HRM in the Organization: An Overview

Abstract

This chapter provides an overview of the Human Resource Management (HRM) function. In particular, the historical developments that combined to shape the modern HRM function are explored, and attention is paid to briefly overviewing current HRM activities that are common across many organizations. Woven throughout the chapter is the suggestion that HRM activities need to be viewed holistically, both with regard to being parts of an overall system that impact each other, and also in light of other organizational activities. An additional recurring theme concerns viewing people as one of the main determinants of achieving organizational goals. The chapter concludes by reinforcing the relationship between HRM and organizational success.

1 Human Resource Management: What Is It and Where Did It Come from?

Human Resource Management (HRM) is essentially a philosophy about how people should be managed [1]. It is a comprehensive, coherent approach to employing and developing people , with a focus on both improving the effectiveness of an organization through people , but also treating those people in a morally sound manner [1]. A widely repeated definition of HRM is offered by Storey [2: 5], who proposes it is:

A distinctive approach to employment management which seeks to achieve competitive advantage through the strategic deployment of a highly committed and capable workforce, using an array of cultural, structural and personnel techniques.

More simplistically, Boxall and Purcell [3: 184] propose that HRM concerns:

Anything and everything associated with the management of the employment relationship of the firm.

Regardless of how it is defined, it is worth remembering that for as long as there has been business involving the employment of others, there has also been HRM , or, more specifically, HRM activity . As discussed later in this chapter, HRM encompasses a number of activities, for example, recruitment , compensation and training . Consequently, for as long as employees have been hired, paid and trained, HRM has existed in some form, but was simply not termed as such.

The historical development of the HRM function varies across the globe. In the context of many countries, particularly Ireland, the UK and the USA, however, the modern term “Human Resource Management ”, replaces the term “Personnel Management ”. Personnel management replaced “Labour Management ” (1940s), which replaced “Welfare” (1920s) [1]. We can, therefore, trace the evolution of the modern HRM function right back to the Industrial Revolution.

Beginning in Britain and spreading through Europe and North America, a crucial foundation of modern HRM originated in the form of the factory system. This saw a shift in industry towards factories, with owners of capital employing large numbers of individuals to produce large quantities of standardized products for much bigger markets [4]. Doing so set the scene for modern management practices , as these large-scale activities required planning, organizing and control . Employees needed to be sourced and directed, buildings and machinery needed to be maintained, production needed to be controlled, and products needed to be sold. This all occurred on a much larger scale than ever before. While business developed, however, working conditions were poor for most workers , which they could do little to change until the arrival of the trade union movement [4]. This period was a catalyst for Social Reform, a driver of whom was Robert Owen. Owen, a factory owner, wrote about, and tried to create, workplaces where employees were treated fairly and encouraged to reach their potential [5]. Leading on from the factory system, and of great significance to modern HR , two important developments surfaced in the late nineteenth/early twentieth centuries, specifically;

• 1. The welfare tradition ,

• 2. Scientific Management .

The first of the above developments, the welfare tradition , is largely considered the “genesis” [4: 25] of HRM . As mentioned above, during the Industrial Revolution workers were poorly treated and viewed as simply instruments of production. In a few large companies in Britain, a series of voluntary initiatives were undertaken to improve conditions, primarily concerning pay, working hours and health and safety [4], which remain areas of concern for HRM today. During this phase, welfare officers , typically female, viewed as the forerunners of HR Practitioners (HRPs), were first appointed, primarily in Quaker-owned food and confectionary firms in the late 1800s [4, 6]. World War I initially helped to drive the welfare tradition in factories due to the need to increase the speed of production, yet, post-war, in the face of widespread unemployment and economic depression, many welfare initiatives were abandoned. While these initiatives were abandoned, however, the caring orientation of welfare is still evident in modern HRM and can be seen in areas such as health and safety and employee assistance programmes.

As the popularity of the welfare tradition waned in the face of post-war economic depression, the second key development identified earlier, Scientific Management , increased in popularity. Most closely associated with Frederick Winslow Taylor, Scientific Management is often referred to as Taylorism. As employers sought ways to improve industrial performance , Taylor’s notions of labour efficiency , based on his work at the Bethlehem Steel Company in the early 1900s, became increasingly popular [4]. Widely adopted in both Britain and the USA between World Wars I and II, Taylor encouraged the adoption of more systematic approaches to job design , employment and pay [4]. Systematic approaches to recruitment , selection and pay are still evident in HRM today.

Under Taylorism, the activity of the emerging HRM function was expanded, as attention was paid to time and motion studies, job analysis, incentive schemes and training . This served to shift orientation from the caring focus of welfare officers towards the efficiency focus of the “work study officer” [4] or “labour officer ” [6]. The increased focus on job design , selection , training , work conditions and pay added weight to the significance of the emerging HR function , even in the light of its shift in orientation, as the function was required to undertake much of the responsibility for the research and administration required to support these new initiatives [4]. While Taylorism/Scientific Management assisted in significantly improving efficiency and systematic approaches to employee management , it has also faced a number of criticisms. It is, for example, associated with many problems still associated with industrial work, including high turnover, absenteeism and low motivation. The next stage in the evolution of the modern HRM function , the Behavioural Science Movement, has its roots in these criticisms.

Similar to Scientific Management , but closer to a welfare orientation, the Behavioural Science Movement also generated a body of knowledge on emerging HR activities such as selection and training , motivation, and rewards , but also employment relations. This movement assisted in addressing some of the issues associated with work in the new industrial era. Just as the origins of Scientific Management are most closely associated with Frederick Taylor, the origins of Behavioural Science are most closely associated with Elton Mayo, and Fritz Rothlisberger and William Dickson. Mayo’s work in particular, based on research conducted in Western Electric’s Hawthorn Works (Chicago, US) between 1924 and 1932 [7], indicated that employee performance is influenced not just by working conditions and payment, but also by motivation and needs. This research highlighted the importance of social factors, group dynamics and employee motivation on both individual performance and organizational effectiveness [4]. Overall, conclusions from the body of work have assisted the HRM function in better understanding drivers behind employee motivation and performance . Conclusions include that:

• Employees are motivated by factors other than just pay and conditions,

• The need for recognition and sense of belonging are important,

• An employee’s attitude to work is shaped strongly by the group to which that individual belongs to,

• The ability of the informal group or clique to motivate an individual should not be underestimated [7].

Overall, the studies underscored the powerful nature of social relations at work and encouraged movement towards consideration of the interpersonal aspects of organizing employees .

While the studies noted above were being undertaken, another development which would go on to shape the HRM function of today was blossoming, specifically, Trade Unionism. Although the trade union movement can be traced back to the early 1900s [4], the changing face of production in the light of World War I spurred employees on in their efforts to organize themselves to improve their pay and conditions. While membership of trade unions has risen and fallen, and risen again, their increasing size, and legitimacy as a result of various pieces of legislation (which vary across countries), saw more activities added to the HRM function , including negotiation and industrial relations.

The above developments provide a simple snapshot of events that contributed to modern HRM . While a number of other events resulted in shaping the HRM function of today, those described, albeit briefly, above highlight some of the more universal contributions. These contributions can be seen in the activities of modern HRM activities , as discussed in the next section.

