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1 Licensed to: ichapters User FOURTH EDITION Human Resource Management in South Africa Pieter A. Grober, Surette Wärnich, Michae R. Carre, Norbert F. Ebert, Robert D. Hatfied

2 Human Resource Management in South Africa, 4 th edition Pieter A. Grober, Surette Wärnich, Michae R. Carre, Norbert F. Ebert and Robert D. Hatfied Pubishing Director: Linden Harris Pubisher: Brendan George Deveopment Editor: Jennifer Seth Content Project Editor: Aison Cooke Senior Production Controer: Pau Herbert Marketing Manager: Amanda Cheung Typesetter: KnowedgeWorks Goba, India Cover design: Adam Renvoize ALL RIGHTS RESERVED. No part of this work covered by the copyright herein may be reproduced, transmitted, stored or used in any form or by any means graphic, eectronic, or mechanica, incuding but not imited to photocopying, recording, scanning, digitizing, taping, Web distribution, information networks, or information storage and retrieva systems, except as permitted appicabe copyright aw of another jurisdiction, without the prior written permission of the pubisher. Whie the pubisher has taken a reasonabe care in the preparation of this book, the pubisher makes no representation, express or impied, with regard to the accuracy of the information contained in this book and cannot accept any ega responsibiity or iabiity for any errors or omissions from the book or the consequences thereof. Products and services that are referred to in this book may be either trademarks and/or registered trademarks of their respective owners. The pubishers and author/s make no caim to these trademarks. For product information and technoogy assistance, contact emea.info@cengage.com. For permission to use materia from this text or product, and for permission queries, emai csuk.permissions@cengage.com. The Author has asserted the right under the Copyright, Designs and This work is adapted from Human Resource Management in South Africa British Library Cataoguing-in-Pubication Data A cataogue record for this book is avaiabe from the British Library. Cengage Learning EMEA United Kingdom Cengage Learning products are represented in Canada by Neson Education Ltd. For your ifeong earning soutions, visit Purchase your next print book, e-book or e-chapter at Printed by RR Donneey, China Copyright 2010 Cengage Learning. A Rights Reserved. May not be copied, scanned, or dupicated, in whoe or in part. Due to eectronic rights, some third party content may be suppressed from the ebook and/or echapter(s). Editoria review has deemed that any suppressed content does not materiay affect the overa earning experience. Cengage Learning reserves the right to remove additiona content at any time if subsequent rights restrictions require it.

3 CHAPTER 1 THE FOUNDATION AND CHALLENGES OF HUMAN RESOURCE MANAGEMENT CHAPTER OBJECTIVES Having read this chapter, you shoud be abe to: evauate the deveopment of human resource management distinguish the strategic approach to human resources from the traditiona approach to human resource management summarise the key human resource management functions expain the roes of the human resources department identify eight chaenges/issues facing human resources today expain the trends reevant to the growing importance for human resource management 2 Copyright 2010 Cengage Learning. A Rights Reserved. May not be copied, scanned, or dupicated, in whoe or in part. Due to eectronic rights, some third party content may be suppressed from the ebook and/or echapter(s). Editoria review has deemed that any suppressed content does not materiay affect the overa earning experience. Cengage Learning reserves the right to remove additiona content at any time if subsequent rights restrictions require it.

4 CHAPTER 1 THE FOUNDATION AND CHALLENGES OF HUMAN RESOURCE MANAGEMENT 3 T here is no doubt that making great peope decisions is vitay important to a organisations. However, this is no easy task. According to Araoz (2007: 56 82) 1 numerous issues come into pay in this area. Firsty, it is important to note that there are ony a sma number of exceptiona performers avaiabe in the abour market. Thus, one is much more ikey to hire an average performer than an exceptiona one. The abiity to identify, attract and integrate exceptiona performers in an organisation is thus a major chaenge. Secondy, assessing peope, especiay for compex positions is inherenty difficut due to the unique and changing characteristics of many jobs, the difficuty of assessing intangibe traits and in many instances the imited accessibiity of many candidates many peope do not have a toerance for any kind of thorough evauation. Thirdy, finding the right person for any job is hindered by various psychoogica biases, and other forces operating within both the hiring team and the company at arge. For exampe, overrating the capabiity of the candidate, snap judgements, evauating peope in absoute terms and sticking with the famiiar. Fourthy, normay peope out of a job woud quicky convince a particuar empoyer that they are uniquey quaified for a position, whie those who are happiy empoyed woud be much more critica about their suitabiity to take up a new/ aternative position within an organisation, thus making the pacement decision more difficut. The aim of Human Resource Management in South Africa is to put the necessary toos in the hands of those entrusted with the peope decisions within organisations to empower them to avoid the traps discussed above PEOPLE PRACTICES IN SOUTH AFRICA According to the 2009 Africa Competitiveness Report (Word Economic Forum (2009: 21) of the 134 countries participating in the project wordwide, South Africa obtained an overa rating of 45 out of 134. The countries were evauated on 12 different piars (see Tabe 1.1). This can be regarded as an outstanding rating because South Africa remains the highest ranked country in Sub-Saharan Africa, and continues to receive exceent resuts in compex areas such as the avaiabiity of the atest technoogy (37th), capacity for innovation (36th), financia efficiency (24th) and business sophistication (33rd). What however, is a serious cause for concern and which coud impact negativey in future on these favourabe ratings is our rating on the Labour Market piar (7th piar). Particuary disturbing is our rating as a country on issues such as: cooperation in abour empoyer reations (119th), fexibiity of wage determination (123rd), hiring and firing practices (129th), pay and productivity (81st) and the brain drain (72nd). Pease note that certain HR components, such as training of staff (piar 5), did receive a very positive rating (15th). However, the peope component needs to be managed as one integrated whoe to enabe a company to obtain and maintain its competitive advantage and from Tabe 1.1 it is cear that South Africa sti needs to do a ot in this area. A HR practices need to be in sync. Thus, this text aims to aso hep those invoved with the peope issues in companies to achieve this goa. 1.2 HUMAN RESOURCES: PAST AND PRESENT Modern human resource (HR) management is radicay different from personne management of decades ago. In the ast 80 years of the twentieth century, both the scientific management approach and the human reations approach have appeared and decined; today what has popuary become known as the human resource approach has emerged Scientific management The technique of scientific management was the first radica change in what most owners and managers of the eary 1900s generay considered the most effective means of managing Copyright 2010 Cengage Learning. A Rights Reserved. May not be copied, scanned, or dupicated, in whoe or in part. Due to eectronic rights, some third party content may be suppressed from the ebook and/or echapter(s). Editoria review has deemed that any suppressed content does not materiay affect the overa earning experience. Cengage Learning reserves the right to remove additiona content at any time if subsequent rights restrictions require it.

