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Chapter 1
HUMAN RESOURCE MANAGEMENT,
THEORY AND PRACTICE
Key issues
● Human resource management deals with the effective and efficient
management of an organisation’s employees.
● All human resource management functions must link to each other and to
the organisation’s goals and strategies.
● Human resource planning aims to ensure that organisational objectives are
achieved by getting the right quantity, quality and skills mix of employees at
the right time.
● Recruitment programs are affected by internal and external factors such as
economic conditions and the nature of the organisation.
● Labour demand forecasting is an important part of human resource
planning.
¶ 1-100 What is strategic human resource
management?
Recruitment and selection within an organisation is an integral part of that
organisation’s overall human resource management and planning process. As
such, it is related closely to other human resource management processes, for
instance, job design, human resource development, performance appraisal
and management, reward systems, career and succession planning,
promotions and transfers.
Two key concepts underlie modern human resource management (HRM)
practice and are reflected in all activities concerned with the attraction,
maintenance and separation of an organisation’s employees. They are:
(1) employees as human resources, human capital or organisational assets,
and
(2) human resource management as a long-term, integrative and accountable
strategic process.
The first concept highlights the productive contribution of employees, both
actual and potential, while the second focuses on the approach of human
resource management practitioners to optimise this contribution for
organisational benefit. Where are these concepts more crucial than in the
careful and cost-effective attraction and choice of employees during
recruitment and selection?
2 Effective Recruitment and Selection Practices
Social, economic, political and workplace relations changes, together with
developments in the human resource (HR) profession, have propelled
practitioners towards innovative managerial perspectives, approaches and
strategies. New skills, especially in the information technology/
telecommunications and accounting areas, need to be acquired, applied and
evaluated. Economic fluctuations, legislative developments in areas such as
workplace relations, equal employment opportunity, privacy and workplace
health and safety, environmental and quality of work life issues provide
human resource practitioners with both pressures and opportunities.
Restrictions on recruitment strategies and selection techniques are balanced by
opportunities to grow current employees in innovative and creative
directions.
Human resource management as a profession is concerned with the effective
and efficient management of an organisation’s employees (human resources)
towards the achievement of desirable objectives and goals. It has displaced
earlier models (eg personnel administration, personnel management) because
of its emphasis on the integration of all traditional personnel functions (eg job
design, recruitment and selection, human resource development, rewards
systems, career management, etc) and their management towards
organisational strategic outcomes and objectives.
Human resource management involves a perception that employees are
human resources (or even human capital ), not unlike other organisational
resources such as finance and technology, who need to be managed in similar
(and different) ways in order to achieve productivity and profitability
outcomes. Specific human resource management functions then provide the
means by which employees are acquired (eg human resource planning, job
design, recruitment and selection), developed (eg human resource development,
reward and remuneration systems, performance and career management) and
ultimately terminated (eg dismissal, retirement and redundancy programs)
according to organisational requirements. It thus involves a human resource
management strategy and a human resource management plan, consistent
with overall organisational strategies, which subsequently feed into each of
the related human resource functions.
4 Effective Recruitment and Selection Practices
programs to the demands of their (external) industry, national and regional
contexts (‘‘dynamic environments’’ in Diagram 1.1).
While practical evidence on the role of HR professionals as ‘‘strategic business
partners’’, demonstrating both horizontal and vertical alignment, internal and
external fit, is limited, there are some promising indications of its applications.
Recent studies (Guest, D, 2011, ‘‘HRM and performance: still searching for
some answers’’, HRM journal , 21(1), pp 1–13; Butler, P, McEvoy, G, 2012,
‘‘Strategic human resource management and performance: sharpening line of
sight’’, HRM review , 22, pp 43–56) reveal significant contributions of human
resource management systems to organisational performance, with the latter
authors concluding that ‘‘much of the recent research suggests that HRM
practices can positively affect firm performance, primarily through their
impacts on human and social capital... the HRM objectives are to establish
and promote a clear alignment of capabilities at all levels with the firm’s
strategic goals and to create the culture, norms, motivation and opportunity to
engage in actions that contribute to these goals’’ (p 54).
Diagram 1.2 below shows the HR professional capabilities (competencies)
considered by the Australian Human Resources Institute (AHRI) as essential
components of a business-driven approach to the human resource practitioner
roles.