2 An Overview of Common HRM Activities

HRM deals with a number of activities. The full list of HRM responsibilities varies across organizations dependent on a number of factors, including organizational size, culture , type and the organizational view of (or philosophy concerning) employees . Additionally, while many HRM departments are responsible for developing and coordinating activities , line managers are often responsible for their implementation. This chapter will provide an overview of HR activities that are common across many organizations, specifically;

• 1. People Resourcing ,

• 2. HR Planning ,

• 3. Learning , Training and Development ,

• 4. Performance Management ,

• 5. Reward Management ,

• 6. Diversity and Inclusion ,

• 7. Engagement and Branding ,

• 8. Employee Relations ,

• 9. Administration and Compliance .

Each of these activities interrelate to achieve HR goals, and, ultimately, organizational goals. Much has been regarding these activities ; however, the scope of this chapter allows for an overview discussion, beginning with people resourcing .

2.1 People Resourcing

People resourcing is much more than simply “hiring and firing”. Employees are arguably an organization ’s most important asset, or certainly one of them, as, without them, nothing can be achieved. We discuss organizations as entities in their own right, but, an organization is actually a collection of people . Without that collection of people , the employees , goals cannot be achieved. As such, one of the most important elements of employee resourcing is first attracting, i.e. Recruiting, the right candidates. Recruitment refers to attracting the right people to apply to an organization . In order to ensure the right people are being attracted, there are important pre-recruitment activitie s to be undertaken (see Fig. 1).

Fig. 1

Source Author (2019)

Stages in people resourcing.

To ensure the right candidates are being hired to fill a position, we must first make sure the right candidates are being attracted to that position. To do so, we need to know what the position the future candidate will be filling involves, as this helps to form an advertisement that will be more successful in attracting the right people for the position. Consequently, as Fig. 1 illustrates, the first step in sourcing is to undertake a job analysis. Job analysis essentially tells us everything about the job and concerns examining the job in question to identify;

• what it involves, i.e. the tasks and activities that make up the position,

• the human requirements of the job, i.e. what someone will need to be able to do to successfully undertake the role,

• the context in which the job is performed.

Gathering and analysing data on the above allows for the development of the next two important steps; the job description and person specification.

Based on the information gathered in the job analysis stage, a comprehensive list of job specific tasks and associated responsibilities and requirements can be drawn up. This details exactly what the job entails. Job descriptions also typically contain the job title, how the job fits into the organization in terms of who the person in the job will report to, who will report to them, the level of responsibility and salary. Job descriptions are vitally important, as they form the foundation for contracts of employment, and assist in Performance Management activities. In addition to the aforementioned details, job descriptions clarify the skills and competencies required for successful undertaking of the role. This assists in the next phase; development of the person specification.

The person specification, stemming from the job analysis and the job description, clarifies who the person undertaking the job should be i.e. what skills , knowledge , experience and educational qualifications they will need to appropriately perform the tasks required of the job. While the job description describes what the job is, the person specification helps to pick the right candidate from the pool of candidates at the selection phase. Once these three pre-recruitment phases have been undertaken, attention can be turned towards recruitment .

Now that what the job entails and the skills and experience necessary to carry out the job tasks are known, it is possible to create a job advertisement. Concurrently, a decision must be made regarding the appropriate recruitment channels or media to use. The aim of the recruitment stage, as discussed earlier, is to attract the right people to apply. This requires the creation of a job advertisement that will attract the right people , and choice of the right place to put the job advertisement. There are a number of options available to organizations looking to place a job ad. The most suitable approach should be based on the type and level of the position and include the following:

• The organization ’s own website/recruitment portal,

• The organization ’s social media channels,

• Professional network sites (e.g. LinkedIn),

• Recruitment agencies,

• Headhunters,

• Online recruitment boards (e.g. Monster.com, Jobs.ie),

• Industry and trade-specific journals and magazines,

• Recruitment fairs,

• Traditional media.

As mentioned above, it is important to factor in both the type of job and level when making a choice on where best to place the job advertisement, as it is important to consider where the required pool of candidates would be likely to discover the advertisement. If, for example, the role is entry level, a recruitment fair, social media channels or the company’s website/recruitment portal may be appropriate. If the role is senior, or perhaps the skills required are in short supply, then the use of a recruitment agency or headhunter may be more appropriate. As important as this choice is, creation of the advertisement is equally important.

The purpose of the job advertisement is to encourage the right candidates (i.e. individuals possessing the skills and knowledge required for the job) to apply. This requires the creation of an advertisement that is attractive to suitable potential candidates, but encourages non-suitable applicants to not apply. The primary method of achieving this balance is by specifying the main tasks of the job and the main skills and knowledge required to assist individuals in identifying whether the job matches their capabilities. It should be noted, of course, that sometimes non-suitable applicants may apply, and, while not suitable for that position, they may be suitable for another, so organizations need to think of the “bigger picture” when it comes to sorting applications. In general, job advertisements should include;

• the name and location of the organization ,

• brief information on the company,

• the job title and level,

• salary or salary scale,

• the main tasks and activities of the role (drawing from the job description),

• the skills , experience and knowledge required (drawing from the person specification),

• how, where and when to apply, and the closing date for final applications.

• In writing the above, organizations should check that their draft advertisement;

• is not contrary to any anti-discrimination legislation,

• is not misleading with regard to potential benefits ,

• is accurate with regard to the job requirements (drawing from the job analysis),

• is realistic in requirements (e.g. a job advertisement for a graduate role should not be calling for many years of previous experience),

• avoids clichéd terms that do not add value (or could discourage some suitable candidates from applying), for example “dynamic ”, “assertive self-starter”,

• avoids terms that may be ambiguous and open to interpretation, for example “brand evangelist” or “entrepreneurial spirit”.

Once the appropriate job advertisement has been written, and the best place to advertise the job decided, the next stage, Selection , can begin.

As Fig. 1 indicates, selection is more than simply hiring a person, although selection ultimately refers to picking the right person from the pool of applicants. Making sure to pick the right person involves a number of steps. First, applications, whether in the format of a curriculum vitae, application form or other, must be sorted. Sorting applications requires use of the person specification again. This tool identified the skills , knowledge , experience and education required in order to fulfil the job tasks (as set out in the job description). Consequently, applications need to be matched against requirements and “shortlisted”. Shortlisting concerns filtering the most suitable candidates from the unsuitable applications. It is critically important to ensure that the candidates being brought forward to the shortlist are those that best match the job requirements. First, being rigorous in the matching process makes it more difficult for discrimination to occur, and easier for organizations to defend their decisions. Second, the purpose of recruitment and selection is to hire the best person for the job, and focusing on objective data during decision-making makes that a more likely outcome. Once a shortlist has been developed, containing the applications of the employees who seem to best match the requirements of the position, these applicants can be invited forward for selection procedures .

There are a number of selection procedures , or techniques, that the organization can make use of. These include

• Interviews (individual, group, panel),

• Ability tests,

• Aptitude tests,

• Psychometric tests,

• Presentations,

• Work samples,

• Assessment centres (which combine a number of tests).

Interviews are still the most commonly used selection technique, as they allow for discussion of past experience, offer the candidate the opportunity to highlight their fit for the role, and allow hiring managers to probe the interviewee’s responses. Regardless of the tool selected, organizations should make sure to invite candidates with sufficient notice, and clarify or identify a number of points, including:

• The location,

• Time,

• Date,

• Who they will be meeting,

• Whether travel expenses are reimbursed,

• The job title and level,

• Any documentation the candidate will be required to bring,

• The format of the process, i.e. whether it will be an interview , a psychometric test etc.