5 4 PART I THE ENVIRONMENT FOR HUMAN RESOURCES TABLE 1.1 South Africa: The Goba Competitiveness Index in detai Indicator Rank/ 134 Indicator Rank/ 134 1st piar: Institutions Property rights 20* Inteectua property protection 23 Diversion of pubic funds 49 Pubic trust of poiticians 50 Judicia independence 30 Favouritism in decisions of government 50 officias Wastefuness of government spending 29 Burden of government reguation 95 Efficiency of ega framework 20 Transparency of government 29 poicymaking Business costs of terrorism 36 Business costs of crime and vioence 134 Organized crime 126 Reiabiity of poice services 109 Ethica behaviour of firms 42 Strength of auditing and reporting 4 standards Efficacy of corporate boards 8 Protection of minority sharehoders 13 interests Overa rating ¼ 46 2nd piar: Infrastructure Quaity of overa infrastructure 46 Quaity of roads 40 Quaity of rairoad infrastructure 37 Quaity of port infrastructure 49 Quaity of air transport infrastructure 25 Avaiabe seat kiometres per week 21 (miions) Quaity of eectricity suppy 101 Main teephone ines (per 100 popuation) 91 Overa rating ¼ 48 3rd piar: Macroeconomic stabiity Centra government baance (% GDP) 47 Nationa savings rate (% GDP) 102 Infation (%) 91 Interest rate spread (%) 45 Government gross debt (% GDP) 54 Overa rating ¼ 63 4th piar: Heath and primary education Business impact of maaria 95 Maaria incidence (cases per 100, popuation) Business impact of tubercuosis 129 Tubercuosis incidence (cases per ,000 popuation) Business impact of HIV/AIDS 133 HIV prevaence (% adut popuation) 132 Infant mortaity (deaths per 1,000 ive 101 births) Life expectancy at birth (years) 121 Quaity of primary education 104 Primary education enroment (net rate, %) 97 Education, expenditure (% GNI) 32 Overa rating ¼ 122 5th piar: Higher education and training Secondary education enroment (gross 44 rate, %) Tertiary education enroment (gross 93 rate, %) Quaity of the educationa system 110 Quaity of maths and science education 132 Quaity of management schoos 25 Internet access in schoos 91 Loca avaiabiity of research and training 29 services Extent of staff training 15 Overa rating ¼ 57 6th piar: Goods market efficiency Intensity of oca competition 59 Extent of market dominance 33 Effectiveness of anti-monopoy poicy 13 Extent and effect of taxation 25 Tota tax rate (% profits) 45 Number of procedures required to start 44 a business Number of days required to start a 70 business Agricutura poicy costs 12 Prevaence of trade barriers 43 Trade-weighted tariff rate (% duty) 75 Prevaence of foreign ownership 58 Business impact of rues on FDI 77 Burden of customs procedures 58 Degree of customer orientation 78 Buyer sophistication 28 Overa rating ¼ 31 7th piar: Labour market efficiency Cooperation in abour-empoyer reations 119 (continues) Copyright 2010 Cengage Learning. A Rights Reserved. May not be copied, scanned, or dupicated, in whoe or in part. Due to eectronic rights, some third party content may be suppressed from the ebook and/or echapter(s). Editoria review has deemed that any suppressed content does not materiay affect the overa earning experience. Cengage Learning reserves the right to remove additiona content at any time if subsequent rights restrictions require it.