Diagram 1.2: AHRI model of excellence — Driving your success
Source: HR Competency Model (Ulrich & Brockbank 2007) and AHRI HR Management
Model 2003.
Human resource management is comprised of a number of interrelated
activities that combine to drive business performance. With a base capability
of being business driven , HR professionals require the following additional
Human resource management, theory and practice 5
capabilities: strategic architect, stakeholder manager, workforce designer,
credible activist, expert practitioner, and culture and change agent. Human
resource management knowledge and capability underpin HR practice and
influence the professional behaviour of HR professionals and how they are
perceived. In addition, the overarching goal of people leading business is
underpinned by the following four HR objectives:
● contribute to a profitable and sustainable organisation
● increase workforce competency and engagement
● develop excellence in people management
● create a dynamic and productive work environment.
All of these ‘‘capabilities’’ may be displayed in the specific recruitment and
selection functions of human resource management, but perhaps the most
important ‘‘capabilities’’ for HR practitioners are those of workforce designer,
stakeholder manager, expert practitioner, culture and change agent. Thus, as
workforce designers, practitioners will be engaged in decisions about the
structure, clusters, and tasks involved in particular jobs; as stakeholder
managers, they manage the expectations of managers, work groups and
potential new employees; as expert practitioners, they must demonstrate their
competence in the design of effective recruitment and selection processes; and
as culture and change agents, use these processes to ensure that new
employees fit into their jobs and work teams.
From a human resource management perspective, recruitment and selection
reflect broader staffing strategies, and represent the first stage of the
management of human resources (employees) towards organisational goals.
They can be considered as the most difficult and yet the most crucial of all
human resource management strategies. Acquiring the best applicants can be
a huge bonus to organisations, but hiring less than the best can result in
enormous disruption, reduced productivity, interpersonal difficulties and
interruptions to teamwork, customer service problems, and long-term costs.
As both stakeholder managers and expert practitioners, HR professionals are
usually the key organisational informants, interpreters, and advisers with
respect to the workplace impacts of existing and new federal and state
government legislation, especially in industrial relations,
diversity/discrimination, workplace health and safety, equal employment and
privacy. Perhaps the most important contemporary pieces of legislation
requiring advice from HR professionals in Australia are the Fair Work Act
2009 , established under the Rudd-Gillard Labor federal government, and the
current amendments proposed by the Fair Work Amendment Act 2013 under
the Abbott Liberal government. Together with the new employer
responsibilities associated with the national ‘‘harmonisation’’ of workplace
health and safety legislation, HR professionals will undoubtedly be required
to provide considerable interpretative and practical advice on their workplace
implications. More details on the inclusions and implications of these Acts are
included in Chapter 3, Legislation and legal issues.
Human resource management, theory and practice 7
each of these functions (see Chapter 13, Evaluation of recruitment and selection )
should then feed back into human resource plans in order to further improve
their capacity to deliver the right employees with the right skills and
competitiveness, according to organisational requirements.
Accordingly, recruitment techniques will vary from time to time. In periods of
growth, alternative sources of contract staff or long-term staff may be sought.
During industry decline, internal development activities, retrenchments or
early retirement programs (sometimes called ‘‘negative recruitment’’) may be
emphasised. Selection strategies will also differ, consistent with corporate
developments.
Ideally, human resource planning focuses on both the strategic (or long-term)
and operational (short-term) perspectives. Long-term covers up to five years
and short-term less than one year, depending on the nature of the industry.
Recruitment and selection should therefore focus on both filling current job
vacancies and preparing for future staffing needs.
More recently, some writers have suggested that human resource planning is
a crucial component of ‘‘human capital management’’, which refers to the
process of measuring (and managing) the alignment of human resource
management and organisational goals, from the perspectives of all
stakeholders, including managers, shareholders and investors. It aims to
‘‘understand and support (HRM) activities that create sustainable capability
and external shareholder value’’ (Donaldson, C, 2006, ‘‘Intangibles crucial in
HR’s future’’, Human resources , 107(27), June, p 1), or more specifically, to
ensure that ‘‘organisational capabilities such as talent, speed, collaboration,
accountability, shared mindset, learning and leadership are the deliverables of
HR... which contribute to an organisation’s market value’’ (Kramar, R, 2006,
Cranet Macquarie survey on international strategic human resource management:
report on the Australian findings , Macquarie University, Sydney, p 7).