Once each candidate has gone through the selection technique being employed, they should, prior to leaving, be informed of the next step in the process (e.g. reference checks, a medical or a second round of testing), and when they can expect to hear an outcome. The selection procedures must be designed in such a way that the process is measurable, i.e. a grading system that allows the hiring managers and those involved to assign justifiable scores based on clear metrics should be used. This allows for a distinction to be made between candidates and again aims to ensure the most suitable person for the job is being hired based on their predicted ability to undertake the necessary activities rather than any other factor. Once the most suitable candidate has been identified, they should be offered the position, ideally in writing, whether letter or email, and told how to accept (or reject) the offer, and the time frame they have to do so. If the preferred candidate rejects the offer, the position can then be offered to the next most suitable candidate. On occasion, however, it will be necessary to re-advertise. Once the position has been offered and accepted, HRM can engage in onboarding and induction.

While often used as interchangeable terms, there is a difference between induction and onboarding. Induction tends to be a short-term, administration -oriented process. The process typically concerns, for example, filling out forms, overviewing the contract, benefits and practical integration of the employee into the organization by, for example, setting up their email address, providing them with a staff ID card and giving them a tour of the business . Onboarding is a longer process, the aim of which is to assist employees in being successful . Onboarding aims to fully integrate the employee into the organization, its culture and the role. This may be undertaken by making sure the employee receives all necessary training , is given and asked for feedback, through the creation of development plans, and by one-to-one conversations to acknowledge progress and work done well, and troubleshoot and potential issues or errors. These activities assist in clarifying and reinforcing expectations and goals, and can create engagement and inclusion . It is important, once a suitable employee has been hired, that attention is paid to retention, as there is little point hiring the best candidates if they cannot be retained.

2.2 HR Planning

While resourcing, discussed above, is concerned with attracting, hiring and keeping the best people , HR Planning is concerned with ensuring that employees in the organization are being used as effectively as possible to achieve organizational goals. This requires holistic consideration of future and current demand for employees and skills , training and development requirements, succession and continuity, and business strategy . HR planning and business planning should happen in tandem, given HR deals with the organizations current employees and sourcing of future employees , and those employees impact the achievement of business goals. When the organizations strategy has been decided, the task of HRM is to assist the organization in meeting that strategy by having the right people , with the right skills , in the right job, working in the right direction. Gunnigle et al. [4] made a number of arguments to cement the importance of HR Planning , specifically it;

• 1. Facilitates reduction of HR costs as both shortages and surpluses of employees can be anticipated and corrected before they become unmanageable,

• 2. Provides a basis for planning employee development ,

• 3. Helps to improve the business planning process,

• 4. Ensures equal opportunities are provided for all categories of employees ,

• 5. Promotes greater awareness of the importance of having well-integrated HR management policies and activities.

Regarding argument five in the above list, the suggestion is that HRM activities need to be considered holistically with regard to how each activity impacts another, rather than as stand-alone tasks. To assist HR Planning efforts, Gunnigle et al. [4] have also proposed a four-stage planning process, with each stage interlinked. The four stages are;

• 1. Stocktaking,

• 2. Forecasting ,

• 3. Planning,

• 4. Implementing.

Stage 1, stocktaking, requires identification of variables that impact organizational operations, which fall into two categories: the external and the internal environment [4]. Considering the internal environment, HR needs to develop an accurate HR Profile, classifying the workforce with regard to age , experience, abilities and skills . This can be greatly assisted by up-to-date job analyses, as discussed earlier. HR can also conduct a skills audit to keep track of core competencies and current skills of employees , as some jobs may have changed with regard to new or redundant activities, or other employees may have engaged in Continuous Professional Development (CPD) and so enhanced their skill set. Performance appraisal , as part of the Performance Management Process, can be used to identify employee potential and future training needs. Considering the external environment, HR should strive to keep up to date with the skills and educational profile of the labour market to assist the organization in making choices about where to recruit for future roles. If, for example, a core skill required by the organization is not being taught in local colleges and universities, or is not typically present among the working population, the organization may need to recruit oversees for that skill in the future, or use recruitment agencies and headhunters.

Stage 2, Forecasting , involves forecasting both the supply of, and demand for, labour  [4]. It has been argued that this is the most difficult aspect of HR planning , as it requires the organization to predict how many employees will be needed for the future, and HRM to determine where these employees are likely to be sourced. This reinforces the argument that HR Planning and Business Planning should be undertaken in conjunction with each other, as it is difficult for HRM to accurately forecast if they are not fully versed of future organizational strategy , and therefore employee, requirements.

Another element of forecasting labour supply and demand relates to keeping records on three supply indices; labour turnover, absenteeism and age [4]. A certain amount of employees will always be expected to leave in a given year. People leave because of retirement, better opportunities elsewhere, illness or disciplinary issues. These employees need to be replaced to maintain operations. This is termed “turnover”. Some turnover is good, as it brings new thinking into the organization or removes underperforming employees . Turnover becomes problematic, however, when levels are high. High turnover carries costs, including recruitment and selection costs, productivity gaps, and potentially damaged employer branding . As such, being aware of the usual turnover rate is beneficial in two ways. First, it helps HRM to predict how many employees are likely to leave in a year, and, subsequently, where their replacements may be sourced (whether internally or externally). Second, monitoring turnover levels assists in identifying increases in turnover, which can be swiftly investigated to prevent a bigger, more permanent staffing issue from occurring.

While turnover refers to employees leaving the organization , absenteeism relates to employees who do not quit, but simply do not attend work. Forecasting current levels of absenteeism can assist in predicting future levels, and trends. Absenteeism refers to all absence from work other than paid holidays, meaning, similar to turnover, a certain amount is inevitable. Individuals may be absent due to illness or accident, may be late or face travel disruption. Alternatively, individuals may not attend work because they simply dislike the organization or the role. This means that absenteeism takes two forms; voluntary and involuntary, and is a function of two variables; motivation and ability. Motivation to attend is linked with the employee’s feelings about the organization and the job, and whether they feel a pressure to attend. When an employee has negative feelings towards work, or does not feel pressure to attend, this absence is termed voluntary. Ability is mainly concerned with illness or incapacity that prevents an employee from attending work, and is usually termed Involuntary. Both forms of absenteeism can be detrimental to organizational performance , and so systems, including disciplinary and Performance Management procedures , need to be in place to deal with both forms.

Finally, engaging in age analysis assists forecasting in three ways, specifically;

• 1. Identification of imminent retirement patterns,

• 2. Planning recruitment policies ,

• 3. Identifying career and succession paths.

The third stage of Gunnigle et al.’s [4] model, planning, is focused on developing actions in the light of Stages 1 and 2. In particular, this stage concerns identifying the gap between supply of, and demand for, labour and skills , and deciding how to address that gap. If a shortage of employee numbers or skills has been identified, a recruitment or retraining plan can be developed. In contrast, if a future surplus has been identified, HR can assess whether individuals can be retrained and redeployed or, less ideally, made redundant. Whichever option is chosen to deal with a surplus, there is likely to be an impact on employee relations and engagement .

The final stage, implementing, requires HR to implement their decided action points, but also reviews their outcomes. Both internal and external environments are subject to change, sometimes rapid, and so it cannot be assumed that because a plan should work, it will.

