2.1 Introduction to HR management

Full video class on YouTube, summary and notes on Instagram, class extracts on TikTok, text below. Have fun!

The main point of this class is to see what HR means, what impacts HR and why change is so important and difficult for employees and managers.

Human resources (HR) are people that constitute the workforce of an organisation. Organisation can be a business of any size and type (not only companies), a country, a region, an educational institution, etc. Very often HR also refers to the department in an organisation. HR management (HRM) is one of the four business functions (review all business functions here) that corresponds to the process of organising people and maximising their efficiency. It is argued to be the most important business function and the most important type of business inputs, especially for service industries (tertiary and quaternary sector), because they rely on people more than other sectors of industry.

In order to explain the role of HRM, we should answer the question “Why is HRM important?”. There are many reasons why HRM is important. I am going to share 9 reasons that personally I find important.

1. HRM maximises staff efficiency. One of the main tasks for people who work in HR department is making sure the workplace allows employees to be as productive and efficient as possible. Without that function, workplaces would probably be monotonous and dull.
2. HRM minimises risk. One thing that HR specialists do is HR planning (more about it later in this class). Any planning is something that you do in order to be prepared to the future and minimise potential difficulties.
3. HRM maintain the appropriate levels of staff retention (number of employees who stayed divided by total number of employees, in a given period). Basically, it means HRM makes sure there are always enough employees hired at any time. The opposite of retention is staff turnover. More about retention and turnover later in Unit 2.
4. HRM develops and maintains organisational structure. HR department is in charge of creating organisation charts (more later in Unit 2) that help employees understand where they belong in the company, who their line manager is, who they are responsible for, etc. It creates a sense of belonging for people at work.
5. HRM develops employees via professional development (PD) workshops and training (more about it later in Unit 2). It is job of HR department to make sure all employees are adequately trained, in line with the objectives and the nature of work.
6. HRM keeps employees motivated by designing appropriate financial and non-financial rewards (again, more about it later in Unit 2).
7. HRM helps to drive change smoothly. People do not like being told that they have to do things differently. Change is scary and humans naturally try to avoid change. However, not to change means to stop developing. Change is inevitable. People who are in charge of change management usually work in HR department too.
8. HRM is in charge of recruitment and selection. This is self-explanatory, but anyway, more details will follow later in Unit 2.
9. Redundancies and dismissals. Unfortunately, organisations do not always grow in terms of the workforce size and sometimes people need to be let go. In addition, sometimes people do not perform their tasks well and they need to be let go as well. HRM is in charge of making sure redundancies and dismissal are as harmless as possible to both employees and organisation. Learn the difference between redundancies and dismissals later in Unit 2.

Basically, everything we learn in Unit 2 explains the role of HRM and explains why HRM is important. I’m sure you will have no problem elaborating on the role of human resource management in the exam if you happen to have a question that asks you to do that.

HR planning (HRP) is a systematic process of anticipating the staffing needs of an organisation. It does not necessarily imply expansion of workforce, it can also refer to downsizing (decrease in the size of the workforce), including redundancies (when employees are laid off because their service is no longer required, even though they do a good job) and dismissals (when employees are fired for not performing their tasks well). More about downsizing later in Unit 2. All organisations, regardless of their size, from small traders to huge MNCs, do HRP: some of them just keep it in mind, and some have a detailed document.

HRP is really important and it’s inevitable, because without it an organisation is unable to achieve its goals and objectives. All organisations rely on people to a different extent and not knowing how many and what kind of employees are required is impossible when it comes to any business-related planning. HRP, just like any business strategy can take place on different levels of management within an organisation. Thus, HRP is a link between HRM and the strategic goal of an organisation.

HR planning, same as any other kind of planning, is not free from influences and having to be reconsidered. There are many factors that can influence HR planning: some of them come from within the organisation (internal factors) and some of them come from the external environment (external factors). Let’s see some examples of internal and external factors that influence HR planning.

With regards to internal factors, it can be (but not limited to) one or some of the following:

1. Leadership styles. The personality of the senior managers and their management and leadership preferences and styles impacts organisation to a very high extent. Leadership styles can vary (democratic, autocratic, laissez-faire, paternalistic, situational) and affect decision-making. More about leadership and management later in Unit 2.
2. Strategies and objectives. As you remember, HRP is a link between strategic goals and HR management. If goals, strategies and objectives change, it means that a change in HRP will follow.
3. Finance. Resources are limited and organisations have to make decisions that are within the budgetary constraints and other financial considerations that we learn in more detail in Unit 3.

Change in any of the factors above will inevitably have an impact on HR planning.

Now let’s see some examples of external factors that influence HR planning. Please keep in mind that I only discuss the ones that IB included in subject guide as examples of external factors, but it does not mean that they are the only or the most important ones. It just means that you are expected to know and be able to explain at least these:

1. Demographic change refers to any change in population dynamics and trends. For example, ageing population (the increase of the age of an average citizen), life expectancy (average life span), birth rates, etc. Check out demographic statistics of your country and think how this affects you if you were running a company.
2. Labour mobility means the extent to which the workforce is flexible in terms of acquiring new occupations (occupational mobility) and relocating to a new place (geographic mobility). For example, if people in a certain area feel completely fine about starting a career in acting after teaching for 10 years, that would be an indicator of high occupational mobility. In the US and China geographic mobility is really common: many people are born in one place, go to college in the second place, start career in the third place and then move several times because of work.
3. Professional immigration refers to moving to a different country for work. For example, myself and all expat teachers in my school immigrated to China for work, for professional reasons.
4. Flexitime refers to a trend in HR practices whereby employers provide an opportunity for flexible schedule to their employees. For example, it might not matter what time you come to the office and what time you leave, and whether you actually come to the office at all. As long as you get your job done before the deadline, you can plan your time yourself without having to comply with the “office hours”. This flexitime trend is on the increase, especially after the pandemic when many companies realised that it is not necessarily for the entire workforce to be in the office all the time.
5. Gig economy is a type of an economy where strong commitments are not common, and were flexible working practices (such as flexitime, short-term temporary contracts, freelance, etc.) are common.