The complexity of human resource planning techniques will vary with
organisational size and the dynamic nature of the organisation or its industrial
environment, and the perception and status of the human resource function.
Most modern organisations engage in forward planning from time to time, to
enable the determination of overall objectives, future directions and
opportunities for growth and productivity. This is usually referred to as
strategic (corporate) planning.
As a result of such plans, structures, budgets and resources can be reviewed to
take advantage of economic, social, labour market, product or industry
changes. Changes in global, regional or national economies, including the
constant restructuring of the Australian economy, financial crises, fluctuating
currency rates, increasing international competition, cross-generational issues,
different work attitudes and workplace relations developments, together with
modern management theories, have highlighted the importance of strategic
planning to achieve organisational success. All these factors have a significant
impact on the nature of recruitment and selection programs.
8 Effective Recruitment and Selection Practices
Such long-term planning is usually undertaken by a team of senior managers
in close liaison with the Chief Executive Officer and the Board of Directors.
The process commonly involves the following five stages.
STRATEGIC PLANNING PROCESS
(1) Development of a clear mission statement, core vision or prime objective.
(2) Review of likely pressures and opportunities both within and outside the
organisation.
(3) Formulation of alternative scenarios and optional strategies. It should also
indicate the proportions of full-time, part-time, contract, casual and
outsourced positions, with the view to aligning staff requirements to the
dynamic demands of organisations.
(4) Choice of the most effective options.
(5) Preparation of objectives, targets, budgets and operational business plans.
The process is cyclical, incorporating contingency strategies and in-built
monitoring and review processes.
With growing recognition of the value and costs of an organisation’s human
resources, most organisations now actively integrate human resource plans
with corporate plans (see Diagram 1.1). The human resource manager should
be well placed to advise on labour market trends, legislative and statutory
requirements, and the staffing impacts of product or service diversification,
relocation, growth or decline. With the support of an efficient human resource
management information system (HRIS) (see Chapter 11), practitioners can
provide a wealth of data relevant to corporate planning. Fully-costed human
resource plans will indicate the relative viability of scenarios and alternative
strategies.
Human resource management policies and practices can be linked to strategic
management in at least three ways:
(1) They can be used to reinforce existing corporate strategies (eg through
performance management or job and work group redesign to improve
productivity).
(2) They can be used to signal and reinforce changes in corporate strategies
(eg through the shaping of existing or injection of new corporate values,
or the development of new workforce skills).
(3) Human resource data can be used as an input into the strategic planning
process (eg employee survey data can be used to guide priority setting or
program development, or human resource planning and employee
demographic data can be used to assess the viability of plans for
diversification, expansion or contraction).
10 Effective Recruitment and Selection Practices
have been summarised as global competition, new technology and
communication developments, an increasing demand for employee flexibility,
‘‘skills convergence in multi-disciplinary environments’’, global best practice,
changing business standards (notably ethical and corporate social
responsibility issues), and dynamic governmental regulations (Wilson, P,
2010, People@Work , AHRI, Melbourne, p 3). More specific issues include
emerging skills shortages in a variety of industry sectors and occupations, at
both professional and technical levels; an ageing workforce in Australia and
other regional countries (for example, China, Singapore, Japan) contrasted
with youthful labour markets in India and Indonesia; workplace inter-
generational conflict; and ongoing industry sectoral shifts.
With respect to the latter, the resources, manufacturing, aviation, and retail
industry sectors in Australia have all been adversely affected by a
combination of increased global and regional competition, the development of
new technologies, and currency fluctuations. For example, the mining ‘‘boom’’
of the early 2000s, which provided significant levels of employment for
workers in Western Australia and Queensland together with contractual jobs
for employees from other states, is now abating. The closure of the Ford Motor
Company and the imminent demise of General Motors signals the end of
vehicle manufacturing in Australia, whilst the deteriorating financial position
of Qantas is likely to result in significant numbers of unemployed skilled
workers. Global online sales have also provided more traditional retailers with
considerable HRM challenges.