The model discussed above indicates that HR Planning activities impact , and are impacted by, a number of other HRM activities . While full discussion is outside the scope of this chapter, Fig. 2 assists to illustrate the interrelationships between activities. Figure 2 also serves as a reminder that HRM needs to be thought of holistically, rather than as a set of independent activities .

Fig. 2

Source Author (2019)

Relationship between HR planning and other HR activities .

2.3 Learning, Training and Development

Learning , Training and Development (LT&D) is a critical HRM activity . While some organizations may have a dedicated LT&D function , LT&D typically falls under the HRM umbrella. As discussed earlier, an important task for HRM is to ensure the right individuals are in the right job. While recruitment and selection activities help to attract and pick the right people , LT&D is critical to ensure those employees are effective in their job, and continue to be. As jobs change in scope to reflect business requirements, it is important to ensure that employees are being trained in a manner that assists them in continuing in the organization . LT&D can also assist in attracting potential employees to the organization , as cohesive LT&D practices signal to future (and current) employees that the organization values them. In addition, as identified in Fig. 2, LT&D is tied to HR Planning . When undertaking succession and continuity planning, future training requirements of employees as they move up the organizational ladder can be identified. When undertaking a stocktake or forecast during HR Planning (see earlier discussion), and when holistically considering the organization’s strategic direction, skills gaps and future skills needs not yet met by, or in, the organization can be identified (i.e. a Learning Needs Analysis is conducted). Ultimately, L&D is:

The process of ensuring that the organization has the knowledgeable, skilled and engaged workforce it needs and that individual employees have the opportunity to develop their abilities and maximize their potential [8: 315].

This definition again points to the argument that it is individual employees whose collective performance combines to achieve the organizations goals. Before progressing, it should be noted that Learning , Training and Development are related, but not interchangeable terms. Training is typically instructor led, while learning is self-directed. Development implies a long-term focus, or a broader process [9].

Learning can be formal or informal, internal or external to the organization , and individual or organizational led. Learning can also be blended, meaning a number of approaches are combined. Regardless of approach and drivers, it is important to remember that all employees learn differently, and so HR should aim to cater to as many different learning styles as possible (Note: it is recommended that Kolb’s Learning Cycle (1974) and Honey and Mumford’s (1996) Learning Styles are reviewed for deeper understanding of this point). There are a number of factors which will determine the appropriate learning or training method. CIPD [9] provides an extensive set of factors to consider, specifically;

• the nature and degree of priority (importance) of the learning needs,

• the required impact on performance post learning or training intervention,

• the type of job and the respective needs and accessibility,

• the background of employees ,

• the organization ’s culture and LT&D budget,

• evaluation of the effectiveness of previous learning interventions,

• the complexity of knowledge , skill or behaviour the learning intervention deals with,

• employee learning preference and perception.

For the purpose of this overview , approaches will be divided into internal and external learning and training options. Internal options include:

• 1. On-the-job training and shadowing,

• 2. Internal development programmes,

• 3. Coaching,

• 4. Mentoring,

• 5. Job rotation and secondment.

• External options include

• 1. Classroom training and courses,

• 2. Formal education,

• 3. Learning projects,

• 4. Distance and digital (online) learning ,

• 5. Bitesize learning [9].

Regardless of the learning or training intervention options chosen, it is important to systematically plan for training events and to evaluate the success of training post-event. Planning is important to ensure the right employees are being trained, or having learning facilitated, in the right way, at the right time, to be more effective in their performance , or to assist future planning and employee movement in the organization . Evaluation is important to ensure the planned training has been successful in achieving its purpose, as it cannot be presumed that attendance at training automatically results in altered performance or an enhanced skill set.

A five pronged process for planning and delivering learning or training events has been proposed. The five phases are analysis, design, development , implementation and evaluation. During the analysis phase, what employees will learn in, and be able to do after, the training is identified, along with the learning environment and the employee’s existing skills . The design phase concerns defining the subject matter and choosing the right methods. Armstrong [10] advocates a blended learning approach, which involves the use of multiple methods, and also proposes that a significant amount of learner participation should be factored in. In the third stage, development , the design phase is expanded on, and the detailed training programme is established. The programme outlines the plan for the session, the learning outcomes, the outline content, the individuals involved in delivery, the methods of delivery and preparation of aids (e.g. handouts, exercises, slides). All necessary facilities should be decided on and booked at this stage, and a final version of the programme distributed to managers, and later to the employees taking part. Final costs should be checked to ensure the budget is being kept to, and those delivering the training or facilitating learning should prepare their individual sessions. The implementation phase simply involves implementing the programme as it was planned. Finally, each training session should be evaluated by the training programme director and by participants. It is important to measure the impact of the training on performance and assess whether the objectives originally laid out were met [8]. While sometimes employees need time to digest new learning and properly apply it to their work, if the learning outcomes were not achieved, or performance was not impacted in the desired way, action must be taken. The HR function can seek feedback from trainers and employees to ascertain whether the training approach chosen was appropriate, further instruction is needed for some employees , or something occurred during the event that negatively impacted the session. Once the root of the issue has been explored, steps must then be taken (based on the aforementioned five-phase model) to complete the training in an effort to improve both individual and organizational performance . It should be noted, however, that while training can assist in improving organizational functioning by enhancing branding and engagement , making some employees feel rewarded, and overall enhancing skill sets, these benefits can often, unless there is a dramatic difference, be difficult to prove.

2.4 Performance Management

Performance Management is much more than a yearly appraisal of an employee’s work. Nor, indeed, is Performance Management solely focused on the performance of individuals. Instead, Performance Management is a continuous process which seeks to clarify expectations of both the organization and employees [11] while establishing an understanding of what is to be achieved and how [12]. Performance Management can therefore be viewed as an approach to managing people that increases the likelihood of organizational success [12] by improving the efficiency and effectiveness of employees , and, through them, the organization . Performance Management can be argued to be a vital process, as discussed at the beginning of this chapter, as it is the individuals within the organization who combine to achieve organizational goals (see Fig. 3). To clarify, DeNisi [13: 57] defined Performance Management as:

Fig. 3

Source Author (2019)

Relationship between organizational strategy and individual goals.

The range of activities engaged in by an organization to enhance the performance of a target person or group, with the ultimate purpose of improving organizational effectiveness.

The overall aim of Performance Management is to set expectations, measure and review results, and reward performance , to improve employee performance , with the ultimate goal of positively affecting the organization ’s success [14]. Achieving this aim does not automatically mean there must be a complicated procedure put in place. Additionally, what Performance Management looks like and its component parts vary across organizations. There are, however, a number of component parts that an effective Performance Management system comprises. These are;

• Performance appraisal/Review,

• Goal setting,

• Feedback,

• Reward.

Performance Management and performance appraisal are often used as interchangeable terms. They are not, however, the same, as appraisal is a component of Performance Management [11]. Indeed, performance appraisal as a stand-alone form of managing performance has been widely criticized [10]. To shift focus from short-term performance to holistic and long-term performance , the term “appraisal” has been replaced in some organizations to, for example, “analysis”, “assessment” or “review”.

Performance appraisal serves multiple purposes. It can be used as a vehicle of communication to provide feedback on current and recent performance , and reinforce and clarify goals, expectations and standards, identify training needs and potential for development , and address job-related issues [15]. When properly undertaken, appraisals can serve to motivate employees by acknowledging appropriate performance and achievements. Additionally, from the perspective of the employee, appraisals can be an opportunity to discuss their view of their performance and career options, and to clarify and set future goals and performance plans. Appraisals can also assist employees in identifying skills sets that need to be improved in order to help them to improve their overall performance .