6 CHAPTER 1 THE FOUNDATION AND CHALLENGES OF HUMAN RESOURCE MANAGEMENT 5 TABLE 1.1 South Africa: The Goba Competitiveness Index in detai (continued ) Indicator Rank/ 134 Indicator Rank/ 134 Fexibiity of wage determination 123 Non-wage abour costs (% worker s 14 saary) Rigidity of Empoyment index (0-100, is worst) Hiring and firing practices 129 Firing costs (in weeks of wages) 39 Pay and productivity 81 Reiance on professiona management 16 Brain drain 72 Femae-to-mae participation ratio in 103 abour force Overa rating ¼ 88 8th piar: Financia market sophistication Financia market sophistication 12 Financing through oca equity market 4 Ease of access to oans 31 Venture capita avaiabiity 29 Restriction on capita fows 111 Strength of Investor Protection 0-10, 10 9 is best) Soundness of banks 15 Reguation of securities exchanges 5 Strength of Lega Rights (0-10, 10 is best) 52 Overa rating ¼ 24 9th piar: Technoogica readiness Avaiabiity of atest technoogies 37 Firm-eve technoogy absorption 32 Laws reating to ICT 34 FDI and technoogy transfer 38 Mobie teephone subscribers (per popuation) Internet users (per 100 popuation) 95 Persona computers (per 100 popuation) 68 Broadband internet subscribers (per popuation) Overa rating ¼ 49 10th piar: Market size Domestic market size index 22 Foreign market size index 36 Overa rating ¼ 23 11th piar: Business sophistication Loca suppier quantity 43 Loca suppier quaity 24 State of custer deveopment 40 Nature of competitive advantage 72 Vaue chain breadth 75 Contro of internationa distribution 37 Production process sophistication 43 Extent of marketing 15 Wiingness to deegate authority 22 Overa rating ¼ 33 12th piar: Innovation Capacity for innovation 36 Quaity of scientific research institutions 31 Company spending on R&D 28 University-industry research coaboration 28 Gov t procurement of advanced tech 63 products Avaiabiity of scientists and engineers 110 USPTO utiity patents (per miion 39 popuation) Overa rating ¼ 37 Note: *Ranking out of 134 countries wordwide Source: The Africa Competitiveness Report 2009 ª Word Economic Forum, the Word Bank and the African Deveopment Bank, p Avaiabe at: accessed on 3 September Used with permission. empoyees constant supervision and threat of the oss of their jobs (simiar to the approach of Dickens s Ebenezer Scrooge). Before the advent of scientific management, a empoyees were considered equay productive, and if their productivity did not measure up, their empoyment deserved to be quicky terminated. The founders of the scientific management movement in the USA beieved differenty. Instead of simpy reying on the use of fear and intimidation, Frederick Tayor, Frank and Liian Gibreth and Henry Gantt beieved that managers shoud take a scientific and objective approach in studying how work coud be most efficienty designed. Copyright 2010 Cengage Learning. A Rights Reserved. May not be copied, scanned, or dupicated, in whoe or in part. Due to eectronic rights, some third party content may be suppressed from the ebook and/or echapter(s). Editoria review has deemed that any suppressed content does not materiay affect the overa earning experience. Cengage Learning reserves the right to remove additiona content at any time if subsequent rights restrictions require it.

7 6 PART I THE ENVIRONMENT FOR HUMAN RESOURCES Tayor, the father of scientific management, and the others empoyed scientific data coection and anaysis methods often found in research aboratories at that time. He emphasised the study of the motions required for each job, the toos utiised and the time required for each task. Then, based on scientific data instead of a boss s subjective judgement, fair performance standards for each job coud be determined. Workers who produced output above the standard woud receive additiona incentive pay (at the time, a empoyees were generay given the same daiy or weeky wage, regardess of their individua efforts). The resuts of scientific management techniques received widespread praise in the newspapers around the word and its principes spread quicky, incuding to South Africa, generay with success. However, the movement s treatment of the worker someone motivated soey by money ed to probems. Frederick Tayor decared that One of the very first requirements for a man who is fit to hande pig iron as a reguar occupation is that he sha be so stupid and so phegmatic that he more neary resembes in his menta makeup the ox than any other type. 3 Tayor s oft-quoted comment underscores a widespread manageria attitude of the eary twentieth century: aong with raw materias, capita and machinery, the empoyee is simpy another factor of production. As such, the scientific management approach resuted in work methods and techniques that showed great concern for empoyee output but itte concern for empoyee satisfaction. Socaed time-and-motion studies repaced rue-of-thumb work methods with the one best way to perform a task. Typicay, the one best way to do the job was highy speciaised and routine, invoving itte menta effort and few opportunities to make decisions or use judgement. Proponents of scientific management are quick to point out that the average turn-of-the-century worker had itte forma education and few skis or abiities that coud be appied to organisationa probems. This was especiay the case, for exampe, in the South African mines at that time. The concept of the economic man, embraced by many managers and administrators during the eary part of the twentieth century, hed that a worker is motivated primariy by economic gain and that a worker s output can be maximised ony through financia incentives. With that concept in mind, Tayor created the differentia piece-rate system, whereby workers woud receive a higher rate of pay per piece produced after the daiy output standard had been achieved. Through the differentia piece-rate system (aong with other techniques), workers were expected to produce at a maximum eve to satisfy what was beieved to be their ony workreated need: money. The personne departments of arge companies during the eary years of the century had the traditiona responsibiities of recruiting, seection, training and heath and safety; but the main focus of their activities was the impementation of scientific management techniques. For exampe, personne department staff conducted time-and-motion studies and fatigue studies, performed job anayses, prepared job specifications and created wage incentive programmes. 4 During this period, many personne departments aso activey supported wefare programmes that addressed the needs of the worker: hoidays, persona hygiene, job training, canteens, company housing, empoyee oans, insurance pans and recreationa programmes. Such wefare programmes generay refected the paternaistic attitude of management common at the time: We know what is best for you. However, these paternaistic practices often faied to bring about unquestioned acceptance of authority. Primariy for that reason, the popuarity of empoyee wefare programmes decined internationay, as we as in South Africa, during the 1920s and 1930s Human reations During the 1930s and 1940s, with impetus provided by the cassic Hawthorne studies in the USA, management s attention shifted from scientific management to human reations. The Copyright 2010 Cengage Learning. A Rights Reserved. May not be copied, scanned, or dupicated, in whoe or in part. Due to eectronic rights, some third party content may be suppressed from the ebook and/or echapter(s). Editoria review has deemed that any suppressed content does not materiay affect the overa earning experience. Cengage Learning reserves the right to remove additiona content at any time if subsequent rights restrictions require it.