Whether human resource plans form an integral component of corporate
plans will depend on the foresight, status and skills of human resource
professionals.
¶ 1-200 Benefits of human resource planning
The principal purpose of human resource planning is to ensure that
organisations have sufficient staff with the required skills, knowledge and
abilities to cost-effectively produce the goods or services required to achieve
organisational objectives.
The human resource planner must therefore forecast staffing requirements
and predict labour supply as well as ensure the effective integration of all
human resource activities. Thus, job analyses must produce position
descriptions that accurately reflect job content, while allowing for
technological change. Job design, job rotation or promotion programs may
reduce or remove the need for expensive recruitment and selection processes.
Organisational restructuring, involving substantial staff redundancies, may
alter these staffing plans and processes. Alternatively, accurate position
descriptions will make those processes more effective when they have to be
used.
For example, in the information technology industry, specific long-term skills
requirements may be difficult to determine due to the dynamic nature of the
industry. Position descriptions and recruitment policies will therefore need to
reflect this uncertainty by providing for both short-term (such as the use of
Human resource management, theory and practice 11
casual or contract employees) vacancy-filling as well as longer-term career
prospects. These days, many of these skills have been contracted out (or
outsourced) as an efficiency and cost-cutting exercise.
Successful induction followed by ongoing human resource development
assists in the motivation and maintenance of valued employees who may
otherwise be poached by attractive offers from competitors. Efficiently-
conducted performance management programs can assist salary
supplementation and career and succession planning procedures. All human
resource functions therefore benefit from a well-prepared, realistic and
carefully-monitored human resource plan linked to the overall corporate
strategy.
Recruitment and selection programs must be linked with other human
resource systems, especially performance appraisal, career management,
rewards schemes and data analysis programs, as well as being integrated into
the overall human resource plan.
In summary, the benefits of human resource planning include:
● the provision of clear linkages between human resource functions and
organisational objectives
● more focused sourcing of workers from both traditional and non-
traditional labour markets
● cost-effective recruitment and selection strategies, and
● systematic and responsive human resource policies and practices in all
areas.
Human resource planning, while of immense benefit to both practitioners and
senior management, also has its drawbacks, including the time required, and
the difficulty in achieving accuracy and the correct focus. Good planning takes
time, and senior management time is expensive. Plans may be subject to a
large number of unpredictable variables (employment levels, demographic
aspects, skill variations, economic factors) demanding multiple contingency
strategies. Finally, practitioners themselves may consider the focus on
employees as resources distasteful. Despite these disadvantages, human
resource plans that are clearly integrated with corporate plans are becoming
essential for modern human resource practice.
¶ 1-250 Linking recruitment and selection with the
strategic business plan
As discussed earlier, both the horizontal and vertical alignment of human
resource management goals, strategies, policies and functions with the
strategic business plan are crucial to strategic human resource management.
Nowhere is this more important than with an organisation’s recruitment,
selection and retention functions. The stage of an organisation’s development
(that is, whether it is just starting up, in a growth phase, merging with another
company, or even in decline) will indicate the numbers and types of
employees it requires in both the short and longer terms. Human resource
planning will, for example, provide organisational planners with details of the
Human resource management, theory and practice 13
development, more rapid promotions, the use of technology to replace
employee tasks, and (where there is difficulty obtaining suitable employees)
the feasibility of reviewing plans to consider whether it is possible to operate
without certain employees. The use of temporary, contract and casual staff, or
the outsourcing of servicing functions, may also be an option.
When determining recruitment needs, it may be beneficial to use three
separate categories of recruits:
● those needed to account for labour turnover
● those needed for short-term growth, and
● those needed for long-term growth of the organisation.
Sometimes the responsibility for recruitment may also be separated, for
example, by giving line managers responsibility for the first two categories
and long-range planners responsibility for key groups of employees.
Labour supply and recruitment
Having determined the appropriate numbers and types of employees required
to meet organisational goals, the next step is to assess their likely sources.
There is an increasing number of general and specialist labour pools, both
within the organisation and in its external environment. These are discussed
later in this book, but the choice between internal and external sources reveals
both advantages and disadvantages, and it should clearly reflect the goals of
the organisation as a whole.