When conducting performance appraisal or analysis, it is important that analysis of employee performance is based on clear and agreed standards, and supported by evidence, rather than the reviewer’s opinion [10]. Additionally, all aspects of the review should be documented. These details are critical, as they provide support for any decision made or outcomes associated with the performance review process. Appraisals which are not conducted well can result in legal costs for an organization if decisions are challenged [16], or can see other costs in the form of diminished performance .

While formal analysis may happen just once a year, analysis should also be undertaken during informal conversations throughout the year, which offers the benefit of both correcting and clarifying behaviours, but also reinforcing appropriate behaviours by acknowledging good performance . During formal reviews, there are a number of assessment options that can be employed, including;

• Rating,

• Graphic Rating Scales,

• The Critical-Incident Technique,

• Behaviourally Anchored Rating Scales,

• Behavioural Observation Scales,

• Results-Based Scales,

• Competency-Based Scales,

• Forced Ranking,

• Narrative Assessment [10: 81–99].

Regardless of the tool chosen, it is vital that managers are trained by the HRM function in how to administer and operate assessments, as these often fall under their remit. Indeed, while the HRM function designs most, if not all, of the elements of Performance Management , it falls to line managers to implement them. This applies to all HRM activities that have been delegated to line management .

In order to review and assess performance , goals and standards of performance must be set. These can be assessed, communicated, added to or amended, and reinforced during performance assessment reviews. Without goals and established standards, it is more difficult for employees to perform appropriately. As highlighted in Fig. 3, goals should stem from the organizations strategy , with a view to realizing that strategy . Clear goals for individual employees are therefore important.

Goals and targets can be both task and developmentally related. In addition to clarifying the performance required of the employee, goals, when stretching but attainable, can be motivating. Overall, goal setting can be an effective method of influencing performance [17]. For effective goal setting, goals should;

• Be short, simple and understandable,

• Be achievable but challenging,

• Have a time limit,

• Be arrived at through employee participation to ensure commitment,

• Clearly outline the reward(s) the employee will receive upon completion,

• Clearly communicated, and visible [18],

• Be revisable and a little flexible,

• Identify any possible constraints that may affect their achievement [19].

Another Performance Management component closely related to goal setting is feedback. Without feedback on performance , employees are less likely to be aware of to what degree they are reaching, or on track to reach, their goals, and whether their general performance is acceptable. Feedback can occur formally as part of Performance Management , generally at the time of performance review, but should also occur informally. Informal, frequent feedback aids in continuously aligning individual performance with goals and organizational needs, and also in reinforcing desired behaviours while addressing non-desired behaviours. Feedback is important not just for individual performance , but also for group/department and organizational performance . Reflecting back on Fig. 3, if individual performance resulting in individual goal achievement feeds into overall organizational goal achievement, then it is important to ensure that performance is being continually monitored and aligned, via feedback.

While feedback can therefore be argued to be of benefit to the organization as a whole, it also carries a number of benefits for the individual employee. First, it provides employees with insight into what they need to improve upon, which ultimately helps them to perform better. Second, it can help employees to understand how their performance is viewed by others [20] which can help them become a better team member. Feedback can also encourage employees to take responsibility, and motivate them to take steps to improve their performance [21]. The benefits associated with feedback for both the organization and the individual are more likely to be realized when feedback is based on job tasks and job-related performance rather than the person.

Reward as a HRM Activity is discussed more fully later, but first, Performance Management in itself provides reward. First, non-financial rewards are provided in a variety of ways. In particular, Performance Management involves recognition (both formal and informal), gives employees the opportunity to succeed and develop their skills , and assists in career planning. Performance Management can also enhance both engagement and commitment [10]. Financial rewards may also be associated with Performance Management , in the form of Performance -Related Pay (PRP). If the organization decides to incorporate PRP into their Performance Management System, a clear means by which increases or performance -related bonuses will be decided is critical. This is commonly achieved via ratings based on the performance review [10]. It is also critically important that managers are trained in use of ratings, to avoid any unfairness, whether real or perceived, which may leave the organization liable to legal claims. Reward as a HRM activity is discussed next.

2.5 Reward Management

As with Planning and Performance Management , reward also needs to be related to, and based on, organizational strategy . Reward, whether in the form of compensation or additional benefits and incentives, exists to ensure that employees are operating in such a way that organizational strategy is more likely to be achieved, and to reinforce appropriate, desired behaviour. Regarding the latter point, reward should particularly reinforce behaviours that assist the organization in achieving its strategy , and so reward strategy should flow from organizational strategy . Figure 4 highlights that, in addition to having a relationship with organizational strategy , the reward function of HRM also impacts, and is impacted by, other HRM activities .

Fig. 4

Source Author (2019)

Relationship between reward and other activities.

The reward strategy concerns what is to be done about reward over the next few years, and how, while the rewards system is the resulting set of policies and procedures that are implemented to ensure reward management is conducted in such a way that both the organization and its employees benefit [1]. Successful implementation of the reward system requires training managers, as line managers are likely to be involved in many reward-related activities. As mentioned in the Performance Management section of this chapter, for example, managers may need to use performance review data to make decisions on PRP.

The HRM function , in conjunction with senior management , has a number of decisions to make regarding the type of rewards that will be offered by the organization . A decision must be made as to whether rewards will be individual, communal, extrinsic (or transactional) or intrinsic (or relational).

Individual reward is reward which primarily benefits the individual employee. This may take the form of, for example, a bonus, commission or training . Communal reward has a broader focus and tends to benefit a number of, if not all, employees . These rewards may include work-life balance initiatives , health care and holidays. Transactional rewards are usually financial, i.e. extrinsic, in nature. These rewards are typically related to job performance and are easily copied by competitors. Transactional rewards include, for example, base pay, bonuses and profit sharing. Relational, i.e. intrinsic, rewards tend to be more difficult to copy. These include the communal rewards already mentioned, and additional individually oriented rewards , including training and development , performance management and career planning (based on the well-known Towers Perrin Model of Total Rewards ).

A trend that has been increasing in popularity concerns combining the above options and focusing on total reward. This approach is not only more cohesive, but emphasizes the importance of all aspects of the work experience and environment for employees . There is, after all, little point in offering high levels of base pay if employees are unhappy with every other aspect of their job, as base pay can easily be matched by competitors.

As indicated in Fig. 4, reward interacts with performance management , training and development and finance. With regard to interactions with performance management , both activities can reinforce and support each other. Through performance management , goals can be set and desired behaviours clarified. Rewards can then reward achievement of goals and expressions of desired behaviour, further reinforcing them. In an opposite vein, the potential of reward receipt can assist in modifying employee behaviour by encouraging them to work to achieve desired goals to achieve said reward. This, however, requires the employee to attach valence to the reward.

Furthermore, Learning , Training and Development (LT&D) can, under total rewards , be considered a reward in its own right. LT&D can be a potential outcome of performance review, when a skills gap is identified, a desire to develop skills is expressed, or potential for progression is identified. In the second and third of those scenarios, LT&D can be considered a reward, as the employee is being facilitated in developing their skills , or assisted in their future progression.