Now, the most important paragraph of this part of class. I have explained the factors that may influence HR planning, but they are not universal and they do not apply equally to all organisations. With the help of your BM teacher, you should choose a company and see how these factors might influence its HRP. In addition, think about other factors that HRP might be influenced by.

In this part of class we’ll figure out what change in the workplace is, why people might not like change and what can be done in order to make change at work nice and smooth. I am going to use Kotter and Schlesinger "change theory" as a framework to discuss change, resistance and approaches to it. Actually it's Kotter and Schlesinger Four Causes of Resistance to Change and Kotter and Schlesinger Six Change Approaches, but to keep it short, I'm going to call it "change theory". I hope these gentlemen will forgive me for this simplification.

First of all, we are now not talking about change in general, but we imply change at workplace. Change (at workplace) is the alteration/modification of the current work practices, or, simply put, having to do things differently. The issue with change is that human beings naturally do not like change because it’s scary and it requires significant effort. Perhaps, you saw in the movies or TV shows the so-called “5 stages of grief” that are called in academic circles “Kubler Ross change curve”. Basically, it describes 5 stages that people go through after they experience some significant and unpleasant change in their lives, such as loss of the loved ones. Luckily, change in business does not usually imply loss of the loved ones but the stages that people go through when they deal with change are similar to that of dealing with grief: denial, anger, depression, bargaining and acceptance.

So, once we figured out what change is, why humans do not like it and what they have to go through to accept and integrate change, we should figure out what might cause resistance to change at workplace. First of all, for a quick intro, I suggest you watch this video that in a weird but cute way describes why employees don’t like change and what needs to be done to overcome it.

If you watched the video above, then you have a good brief “common-sense” introduction to change and you are now ready to talk about change like a boss. We are going to explore Kotter and Schlesinger "change theory" that kills two birds with one stone and helps us to achieve both objectives for this part of class:

1. Suggest the reasons for resistance to change in the workplace (AO2)
2. Discuss HR strategies for reducing the impact of change and resistance to change (AO3)

Firstly, let’s discuss the 4 reasons for resistance to change in more detail:

1. Self-interest. Employees do not understand how change benefits them personally and do not really care about distant and intangible benefits for the organisation. Thus, they are reluctant to drive change, not knowing how it benefits them personally. Quite cynical, yet true.
2. Misunderstanding. Sometimes there are actually benefits to employees but they are not explained correctly or misunderstood by them.
3. Low tolerance. Having to change means stop doing things that are secure and safe. Some employees might not be be able to bear with it well.
4. Different assessments of the situation. Different people see the same thing from different perspectives. Very often, what the boss sees as an opportunity is perceived as a threat by employees.

Secondly, let’s discuss the 6 approaches/strategies for reducing the impact of change and resistance to change in more detail:

1. Education and communication. This is the most smooth and nice way to deal with change: prepare employees to it, train them, and let them be the drivers of change. Unfortunately, there is not always enough time for that.
2. Participation and involvement. If employees are empowered and are part of the decision-making process in an organisation, they demonstrate more loyalty and flexibility towards change because they feel that they are part of it. Thus, making employees involved and engaged reduces resistance to change.
3. Facilitation and support. This simply means being supportive and caring to employees because they might be afraid to change their working routines. Facilitation and support never hurts.
4. Negotiation. This implies reconsideration of the current incentives together with employees and trying to make mutual concessions for the benefit of implementing change. Usually it works well for highly skilled and experienced employees who cannot stand being patronised.
5. Co-optation and manipulation. If the four methods above do not work, then managers might find employees who have influence over others and try to appoint them a certain role that helps to promote and implement the desired change. The basic formula here is “if you don’t do A then B happens” where B is usually something not very nice…
6. Coercion. This is the least nice strategy to overcome resistance to change. It is the ultimate form of the previous strategy (co-optation and manipulation), but it implies more dramatic effects such as dismissals and loss of certain benefits. This strategy does not really overcome the resistance, it mainly pushes change through. In the long term, this strategy will not work, if the change was not actually necessary.

Finally, similar to the previous part of class, I have to emphasise that I have provided an overview of reasons for resistance to change and strategies to overcome this resistance using Kotter and Schlesinger "change theory". It does not mean that this theory applies universally and equally to all organisations. In order to develop a proper understanding of this topic and discuss change like a boss, you have to critically apply this theory to an organisation of your choice, with the help of your teacher. This is what Business Management classes are for, right? For the rest, you can just use lewwinski.com, haha! Good luck!

Make sure you can define all of these:

1. Human resources (HR)
2. HR management (HRM)
3. Staff retention
4. Staff turnover
5. HR planning (HRP)
6. Downsizing
7. Redundancies
8. Dismissals
9. Demographic change
10. Labour mobility
11. Occupational labour mobility
12. Geographic labour mobility
13. Professional immigration
14. Flexitime
15. Gig economy
16. Change (at workplace)
17. Kotter and Schlesinger "change theory"
18. Kubler Ross change curve
19. Self-interest
20. Misunderstanding
21. Low tolerance
22. Different assessments of the situation
23. Education and communication
24. Participation and involvement
25. Facilitation and support
26. Negotiation
27. Co-optation and manipulation
28. Coercion