8 CHAPTER 1 THE FOUNDATION AND CHALLENGES OF HUMAN RESOURCE MANAGEMENT 7 Hawthorne studies demonstrated that empoyee productivity was affected not ony by the way the job was designed and the manner in which empoyees were rewarded economicay but aso by certain socia and psychoogica factors. 5 Hawthorne researchers Eton Mayo and F. J. Roethisberger discovered that empoyees feeings, emotions and sentiments were strongy affected by such work conditions as group reationships, eadership styes and support from management and that those feeings coud, in turn, have a significant impact on productivity. 6 Thus, it was asserted, treating empoyees with dignity woud both enhance empoyee satisfaction and enabe the achievement of higher productivity. The Mayo-Roethisberger research ed to the widespread impementation of behavioura science techniques in industry, incuding supervisory training programmes that emphasised support and concern for the workers. The personne department was primariy responsibe for designing and impementing such programmes. The shift to human reations was aso infuenced by the growing strength of unions a over the word and in South Africa during this period. The rise of unionism in South Africa was the direct resut of the many foreign workers who came to work on the god and diamond mines from a over the word and brought these concepts with them. As a resut of the rise of unionism in South Africa, as we as strikes on the mines, the first Industria Conciiation Act was passed in This Act gave workers the ega right to organise and bargain coectivey with empoyers in disputes about wages, job security, benefits and many other work conditions. Athough the Act did not egisate good human reations, it did compe many empoyers to improve their personne programmes (i.e. empoyee reations) in an effort to keep unions out. With unionisation came forma grievance procedures, which provided empoyees with a measure of protection against arbitrary or despotic supervision. Athough unionisation ed to an erosion of abourmanagement reations in some firms, in many other companies in South Africa it resuted in greater acceptance of the principes of human reations. The human reations approach was no doubt instrumenta in improving the working environment of many workers but it achieved ony minima success in increasing worker output and enhancing job satisfaction. The ackustre performance of the approach is attributabe to the foowing: The approach was based on an oversimpified concept of human behaviour in an organisationa setting. The notion that a happy worker is a hard worker generay presented to management as an untested hypothesis is now recognised to be vaid for ony part of the workforce. The approach faied to consider the concept of individua differences. Each worker is a unique and compex person with different wants, needs and vaues. What motivates one worker may not motivate another; being happy or feeing good may have itte or no impact on the productivity of certain empoyees. The approach faied to recognise the need both for job structure and for contros on empoyee behaviour, and it argey negected the importance of procedures, standards and work rues in guiding empoyees toward the goas of the organisation. The approach faied to recognise that good human reations are but one of many conditions necessary to sustain a high eve of empoyee motivation. For instance, productivity may aso be improved with performance appraisa systems, career deveopment programmes, job enrichment programmes and seection and pacement systems that successfuy match the empoyee with the job. The human reations approach fe out of favour with management during the 1950s and 1960s and is considered passé today. Whie good human reations are sti an important organisationa objective, the human reations approach is no onger the predominant one guiding eadership stye within organisations. Good feeings are necessary but certainy not sufficient to ensure peak eves of empoyee satisfaction and productivity. Copyright 2010 Cengage Learning. A Rights Reserved. May not be copied, scanned, or dupicated, in whoe or in part. Due to eectronic rights, some third party content may be suppressed from the ebook and/or echapter(s). Editoria review has deemed that any suppressed content does not materiay affect the overa earning experience. Cengage Learning reserves the right to remove additiona content at any time if subsequent rights restrictions require it.