Finally, at least given the scope of this chapter, it is important that rewards are budgeted for, which requires liaising with the Finance Department/Function. There is, for example, little point in developing a new incentives scheme that will require increased HRM spending, if the money for that will not be provided in the budget. Additionally, there needs to be consideration of long-term feasibility and sustainability of rewards offered, specifically with regard to financial rewards . The HRM function needs to ensure that if a new suite of financial rewards are developed and implemented, funding exists to follow through on what has been promised. If not, rewards activities will instead disengage and demotivate, achieving the opposite of their purpose.

2.6 Diversity and Inclusion

Diversity means differences. As society is diverse, and organizational workforces are made up of individuals from society, organizations are therefore also diverse, even when they appear to be homogenous. Diverse employees bring different perspectives and experiences to the organization , which can, if encouraged and utilized, present a number of benefits to the organization , as indicated in Fig. 5.

Fig. 5

Source Author (O’Donovan [22])

Advantages associated with diversity and inclusion .

Diversity in the organization can also potentially result in challenges , however, as identified in Fig. 6. In order to capitalize on the benefits of diversity , while harnessing some additional benefits and pre-emptively addressing the potential challenges , an inclusionary approach to diversity management is advocated.

Fig. 6

Source Author (O’Donovan [22])

Diversity and inclusion challenges .

Inclusion refers to the extent an individual feels they belong in the organization and can be themselves. Inclusion concerns how well organizations and their employees fully connect with, engage and utilize employees across all types of differences [23].

Under an inclusionary approach to diversity management , the differences of individuals in the workplace are not just identified, rather are integrated into the very fabric of the organization ’s culture [24]. Employees are allowed to be their full selves while at work, and their differences and similarities are leveraged to improve the functioning and performance of the organization . Through diversity training , organizations can encourage employees to consider what makes them different, not to negatively highlight differences, rather to focus on how those differences can be harnessed to enhance employee, team and organizational performance . A focus on similarities, rather than just differences, among individuals who appear quite different can assist in increasing understanding, group harmony and feelings of a shared sense of purpose.

While diversity management and training are useful tools in beginning to address diversity , they have the potential to be divisive, regardless of intent. Diversity management and training can result in trying to, or appearing to try to, understand employees by assigning them to a particular grouping (based on, e.g. gender, age , parental status, country of origin). Rigidly categorizing employees in this manner potentially ignores other aspects of an individual’s diversity , which can result in them feeling marginalized or misunderstood. For this reason, while organizations should build foundations on diversity management and diversity training to help enhance understanding and open channels for communication , it is advisable to do so with the ultimate aim of creating inclusion .

Creating and maintaining inclusion is an ongoing process, but organizations can capitalize on the identification of a number of contributory factors which can assist in developing and maintaining employee perception of inclusion . Of course, it is important to remember that as all employees are different, the factors about to be discussed may not automatically make all employees feel included, as what constitutes inclusion is different for different people .

The first factor that organizations can develop, encourage and maintain relates to teams. Having a sense of being part of a team has been identified as important for inclusion , therefore, organizations should identify ways in which a team orientation can be created [24]. The structure of some organizations may more naturally result in team working, for example small organizations or hospitals, but other organizations can enhance this team feeling by scheduling “team” meetings or briefings, or encourage inter- or cross-departmental problem solving. A team orientation can also be encouraged from the earlier discussed onboarding stage in large organizations by grouping individuals from different departments together for a portion of their onboarding, to allow the development of relationships across the organization’s departments, allowing even individuals who typically work individually or as part of a small group to feel part of a greater team. Organizations could also take advantage of common training , such as legally mandated training or, of course, diversity training , to bring individuals from different departments, or departments in which performance is strongly individually based, together.

The second factor concerns stability, combining the related concepts of familiarity (in a unit or department) and relationships (in the workplace ). First, individuals should be allowed form and maintain relationships in the workplace . To assist this, organizations are advised to avoid unnecessary, frequent, transfers across departments or projects. If such transfers are necessary, organizations may find it useful to facilitate cross-departmental relationship building, whether by formal or informal activities, in an attempt to create familiarity throughout the organization . Again, engaging in group onboarding when appropriate will make familiarity throughout the organization more likely.

Employee engagement , perceiving respect from colleagues, and being willing, and believing the freedom is there, to offer opinions on work-related matters, are more contributory factors that HR and organizations can work on. Feeling respected and free to engage in dialogue in the workplace are elements of employee engagement , meaning organizations should, in conjunction with inclusionary efforts, also focus on employee engagement , as both engagement and inclusion arguably support and reinforce each other. There is a need to be cautious here, however, cognizant of diversity in personality and culture . In particular, for some employees , being asked for their opinion directly or publicly can be quite uncomfortable, not because of inability, but because of personality or cultural norms, leaving them feeling unincluded. As such, if aiming to increase engagement through participation, it may also be useful to allow individuals to give opinions or suggestions privately in some manner.

Finally, management also has a role to play in creating inclusion and in championing diversity . If managers are seen to behave inclusively, and view diversity as advantageous, this symbolizes the importance of inclusion throughout the organization . If management is seen to encourage individuals to engage their differences to assist in their work, this symbolizes acceptance and valuing of differences. Additionally, managers have a role to play in reinforcing organizational culture , and so have a role to play in reinforcing a culture of inclusion . Managers can also act as driving forces for the other contributory factors identified in this section. Of course, in order for managers to behave inclusively, they too must perceive inclusion . HR functions therefore need to remember that when engaging in activities to inclusively manage diversity , managers must be included in, committed to, and trained in implementing, those activities.

The HR function ultimately needs to remember that all employees are different, and, while employees are hired by the organization for the purpose of achieving organizational goals and strategy , proactively thinking practically about what diversity might mean for different employees in the organization can assist in trouble shooting issues which may prevent employees from working to their potential. Table 1, adapted from O’Donovan [22], identifies and offers a brief overview of some possible implications associated with diversity . In addition, the importance of diversity training , both awareness and skills based, should not be overlooked by HR functions , as it can greatly assist in developing and maintaining an inclusively diverse workplace .

Table 1 Practical implications of diversity

2.7 Engagement and Branding

Employee engagement and employer branding may be dealt with as separate activities , but this chapter suggests that HR functions should consider them related, as they can serve to reinforce each other. Engagement concerns the extent to which employees are committed to their work, their department and their organization (ideally to all). This commitment is purported to make employees more motivated to strive for, and achieve, high levels of performance . When employees are engaged, a number of positive outcomes are possible, including:

• lower absenteeism rates,

• lower turnover intent and higher retention levels,

• increased productivity and higher profitability,

• lower error and waste levels,

• improved customer satisfaction and loyalty,

• enhanced likelihood of realizing organizational strategy and business success [8].

There is, however, a possible negative outcome that HR functions need to be aware of in the form of presenteeism. Employees who experience high levels of commitment to their job or the organization may end up either overworking or attending while ill. Continuously working beyond required hours can, even for committed employees , result in burnout. Attending while ill, in particular while contagious, can result in making other employees unwell, negatively impacting overall organizational performance .

The employer brand relates to how the organization differentiates itself in the labour market to assist in recruiting, retaining, and, as inferred earlier, engaging employees [33]. Evidently, branding is concerned with both potential and current employees . The organization ’s employer brand should connect the organizations values, people strategy and HR policies . Effective branding efforts can:

• help the organization to compete for talent,

• drive loyalty through effective recruitment , retention and, again, engagement [33],

• assist the organization in achieving its strategy via the attraction and retention of the best talent.

