidence HR? Depression Demand for goods and services is falling down even further Production and employment is on a minimum level Households’ income is low – no credit consumption Profits of business activity are very low / even more bankruptcies All new ventures and investments are very risky Stock in warehouses are empty General economic pessimism Low value of the currency Low consumers’ confidence HR? Trough (bottom) High unemployment – low inflation (deflation) Production on a minimum level of its capacity Profits are very low General economic performance – stable indicators General lack of confidence HR? Recovery Demand for goods and services is still very low, however there are some signs in the rises of retail sales Production and employment is on a minimum level Households’ income is low – some credit consumption Profits of business activity are low / no more bankruptcies All new ventures and investments are becoming very attractive Stock in warehouses is rising - some economic optimism Rising value of the currency Rising level of new investments – new technology Expatiations become more favorable as a result of increases in production, sales and profit Prosperity / Growth Demand for goods and services is rising dramatically – rapidly disappearing stock has to be replaced by only new investments and hiring üHouseholds’ income is high – heavy credit spending Profits of business activity are very high All new ventures and investments are becoming even more attractive with low risk level Stock in warehouses is falling and at the certain point - rising Very big general economic optimism Stabilizing value of the currency Increase of demand above supply level generates inflation (increase of price for consumers’ and productions’ goods and services Peak (boom) High degree of utitlization of existing capacity Labor shortages – significant rise of wages Shortages of strategic raw amterials (oil, steel, energy) Significant raise of inflation Crash on a stock market !!! Historical data on Business Cycles Historical Data www.angelfire.com Historical Data - USA http://www.phschool.com BUSINESS CYCLES and HRM Practice Indicators 1. GDP (GNP) Economic Activity 2. Sales (Outlet Stores) 3. Warehouse (Stock level) 4. Investments (Factories) 5. Inflation Rate (Price stability) 6. Bank Rates % (Central Bank Rate) 7. Unemployment (Job Market) 8. Wages (Personal Income) 9. Consumers’ Optimism 10. Stock market (Earnings/Value) 11. Oil Price (Raw materials) 12. Gold price (Strategic / Risk) 13. Currency (Exchange Rate) ? Business Cycle – practice test Indicators GDP (GNP) Economic Activity Sales (Outlet Stores) Warehouse (Stock level) Investments (Factories) Inflation Rate (Price stability) Bank Rates % (Central Bank Rate) I – RECESSION II – DEPRESSION III – RECOVERY IV – GROWTH (Crisis/Contraction) (Slump) (Expansion) (Boom) ? ? Indicators Unemployment (Job Market) Wages (Personal Income) Consumers’ Optimism Stock market (Earnings/Value) Oil Price (Raw materials) Gold price (Strategic / Risk) I – RECESSION II – DEPRESSION III – RECOVERY IV – GROWTH (Crisis/Contraction) (Slump) (Expansion) (Boom) ? ? ? ? ? ? Indicators Currency (Exchange Rate) I – RECESSION II – DEPRESSION III – RECOVERY IV – GROWTH (Crisis/Contraction) (Slump) (Expansion) (Boom) Indicators GDP (GNP) Economic Activity Sales (Outlet Stores) Warehouse (Stock level) Investments (Factories) Inflation Rate (Price stability) Bank Rates % (Central Bank Rate) Unemployment (Job Market) Wages (Personal Income) Consumers’ Optimism Stock market (Earnings/Value) Oil Price (Raw materials) Gold price (Strategic / Risk) Currency (Exchange Rate) I – RECESSION II – DEPRESSION III – RECOVERY IV – GROWTH (Crisis/Contraction) (Slump) (Expansion) (Boom) ? ? ? ? ? ? ? ? How Business cycles impact HR decisions? 1. What is the level of employment? 2. What is a strategy of wage increase? 3. What is the training policy? 4. What is nonfinancial benefits package strategy?