9 8 PART I THE ENVIRONMENT FOR HUMAN RESOURCES The human resource approach The emerging trend in HR management is ceary toward the adoption of the HR approach, through which organisations benefit in two significant ways: an increase in organisationa effectiveness and the satisfaction of each empoyee s needs. Rather than addressing organisationa goas and empoyee needs as separate and excusive, the human resource approach hods that organisationa goas and human needs are mutua and compatibe: one set need not be gained at the expense of the other. The HR approach is reativey new in the management of peope. The term became popuar in the 1970s as research in the behavioura sciences showed that managing peope as resources rather than as factors of production, or as human beings who act soey on the basis of emotions, coud resut in rea benefits to both the organisation and the empoyee. As important as the approach has become, the term human resources ike many other terms in management iterature is hard to define with carity. Nonetheess, a number of principes provide the basis for a HR approach: Empoyees are investments that wi, if effectivey managed and deveoped, provide ong-term rewards to the organisation in the form of greater productivity. Poicies, programmes and practices must be created that satisfy both the economic and emotiona needs of empoyees. A working environment must be created in which empoyees are encouraged to deveop and utiise their skis to the maximum extent. HR programmes and practices must be impemented with the goa of baancing the needs and meeting the goas of both the organisation and the empoyee. As Figure 1.1 indicates, this can be achieved through a circuar process in which the organisation and empoyees enabe each other to meet their goas. FIGURE 1.1 The human resource approach EMPLOYEE Higher empoyee motivation and appied abiity Leads to Greater quaity, quantity of work Leads to Leads to Greater empoyee rewards, recognition Higher organisationa productivity, profits Leads to ORGANISATION Copyright 2010 Cengage Learning. A Rights Reserved. May not be copied, scanned, or dupicated, in whoe or in part. Due to eectronic rights, some third party content may be suppressed from the ebook and/or echapter(s). Editoria review has deemed that any suppressed content does not materiay affect the overa earning experience. Cengage Learning reserves the right to remove additiona content at any time if subsequent rights restrictions require it.

10 CHAPTER 1 THE FOUNDATION AND CHALLENGES OF HUMAN RESOURCE MANAGEMENT STRATEGIC HUMAN RESOURCE MANAGEMENT In a fast-paced goba economy, change is the norm. Environmenta, socia and technoogica change, the increased internationaisation of business and the increased scarcity and cost of HR can ony mean that ong-term panning is risky but absoutey essentia. How do organisations make decisions about their future in this compex, rapidy changing word? The process is caed strategic management. It invoves making those decisions that define the overa mission and objectives of the organisation, determining the most effective utiisation of its resources, and crafting and executing the strategy in ways that produce the intended resuts. Business strategy is management s game pan. 8 Without one, management woud have no road map to foow and no action pan to produce desired resuts. Strategic human resource management (SHRM) activities (which gained popuarity during the 1980s) address a wide variety of peope issues reevant to the business strategy. HRM crosses a the functiona areas and is fuy integrated with a the significant parts of the organisation: operations, marketing, finance, and so on. Lasty, the process is ed and coordinated by top management, usuay the deputy genera manager of human resources. 9 In Tabe 1.2 the difference between the strategic HRM approach and the traditiona HRM approach is shown; in Figure 1.2 a typica mode of strategic human resource management appears. In the past, peope issues were the soe province of the personne department. Today strategic HR probems are the responsibiity of every manager in every department. The HR staff are themseves resources to be caed on in support of operating managers. Whether managers are in charge of saes, accounts payabe or information systems, if they are responsibe for peope then they are HR managers. TABLE 1.2 The differences between strategic HRM and traditiona HRM Dimensions Strategic HRM Traditiona HRM Panning and strategy formuation Participates in formuating overa organisationa strategic pan and aigning HR functions with company strategy Is invoved in operationa panning ony Authority Has high status and authority for top HR officer (e.g. vice president for HR) Scope Is concerned with a managers and empoyees Decision-making Is invoved in making strategic decisions Integration Is fuy integrated with other organisationa functions e.g. marketing, finance, production Has medium status and authority (e.g. HR director) Is concerned primariy with houry, operationa and cerica empoyees Makes operationa decisions ony Has moderate to sma integration with other organisationa functions Coordination Coordinates a HRM activities Does not coordinate a HR functions Source: Anthony, W. P., Kacmar, K. M. and Perrewé, P. L. (2007) Human Resource Management: a strategic approach, 4th edn. ª South-Western, a part of Cengage Learning, inc. Mason, OH, p. 18. Used with permission. Copyright 2010 Cengage Learning. A Rights Reserved. May not be copied, scanned, or dupicated, in whoe or in part. Due to eectronic rights, some third party content may be suppressed from the ebook and/or echapter(s). Editoria review has deemed that any suppressed content does not materiay affect the overa earning experience. Cengage Learning reserves the right to remove additiona content at any time if subsequent rights restrictions require it.