It should be noted that engagement can assist in the above. Engaged employees , given they likely perceive their organization in a positive light, can be viewed as brand ambassadors, spreading positive stories about the organization . This has the potential to attract talent to the organization over its competitors. Moreover, the presence of engaged employees can create an engaging culture , facilitating the perception of engagement among new hires, subsequently aiding in their retention.

To develop an effective employer brand, CIPD [33] has identified a four-step approach. The first stage is discovery, which concerns collecting data to explore how the brand is currently perceived by employees and other stakeholders . Next, HR should engage in analysis, interpretation and creation, by building a clear picture of what the organization “stands for”, and both require and offer as an employer. Third, the picture established in step two must be communicated and implemented in the organization . Finally, the HR function needs to measure and maintain the employer brand.

Both individually and as related concepts, engagement and branding activities can positively impact other HR activities , as highlighted in Fig. 7. As also indicated in Fig. 7, engagement and branding are also arguably linked to the organization ’s strategy .

Fig. 7

Source Author (2019)

Beneficial impact of engagement and branding .

First, consider Learning , Training and Development (LT&D). Engaged employees are typically more committed to the organization and its success . Consequently, engaged employees may be more likely to seek out training that assists in improving their performance . Additionally, engaged employees , as a result of their commitment, may be more willing to informally train and develop new hires, reducing formal LT&D costs and facilitating on-the-job training , mentoring and coaching. Development for the purposes of succession planning may be more successful when employees are engaged and therefore more committed to staying. A strong brand may assist in easing the pressure on LT&D activities by helping to ensure that the right candidates (i.e. with the right skill set) are applying to begin with. Furthermore, training spending may be easier to justify outside the HR function when turnover is relatively low as a result of employee buy-in to the brand. Of note, LT&D can also enhance engagement , and support branding initiatives , as employees who feel the organization is investing in them via training may feel more committed.

The relationship between engagement , branding and recruitment has already been introduced at the beginning of this section, but is worth some further discussion. Recruitment and selection is a costly activity. While some turnover is to be expected, and in some cases desired (e.g. when underperforming employees leave), in general, high turnover levels are to be avoided. Employee engagement can assist in keeping turnover levels at a low level, as engaged employees are more likely to stay in the organization . Additionally, strong branding efforts that attract employees to the organization , and are then supplemented by engagement and inclusion activities, can, when maintained, help employees to feel part of a “bigger picture” and a unified team, again assisting in retention, thereby lowering R&S costs. In another vein, existing employees who are engaged and buy in to the employer brand can aid recruitment efforts by recommending the organization as a great place to work, making it attractive to talent in their network, whether their personal network or their professional network (e.g. by posting on platforms such as LinkedIn).

Regarding inclusion , engagement has been identified as a factor which contributes to employees perceiving the concept [22]. It has been noted that engagement and inclusion support and reinforce each other. Elements of engagement , such as employees feeling respected and able to participate and engage in open dialogue, can enhance perceived inclusion in the workplace . In turn, perceiving inclusion can result in enhanced morale, feelings of support and job satisfaction, bolstering engagement levels [34].

Finally, Fig. 7 notes that engagement and branding can benefit and assist performance management activities. First, it can be argued that engaged employees are more likely to be committed to, and therefore more likely to strive to achieve, the goals set for them. Similarly, employees who buy in to the employer brand may be more committed to helping the organization to achieve. Next, it is possible that engaged, committed employees will be more willing to fully engage in the performance management process, identifying issues that may prevent goal attainment, seek clarity on required behaviours, and take feedback on performance in a positive light, rendering the performance management process more effective . Employees striving to perform at high levels can aid the performance management process in identifying employees suitable for progression in the organization . Finally, it was noted earlier in the Performance Management section of this chapter that performance management can enhance engagement . As per Fig. 7, the positive impact of engagement and branding on the four HRM areas discussed above can combine to assist in achieving organizational strategy , in this case by reducing costs, increasing ad hoc and informal training , enhancing perceived inclusion and reaping its benefits , and rendering performance management more effective .

2.8 Employee Relations

The area of employee relations (ER), or employment relations, is concerned with managing the psychological contract and the employment relationship . This term refers to the methods organizations use to deal with employees , whether individually, collectively, or through a trade union. Employee relations is wider than industrial relations (IR), which refers to interactions between management and trade unions involving collective bargaining and agreements and dispute resolution [8].

Armstrong and Taylor [8] note that ER policies express the organization ’s philosophy on the sorts of relationships that are wanted between managers and employees , and identifies four approaches, specifically

• 1. Adversarial: The organization decides what it wants to do, and how. Employees are expected to align with the organization , and only exercise power via refusal to cooperate.

• 2. Traditional: A relatively good day-to-day working relationship exists, but management makes proposals which are reacted to by employees via their representatives (if they exist), and employees either accept the proposals, or leave.

• 3. Partnership: Employees are involved in developing and executing policies , but the organization retains the right to manage.

• 4. Power Sharing: The organization involves its employees in both day-to-day and strategic decisions/decision-making .

Effective communication in the workplace is central to good ER. Focusing on positive, desired, behaviours and outcomes, and taking a proactive, problem-solving approach to issues and recommending viable, appropriate solutions are also critical factors [35]. This requires a specific set of HRM competencies, including consultation, surveying (and interpreting) employee’s attitudes, identifying potential conflict and early efforts of resolution of management and employee differences. Indeed, conflict is inherent in ER. CIPD [35] note that the increased popularity of Alternative Dispute Resolution (ADR) techniques, including mediation and early neutral evaluation, represents an important shift from the more traditional industrial relation (IR) framework. The traditional IR approach tended to place emphasis on formal disciplinary and grievance procedures . ADR, however, is more reflective of a desire for a “win-win” outcome or stopping negative outcomes from conflict at an early stage.

Contracts are the foundation of the employment relationship . The relationship begins with an employee undertaking to provide inputs, which the organization will return with remuneration. While this relationship is initially formed by a legal contract drawn up at the commencement of employment, the psychological contract becomes as significant to the employment relationship . It is important to note that, in many countries, a lack of written contract does not mean there is no contractual relationship as there are typically still legal rights and responsibilities pertaining to both employees and employers. The purpose of the formal , legal contract is to clarify and solidify expectations regarding the job, required employee inputs, and resulting organization remuneration [8].

In contrast to the legal contract, the psychological contract is neither a legal document or even necessarily expressed. Instead, it is a set of unwritten expectations on the part of both the employer and the individual employee. Essentially, it concerns what employees believe is expected of them and what they believe they should receive in return for fulfilling those expectations, and what the employer believes is expected from them, and what they should get from employees in return for fulfilling those expectations [8, 36]. Offering a stark warning, CIPD [37] caution that the psychological contract can significantly impact both the length and quality of the employment relationship . Organizations can ill-afford to ignore this warning as, as discussed earlier, retention and engagement of talented employees is crucial to organization success . In order to manage the psychological contract, and align employee expectations, the organization must be clear regarding what is expected of the employee and what they offer [37]. The performance management system can assist HR in this effort via use of performance review and feedback. Rewarding desired behaviours via the rewards system can also further reinforce actual requirements.

