AN OVERVIEW OF HRM
Chapter 1
DEFINITION
• Human Resource Management is the
development and implementation of systems in
an organization designed to attract, develop
and retain a high performing workforce.
• HR Manager’s Title
–
–
–
–
Welfare Managers
Personnel Managers
HR Managers
Human Capital Managers
• The purpose of HRM is to ensure that the
people employed by the organization are being
used as efficiently and effectively as possible.
The Historial Background of HRM
• Industrial Revolution
– 1850s-1920s
– Specialization
– Exploitation of workers
– Worker alienation
The Historial Background of HRM
• Human Relations Approach
– 1930s-1950s
– Emphasis on supervisory training
– Recreation programmes
– Welfare programmes
The Historial Background of HRM
• Recent Development
– Increased labour legislation
– Organizations getting bigger
– The world getting smaller
– Increasing workforce diversity
– Rapid change
Change and HRM
• Changes that have taken place in
society today have a major impact
on human resource management.
• Employers and employees need to
be aware of these changes and to
manage them successfully if they
want to stay in business.
Change and HRM
• Some of changes affecting HRM are:
– Technological changes
– Globalizationand increased
competition
– Employee education and expectations
– Progressive increases in workforce
diversity
Employees’
skills and
knowledge
must be
constantly
updated
The paper work is
greatly reduced
because employees’
benefits are
processed through
intranet and
automated system
A lot of time is
wasted by
employees
using
computer for
unrelated
purposed
Technological
Changes
Easier for HR
departments
to keep track
of employee
data
Fierce
arguments
about privacy
at the
workplace
Globalization and Increased
Competition
• Many countries are signing free trade
agreements with each other.
– Ex: ASEAN Free Trade Agreement (AFTA)
• To strengthen company position in the
market place, many companies are
merging with rivals or acquiring new
businesses.
Employee Education and Expectations
• Level of education among
employees is rising.
• With higher levels of education,
workers are becoming more aware
of their employments rights
• Low umployment rates = Tight
labour market = Higher turnover
rates
Workforce Diversity
• Employees in different age groups have
different expectations
• Different employees respond to different
HR practices. Workforce diversity must be
considered when designing HR practices.
The Purpose. Structure and Functions of a
HR Department
• HRM exists to ensure organizations have the right
people who wil be able to achieve the organizational
objectives.
• Not every organization has a specialized HR
department. A number of factors determine whether
or not a company will have such a department. These
factors are:
– The size of organization
– Unionization of the workforce
– Ownership of the company
– The philosophy of top management
Human Resource Management Functions
Human
Resource
1
Manageme
nt
Safety and
Health
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1-13
Staffing
• Job Analysis
• Human Resource Planning
• Recruitment
• Selection
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1-14
Staffing (Cont.)
• Staffing - Process through which organization
ensures it always has proper number of
employees with appropriate skills in right jobs
at right time to achieve organizational
objectives
• Job analysis - Systematic process of
determining skills, duties, and knowledge
required for performing jobs in organization
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1-15
Staffing (Cont.)
• Human resource planning - Systematic process of
matching the internal and external supply of people
with job openings anticipated in the organization
over a specified period of time .
• Recruitment - Process of attracting individuals on a
timely basis, in sufficient numbers, and with
appropriate qualifications, to apply for jobs with an
organization
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1-16
Staffing (Cont.)
• Selection - Process of choosing from a group
of applicants the individual best suited for a
particular position and the organization
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1-17
Human Resource Development
• Training
• Development
• Career Planning
• Career Development
• Organizational Development
• Performance Management
• Performance Appraisal
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1-18
Human Resource Development (Cont.)
• Training - Designed to provide learners with
knowledge and skills needed for their present
jobs
• Development - Involves learning that goes
beyond today's job; it has more long-term
focus
• Career planning - Ongoing process whereby
individual sets career goals and identifies
means to achieve them
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1-19
Human Resource Development (Cont.)
• Career development - Formal approach used
by organization to ensure that people with
proper qualifications and experiences are
available when needed
• Organization development - Planned process
of improving organization by developing its
structures, systems, and processes to improve
effectiveness and achieving desired goals
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1-20
Human Resource Development (Cont.)
• Performance management - Goal-oriented
process directed toward ensuring organizational
processes are in place to maximize productivity
of employees, teams, and ultimately, the
organization
• Performance appraisal - Formal system of
review and evaluation of individual or team
task performance
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1-21
Compensation
Compensation - All
rewards that
individuals receive
as a result of their
employment
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1-22
Compensation
• Direct Financial Compensation - Pay that person
receives in form of wages, salaries, bonuses, and
commissions.
• Indirect Financial Compensation (Benefits) - All
financial rewards not included in direct
compensation such as paid vacations, sick leave,
holidays, and medical insurance.
• Nonfinancial Compensation - Satisfaction that
person receives from job itself or from psychological
and/or physical environment in which person works.
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Safety and Health
Employees who work in
safe environment and
enjoy good health are
more likely to be
productive and yield
long-term benefits to
organization.