11 10 PART I THE ENVIRONMENT FOR HUMAN RESOURCES FIGURE 1.2 A mode of strategic human resource management Externa environment Staffing Competition Government reguation Technoogy Market trends Economic Empoyee separation HR strategy Laws reguating empoyment Training Corporate strategy Business unit strategy Cuture Structure Poitics Empoyee skis Past strategy HR panning Design of jobs and work systems What workers do What workers need How jobs interface with others HR information systems Performance management Compensation Labour reations Interna environment Source: Meo, J. A. (2006) Strategic Human Resource Management, 2nd edn. ª South-Western, a part of Cengage Learning, inc. Mason, OH, p Used with permission. To be successfu in this regard the HR manager wi need to acquire a compementary set of competencies which can be cassified as foows: 10 Business mastery. The HR manager wi need to know the business of their organisation thoroughy. HR mastery. The HR manager wi have to keep abreast of changes reating to issues such as staffing, deveopment, appraisas, rewards, team buiding and communication. Change mastery. The HR manager wi have to be abe to manage change processes so that HR activities are effectivey merged with the business needs of the organisation. Persona credibiity. The HR manager must estabish persona credibiity, this they can do by standing up for their beiefs and being fair-minded in deaing with others. 1.4 HUMAN RESOURCE FUNCTIONS Because the human resource function within each organisation is unique to that organisation, the activities incuded in the HR department wi vary from organisation to organisation. However, different management activities can be assigned to the personne/hr department, either excusivey or in conjunction with other departments in the organisation. These activities can be paced in a so-caed HRM mode, as indicated in Figure 1.3. Among the activities that are most ikey to be assigned excusivey to the HR department are: Compensation and benefits issues, such as insurance administration, wage and saary administration, unempoyment compensation, pension pans, hoiday/eave processing and fexibe benefits accounts. Copyright 2010 Cengage Learning. A Rights Reserved. May not be copied, scanned, or dupicated, in whoe or in part. Due to eectronic rights, some third party content may be suppressed from the ebook and/or echapter(s). Editoria review has deemed that any suppressed content does not materiay affect the overa earning experience. Cengage Learning reserves the right to remove additiona content at any time if subsequent rights restrictions require it.

12 CHAPTER 1 THE FOUNDATION AND CHALLENGES OF HUMAN RESOURCE MANAGEMENT 11 FIGURE 1.3 Human resource management mode HUMAN RESOURCE STRATEGY, POLICY AND PRACTICE (LOCAL/INTERNATIONAL) Exit management Promotion Eary retirement Transfer Retrenchment Dismissa Retirement Redepoyment Resignation Medica boarding Death Industria reations Stakehoders (interna & externa) Rues & procedures Negotiation forums Confict resoutions Labour reations management Appointments Panning & contro of resource aocation Seection & redepoyment Skis & competency assessment Sociaisation (induction, training & deveopment) Work design & structure Work, design & anaysis Work outputs & key interfaces Worth evauation Remuneration & rewards Market reated remuneration Contribution (performance & competency) based pay Performance incentives Remuneration structures Performance management Performance contracts Performance appraisa Recognition (e.g. money, empoyee of the month) Performance improvement Cuture management Change faciitations Cuture/cimate deveopment Leadership assessment & deveopment Career management Career pathing (miestones, competencies) Succession panning Individua deveopment pan Administration Payro & empoyee administration Empoyee contract, e.g. exit management Heath & Safety Reationship management Stakehoders (interna & externa) Organisationa networks Boundary management Confict management Probem management Corporate image Training & deveopment Competency assessment Competencies broken into training components Training programmes Individua/team training needs anaysis Skiing, reskiing & mutiskiing Nationa Quaifications Framework (training inked to industry) Competency matrix (skis inventory) Human Resource Information System (HRIS) Source: Adapted from Matthews, R., (1997) Future HR managers...experts in change management and strategic thinking? Peope Dynamics. vo. 15 (7) Juy, p. 24. Reproduced with kind permission of the Institute of Peope Management. Copyright 2010 Cengage Learning. A Rights Reserved. May not be copied, scanned, or dupicated, in whoe or in part. Due to eectronic rights, some third party content may be suppressed from the ebook and/or echapter(s). Editoria review has deemed that any suppressed content does not materiay affect the overa earning experience. Cengage Learning reserves the right to remove additiona content at any time if subsequent rights restrictions require it.

13 12 PART I THE ENVIRONMENT FOR HUMAN RESOURCES TABLE 1.3 Factors infuencing the standing of HRM speciaists in organisations Strengthening factors Poitica/visionary skis possessed by HR practitioners Perceived competence of HR staff Top management support Invovement in strategy-making Ongoing need for staff deveopment and training Large-scae reorganisation in training Expansion of business requiring emphasis on recruitment and training Crisis in empoyee reations, especiay where trade unions are invoved Business criticay reiant on peope as opposed to technoogy (e.g. services) Weakening factors Inept HR practitioners HR function performing ony a servicing roe Lack of top management support HR managers not invoved in strategy process Training undertaken by ine units Stabe organisation with itte demand for change Static business conditions No chaenge from workforce Roe of peope ess important than that of technica considerations Source: Coe, G. (2002) Personne and Human Resource Management, 5th ed. Continuum: London. p. 13. ª Cengage Learning EMEA. Used with permission. Affirmative action and empoyment equity; Job anaysis programmes; Pre-empoyment testing; Attitude surveys (research). In addition, the HR department is ikey to carry out some activities jointy with other departments in the organisation, incuding interviewing, productivity/motivation programmes, training and deveopment, career panning, discipinary procedures and performance appraisas. 11 In this text we discuss a these HR activities, whether they are performed soey by the HR department or together with other departments. A brief description of some of these activities foows Job anaysis and design For an empoyee to perform satisfactoriy, their skis, abiities and motives to perform the job must match the job s requirements. A mismatch may ead to poor performance, absenteeism, turnover and other probems. Through a process caed job anaysis, the skis and abiities to perform a specific job are determined. Various job anaysis techniques exist. When scientific management was popuar, jobs were designed to be simpe and routine so that unskied workers coud be trained quicky to do the work. A primary assumption of such job design was that the average worker had no need to gain satisfaction from work and had neither the ski nor the incination to participate in work decisions. No doubt many assumptions about turn-of-the-century workers were vaid, but athough empoyee needs and motives have experienced many changes since the formative years of industria reations, job design in many organisations in South Africa sti resembes that of scientific management. Organisationa research shows that empoyees are not ony demanding more satisfying and rewarding work but aso demonstrating that their invovement in decision-making can enhance rather than impair organisationa effectiveness. Copyright 2010 Cengage Learning. A Rights Reserved. May not be copied, scanned, or dupicated, in whoe or in part. Due to eectronic rights, some third party content may be suppressed from the ebook and/or echapter(s). Editoria review has deemed that any suppressed content does not materiay affect the overa earning experience. Cengage Learning reserves the right to remove additiona content at any time if subsequent rights restrictions require it.