Regardless of how it is achieved, it is important to manage the psychological contract, as employees who perceive fairness in terms of their inputs and what they receive for them are more likely to be committed and engaged, which, as discussed in earlier sections of this chapter, can result in a number of benefits for the organization . Consequently, it is important to create a climate of fairness and trust. Trust will, or is more likely to, be perceived by employees when managers act fairly and consistently, their actions are transparent and justifiable, and decisions are communicated, and other HR tools are effectively employed. If trust is lost via a breach or violation of the psychological contract, it is important to attempt to mend that break. Indeed, it is important to take swift action, as violation can result in strong negative reactions ranging from anger to withdrawal of effort [38] and breaches have been found to have a significant impact on work-related outcomes [39].

A psychological contract breach is an event that triggers affective reactions in employees , while a violation is the emotional response (e.g. frustration and anger) that follows a breach [39]. To avoid a breach to begin with, managers and HRM

• Should not make unrealistic promises during recruitment , induction and onboarding, and daily interactions,

• Pay close attention to the emotional state of employees and aim to proactively address issue to prevent negative outcomes and behaviour occurring.

When a breach occurs, to prevent movement towards negative reactions (violations), managers and HRM can;

• Listen to employee’s concerns when an issue arises and explain how the issue is out of management, HRM or organizational control .

• Assess employee’s needs and make a sincere effort to fulfil obligations when reasonable [39].

Breach does not have to result in violation. If the breach can be shown to not be the employer’s fault, or intended, the impact on loyalty, engagement , commitment and productivity can be small and short-lived. As such, open communication and speedy action are important.

2.9 Administration and Compliance

The final activity, or more appropriately set of activities that have been grouped together for the purpose of this overview chapter, as they fit nicely together, concerns Administration , Compliance and Safety. Administration is the act or process of administering something [40], or the range of activities associated with organizing and supervising the manner in which the organization functions [41]. HR engages in a significant amount of administration . Indeed, many organizations have individuals employed in a HR Administration role . Each of the activities discussed in this chapter thus far require administration of policies and procedures , the purpose of which is to manage how the organization functions. Table 2 provides some examples of administration duties related to each activity (not an exhaustive list). An important note relates to the last administration duty identified in Table 2, specifically “Keep records on all of the above up to date”. A crucial activity concerns maintaining “paperwork” (whether in an electronic or paper format). The reason this is important is that maintaining paperwork allows organizations to prove they have been fairly and consistently applying policies and procedures , and have been dealing with their employees in a legally sound manner. This is of vital importance if ever a case regarding unfair or constructive dismissal, discrimination or harassment is brought against the organization . This signifies the importance of HR Compliance .

Table 2 HRM administration activities

Compliance concerns adhering to law . Employment law varies across country. Common areas include anti-discrimination, harassment and bullying, pay, working hours, leave entitlements, immigration, union interactions, health and safety, grievances and discipline. These broad areas each cover a number of other areas. While most of these areas have been already addressed (either mentioned or discussed) in this chapters, two areas not yet discussed but certainly important are health and safety and grievance and discipline.

HRM functions today need to think beyond physical health and safety to also consider mental health and employee well-being. This notion has its roots in the welfare tradition , discussed in the opening pages of this chapter. Organizations have a duty of care to look after the physical and mental well-being of their employees , and to operate in such a way that their health is not compromised. This may take the form of training employees in how to identify and manage stress, use of an Employee Assistance Programme (EAP), or training on harassment, discrimination and bullying. One-off training on these areas alone is insufficient, however. Instead, refresher training should be frequent, and all employees should be made aware of the channels to follow if experiencing something in the workplace which is detrimental to their physical or mental well-being. There needs to be two avenues to follow. While many HRM activities are undertaken by line managers, it can unfortunately be the case that issues resulting in potential physical or mental injury may be caused by the manager . As such, in these cases, employees need to be aware of a process by which this can be addressed which can be used if raising the issue with their manager does not resolve it, or they have genuine reason to fear addressing the issue with their manager . Table 2 identifies other areas of HRM compliance regarding health and safety.

While health and safety practices are, in most countries, a legal requirement, it also makes good business sense. Needlessly engaging in practices that might cause injury to employees can result in being sued or high turnover. Not having a focus on well-being can damage engagement , commitment and inclusion , which can result in decreased productivity, and again potentially result in being sued and facing high turnover. Being sued or experiencing high turnover can negatively affect the business in terms of increased costs, reduced profits and stakeholder pressure, all of which detracts from achieving the business strategy . Beyond this, looking after employee health, in as much as is possible, is a morally sound way to conduct business .

As mentioned, employees need to know how to go about raising grievances. This falls under the umbrella of grievance and disciplinary procedures . A grievance procedure details the organization’s policy on handling grievances, while a disciplinary procedure details the stages through which disciplinary actions should proceed [8]. Assisted by the initial employment contract, disciplinary procedures ;

• Make employees aware of what is expected of them.

• Make employees aware of the consequences of continually failing to meet expected standards.

• Identify obstacles preventing standards being achieved.

• Enable agreement to be reached regarding goals and timescales for improvement.

• Try to resolve issues rather than escalating issues to external dispute resolution.

• Prove fairness in that an appropriate process was followed if an employee brings a case against the organization post-dismissal [42].

• Grievance procedures;

• Offer employees a course of action if they have a complaint that they cannot resolve through discussion with the relevant party (e.g. their manager , colleague).

• Identify points of contact and timescales to resolve the matter.

• Again, try to resolve issues rather than escalating issues to external dispute resolution [42].

Adhering to these policies is crucial, as is accurately recording their use, as they can support the organization’s position if a case is brought against them. It is important, therefore, that HR trains managers on their use. Organizations are cautioned that correct procedures show employers to be acting fairly, and reduce the possibility for inconsistencies in dealing with employees . If grievances are not properly dealt with, they can damage ER [43].

Having overviewed the common HRM activities across the organization , the final section of this chapter offers concluding remarks on the importance of the HRM Function .

3 Conclusion: The Importance of the HRM Function

This chapter has provided an introductory overview to the development of HRM and brief discussion of its common core activities . There are a number of strategic HRM concepts to be considered, including Best Fit versus Best Practice HRM , Shared Services, Ulrich’s Model of HRM etc. , which are beyond the scope of this current chapter, but worthy of further reading.

Overall, this chapter has identified a number of current themes which signify the importance of HRM in the organization , whether as a distinct function in a large organization or activities under the remit of some managers in smaller organizations. First, a link between HRM and performance for the achievement of organizational strategy and goals has been identified. In particular, it has been established that the ability to perform and achieve rests in the organization ’s people : its human resources. As HRM activity can be used to communicate desired behaviours, shape and reinforce performance , HRM contributes to goal achievement.

In addition to moulding and guiding performance , HRM can further contribute to organizational success by decreasing certain costs. The chapter has discussed how effective recruitment and selection , retention, engagement , inclusion and performance management practices can result in reduced turnover, training and legal costs. Reduced costs mean higher profits which can be used to the benefit of the organization .

Furthermore, HR Planning , inclusion , engagement and development activities assist in sustainability . Identifying future skills needs and developing employees to move into new roles, and ensuring they are committed and so stay, is beneficial for organizational longevity.

Finally, both in summation of the above latter three themes, and indeed speaking to the overall theme of the chapter, people are important. Without them, an organization cannot function. Given people are important, so too is HRM , the People Function .