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1-24
Safety and Health
• Safety - Involves protecting employees from
injuries caused by work-related accidents
• Health - Refers to employees' freedom from
illness and their general physical and mental
well being
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Employee and Labor Relations
• Private-sector union membership has fallen from 39
percent in 1958 to 7.8 percent in 2005.
• Business is required by law to recognize a union and
bargain with it in good faith if the firm’s employees
want the union to represent them
• Human resource activity is often referred to as
industrial relations
• Most firms today would rather have a union-free
environment
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Interrelationships of HRM
Functions
• All HRM functions are
interrelated
• Each function affects
other areas
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Questions
•
•
•
Changes that have taken place in society today
have a major impact on human resource
management. Employers and employees need to
be aware of these changes and to manage them
successfully if they want to stay in business.
Discuss the changes that affecting Human Resource
Management.
(10m)
In your opinion, why HRM is so important for
organization?
(5m)
Labor Laws and their Enforcement
• The International Labor Organization
recommends basic labor standards to be
implemented by all member nations.
Labor Laws and their Enforcement
• The Employment Act 1955
• The Sabah Labor Ordinance
• The Sarawak Labor Ordinance
• This 3 laws set minimum labor standards for
workers and seek to protect them from
exploitation
THE PURPOSE OF LABOR LAW
• Establish an economic climate in which
businesses can flourish
• Protect employees from exploitation
• Ensure a harmonious relationship between
employers and employees.
Labor Laws and their Enforcement
• The Employment Act covers those groups of employees
in the private sector in Peninsular Malaysia and the
Federal territory of Labuan who earn NOT MORE than
RM1500 per month or:
 Work as *manual laborers
 Supervise *manual laborers
 Operate or maintain a mechanically propelled vehicle
• Similar with Sabah and Sarawak Labor Ordinance but the
ceiling wage limit is RM2500
* Manual labour (British English) or manual labor (American English) is physical work done by
people, most especially in contrast to that done by machines, and also to that done by working
animals. It is most literally work done with the hands (the word "manual" comes from the Latin
word for hand), and, by figurative extension, it is work done with any of the muscles and bones of
the body.
Labor Laws and their Enforcement
• The main areas covered by the Employment
Act and the 2 Labor Ordinances are:
Contracts of service
Payment of wages
Employment of women
Working hours and holidays
Registers, returns, complaints and inquiries
Labor Laws and their Enforcement
• Under Section 61 of the Employment Act, the
employer is required to keep a register of employees
which includes details such as:
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Name, sex, age and identity card number
Permanent home address
Occupation
Date of commencing and leaving employment
Details of terms and conditions of employment
Details of wages and allowances earned during each wage period.
• The Labor Department in the Ministry of HR has the
authority to inquire into and decide on disputes
between an employer and his employee regarding
any problems which arise out.
The Wages Councils Act 1947
• Orders on minimum wages are made under
this legislation for industries in which
employees are not organized into unions
• the 4 sectors covered by Wages Councils:
i. Shop assistants
ii. Hotel catering industry workers
iii. Port of Penang stevedores
iv. Cinema workers
The Employees Provident Fund
(EPF) Act 1991
• The Employees Provident Fund is a scheme to
ensure workers have Funds available on their
retirement.
• All employers must register with the Fund and
they are responsible for contributing to the
Fund for their employees
• Wages include:
Fixed allowances
Commissions
Bonus payments
The Workman’s Compensation Act
1952
• To provide compensation to workers who have
accidents at work or who contract
employment-related diseases.
• For foreign workers earned less than RM500
per month. Employers must take out an
insurance policy.
The Employees Social Security Act
(SOCSO) 1969
• To provide protection to workers who may be
involved in an accident at work or who
contract some occupational disease.
• The scheme is designed to ensure workers
receive financial compensation for injuries if
they are unable to work.
The Employees Social Security Act
(SOCSO) 1969
• The Social Security Organization set up by the
Act administers the following benefits:
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Free medical care
Disablement benefit
Dependants’ benefit
Invalidity pension
Survivors’ pension
Funeral benefit
Constant attendance allowance
Supply of prosthetic appliances
Facility for physical rehabilitation
The Occupational Safety and Health Act 1994 &
The Factories and Machinery Act 1967
• To carry out safety inspections at workplaces
• To organize promotional activities to improve
employers’ and workers’ understanding of good
safety practices
• Assist other government departments with technical
expertise
• To carry out any activities aimed at improving safety
and health at work.
The Children and Young Persons (Employment)
Act 1966
• This legislation is aimed at preventing the
exploitation of child labor.
• Children under 14 years of age can only be engaged
in light work in their family’s business.
• Young persons aged 14-16 are restricted to working:
 In light work which does not involve the use of machinery
 A maximum of 7 hours per day
 They may not work between 8.00pm and 6.00 am.
The Employment (Restriction) Act
1968
• This act requires non-Malaysian citizens to obtain a
valid work permit before they can be employed
locally.
The Trade Unions Act 1959
• Workers are permitted to form and join trade unions
provided these are registered organizations
• The procedures for applying for registration, the use
of union funds, the rights and liabilities of unions and
other matters relating to the constitution of unions
are laid down in this Act.