14 CHAPTER 1 THE FOUNDATION AND CHALLENGES OF HUMAN RESOURCE MANAGEMENT Recruitment, seection, induction and interna staffing To a great degree, the effectiveness of an organisation depends on the effectiveness of its empoyees. Without a high-quaity abour force, an organisation is destined to have mediocre performance. For this reason, the externa recruitment of human resources is a critica HR function. Recruiting and seecting a quaified abour force invoves a variety of HR activities, incuding anaysis of the abour market, ong-term panning, interviewing and testing. Once empoyees are paced in their posts it is important that they be introduced to the organisation, their tasks, superiors and co-workers. This process is aso known as induction, sociaisation or orientation. Besides the recruitment of empoyees from outside the organisation, the interna movement of empoyees, by means of promotions and transfers, is aso important Appraisa, training and deveopment and career management The growth of an organisation is cosey reated to the deveopment of its human resources. When empoyees fai to grow and deveop in their work, a stagnant organisation wi most probaby resut. A strong empoyee deveopment programme does not guarantee organisationa success, but such a programme is generay found in successfu, expanding organisations. One important deveopmenta function is the appraisa of empoyee performance. During an appraisa process, empoyees become aware of any performance deficiencies they may have and are informed of what they must do to improve their performance and thus become promotabe. Various methods and techniques of performance appraisa are avaiabe. For many organisations, the heart of the deveopment process is composed of on-the-job and off-the-job activities that teach empoyees new skis and abiities. Because modern managers recognise the benefits derived from the training and deveopmenta process, expenditures for empoyee education are at an a-time high. The rise in empoyee education has been accompanied by growing professionaism in the training fied and a demand for competent, quaified trainers. Training and deveopment offer many rewards but aso pose many probems for training personne: Who shoud be trained and why? What training techniques shoud be used? Is training cost-effective? A further important issue is that of career management. HR managers are devoting increasing amounts of attention to processes and activities that enhance career advancement and sove probems empoyees encounter aong their career paths. Whie career management is difficut to impement, advances in recent years have brought about improvements in the decision-making processes that affect empoyees careers Compensation and heath The issue of compensation has ong posed probems for the HR manager. How shoud jobs be evauated to determine their worth? Are wage and saary eves competitive? Are they fair? Is it possibe to create an incentive compensation system tied to performance? An increasingy important part of compensation is empoyee benefits. Because the cost of benefits for many organisations now averages as much as 40 per cent of tota payro costs, empoyers are trying to contro benefit costs without affecting the overa compensation programme seriousy. A newer area of concern to the empoyee today is heath and safety. Each year, accidents, injuries and occupationa diseases cost biions of Rands in medica expenses, medica insurance, equipment damage and production probems. Athough much is being done to improve the workpace environment, there is sti considerabe room for improvement Labour reations Labour unions exert a powerfu infuence on empoyers and hep shape the HR poicies and programmes for union empoyees. The South African abour reations system is basicay buit Copyright 2010 Cengage Learning. A Rights Reserved. May not be copied, scanned, or dupicated, in whoe or in part. Due to eectronic rights, some third party content may be suppressed from the ebook and/or echapter(s). Editoria review has deemed that any suppressed content does not materiay affect the overa earning experience. Cengage Learning reserves the right to remove additiona content at any time if subsequent rights restrictions require it.

15 14 PART I THE ENVIRONMENT FOR HUMAN RESOURCES around the Labour Reations Act, No. 66 of The empoyee who fais to perform up to expectations not ony can be costy to management but can aso create stress, frustration and tension within the work group. For these reasons, managers must recognise the causes of unsatisfactory performance and be abe to bring about a permanent improvement in job behaviour Human resource information systems (HRIS), HR research and probem-soving The HR department has been transformed by the computer in more ways than were even imagined ony 20 years ago. Today a of the activities just mentioned, and many more, can be accompished with a human resource information system (HRIS) package, often on a mainframe and increasingy on a persona computer (PC). With the right area wide network and database server, PCs can be configured to hande the HRIS needs of amost a organisations, regardess of size. 12 Many HR probems such as absenteeism, turnover, job dissatisfaction and unfair empoyee treatment are costy and sow an organisation s productivity rate. Today s administrators must create strategies to resove these probems and in many instances these difficuties are researched and soved. 1.5 HR DEPARTMENT ROLES The primary task of the HR department is to ensure that the organisation s human resources are utiised and managed as effectivey as possibe. HR administrators hep design and impement poicies and programmes that enhance human abiities and improve the organisation s overa effectiveness. Top executives have earned sometimes the hard way that inattention to personne reations and negect of HR programmes are often causes of poor abour management reations, excessive absenteeism and turnover and substandard productivity. More and more, eaders of pubic and private organisations recognise that peope are the organisation s primary resource and acknowedge the HR department s roe in deveoping that resource Does the HR function affect the success of an organisation? Managers, owners and even university professors sometimes question whether the HR department can reay affect the financia success of an organisation. Without a doubt, organisations wishing to remain competitive in today s rapidy changing goba marketpace need to address the issue of achieving productivity through their empoyees. The question that is often asked, however, is how important the HR function is in that achievement, given other critica factors such as the eadership provided by top management, product ine, market advantage and research and deveopment. The importance of the HR function in the organisation s efforts to achieve financia success can be found in many artices and books pubished on the subject. For exampe, the top 100 rapid-growth companies, as identified by Inc. Magazine in the USA, were incuded in a study of 12 HR practices. The resuts indicated a strong reationship between HR practices and bottomine profits. A second finding was that company size, measured by number of empoyees, did not affect the resuts: companies of a sizes were equay affected. The resuts generay indicated that more successfu companies engaged in more HR practices than did ess successfu companies. Simiar findings were aso recorded in two separate studies undertaken in the manufacturing industry in South Africa. Successfu rapid-growth companies were generay abe to use the HR function to sove probems and achieve success in the foowing ways: 13 Having the HR directors report directy to the genera manager; Pacing major emphasis on empoyee recruitment, seection and training; Copyright 2010 Cengage Learning. A Rights Reserved. May not be copied, scanned, or dupicated, in whoe or in part. Due to eectronic rights, some third party content may be suppressed from the ebook and/or echapter(s). Editoria review has deemed that any suppressed content does not materiay affect the overa earning experience. Cengage Learning reserves the right to remove additiona content at any time if subsequent rights restrictions require it.

16 CHAPTER 1 THE FOUNDATION AND CHALLENGES OF HUMAN RESOURCE MANAGEMENT 15 Using team buiding and creating an environment of rapid decision-making at ower eves; Communicating key company performance objectives through a programmes and inking them to goas at a eves; Incuding HR panning as part of management s strategic panning. Throughout this book, you wi find many of these points repeated and discussed in detai. Empoyers who have successfuy integrated the HR function into the top eve of management and strategic panning, and who have paced a strong emphasis on empoyee recruitment, seection, motivation and team-buiding, can expect greater empoyee productivity and thus greater overa company success. To acquire and retain empoyees, HR administrators perform five critica roes: create and impement poicy, maintain communication, offer advice, provide services and contro personne programmes and procedures. Let us examine the mutipe roes of the HR staff more fuy HR poicies HR poicies are guides to management s thinking, and they hep management achieve the organisation s HR objectives. Poicies aso hep define acceptabe and unacceptabe behaviour and estabish the organisation s position on an issue. Top HR officias the deputy genera manager or the HR department heads are generay responsibe for poicy-making. In critica HR matters, such as empoyment equity or management deveopment, the poicies may be drafted by an HR committee for approva by the CEO. HR committees generay incude members from both ine and staff departments. A ine function is one that is directy reated to the achievement of an organisation s goas. In a typica manufacturing enterprise, ine functions incude production and saes; in a university, teaching is a ine function and the facuty members are ine personne. Staff generay refers to a department that provides speciaised services for the entire organisation. Staff departments normay incude engineering, research and deveopment, purchasing, quaity contro, ega, finance and HR. Line managers not ony bring experience to the HR committee but are aso more ikey to support the poicies they hep create. To be maximay effective, HR poicies shoud be in writing and shoud be communicated to a empoyees. To ensure that empoyees are famiiar with HR poicies, many organisations particuary arge firms and government departments pubish an HR poicy manua. Each manager receives a copy of the manua with instructions to review it in detai with a new empoyees. Updates of the manua may be posted on buetin boards, and supervisors may be required to discuss poicy revisions with their empoyees. A we-written and we-used poicy manua can be a vauabe aid not ony in orienting new empoyees to the workpace but aso in setting differences between supervisors and subordinates Critica poicy issues Most of the critica issues facing HR management are incuded in four broad areas: empoyee infuence, personne fow, reward systems and work systems. Each of these areas must be addressed regardess of the industry, the size of the company or the types of empoyees invoved. By deveoping critica HR poicies with those four areas in mind, decision-makers can create HR programmes in a unified and systematic manner rather than by accident or by gut reaction to probems and pressures. Such decisions invove choices, and choices are most effectivey made through panned poicies and practices. 14 Empoyee infuence With the increasing popuarity of re-engineering, tota quaity management, cooperative abour management reationships and other forms of worker participation, more and more Copyright 2010 Cengage Learning. A Rights Reserved. May not be copied, scanned, or dupicated, in whoe or in part. Due to eectronic rights, some third party content may be suppressed from the ebook and/or echapter(s). Editoria review has deemed that any suppressed content does not materiay affect the overa earning experience. Cengage Learning reserves the right to remove additiona content at any time if subsequent rights restrictions require it.