Existing employees can be trained, developed, redeployed, transferred or
promoted for future skills needs. New recruits will need to be sought out,
attracted and carefully selected to ensure suitability for future positions.
Internal labour supply can be determined effectively if prior skills audits have
been conducted and maintained on an effective HRIS (see Chapter 11, Human
resource management information systems ). Job analyses (see Chapter 4, Job
analysis and competency profiling ), replacement charts, human resource
development records, career and succession programs are usually integrated
and contain usable data for predicting internal supplies to meet future
demand.
While internal supplies of labour are more predictable, less expensive and
require minimal orientation to the organisation compared with new recruits,
they can also have disadvantages. Existing employees may not possess the
required new skills or relevant experience and/or may have become
entrenched or restricted in work focus. Some organisations have addressed
the issue of employee stagnation by interchange or secondment programs.
These are inexpensive and can prove immensely valuable. In parts of the
Australian public sector, senior staff exchange positions with private sector
managers in order to gain additional work experience and liaison. As
examples, there is currently a shortage of highly skilled technical and
professional employees at one end of the labour market, and an undersupply
of apprentices, age care and childcare workers, at the other.
14 Effective Recruitment and Selection Practices
The alternative future labour source is from outside the organisation. This
source also has advantages and disadvantages. New blood, fresh approaches,
cultural changes and specialist skills are balanced by the costs associated with
recruitment and selection, human resource development, induction and
orientation to the organisation. If corporate directions require attracting
employees from outside the organisation, the human resource planner must
become an environmental scanner of the changing community.
As discussed earlier in this chapter, economic, social, political, technological
and industry variables will all affect future labour supply. Employment levels
will vary according to locality, industry, occupation and educational
emphases. Government policies will affect the numbers, training and
availability of apprentices and graduates. The policies of educational
institutions (TAFE, universities and schools) will determine proportionate
supplies of labour in occupations such as law, medicine and accountancy.
Migration trends and legislation will have an impact on overseas recruitment,
while technological developments will affect numbers and qualities of
employees.
Inflation levels, interest rates, mergers and acquisitions, industry competition
and economic policies may provide constraints on opportunities to the staffing
of new sections or the development of additional services.
Social factors, such as environmental movements, industrial relations
initiatives, quality of work life and workplace health and safety issues will
affect applicant response levels to advertised positions. Demographic
variables, including age, gender, ethnicity, impairment and area of residence,
may have an increasing impact on the types and quality of future applicant
pools. In particular, the needs and expectations of different generations of
employees (for example, Baby Boomers, Generations X and Y, Nexters) will
demand new approaches to their attraction and retention. The latter factor is
becoming a key challenge for recruiters, as research on the expectations of
younger generations of employees has revealed that they often have different
needs and demands from their older colleagues. These include work-life
balance, varied job roles, new technology, supportive managerial styles, and
ongoing learning and development opportunities, and enhancing their
perceptions of ‘‘employer of choice’’ company branding. It is interesting to
note that these characteristics have been found not only in Australia, but also
in the USA, Europe, Singapore, China and India.
Recognition of these issues has led to significant changes in the ways in which
such applicants are being recruited. Newspaper recruitment, for example, has
been largely replaced by posting vacant positions on company websites and
the use of social media such as Facebook, Twitter and LinkedIn. As Scott
McDaid, Head of Recruitment and Learning at ANZ bank explains, the
company ‘‘uses such direct channels to source talent and reduce our
dependence on more traditional sources’’ (Nankervis, A, Compton, R, Baird,
M, Coffey, J, 2011, Human resource management: strategies & processes , 7th edn,
Cengage, Melbourne, p 241). Others caution reliance on social media for
applicant endorsements, suggesting that ‘‘skill endorsements on social media
16 Effective Recruitment and Selection Practices
may also be used to evaluate the effectiveness of recruitment and selection
over time, and can help to identify potential or actual weaknesses in the
current workforce.
Labour turnover analyses
Again, usually based on organisational data from the HRIS, regular analyses
of employee turnover (sometimes called wastage), or the numbers and types
of employees resigning or being terminated from an organisation, can assist
human resource professionals, senior and line managers to assess whether too
many qualified and experienced employees are leaving, with enormous costs
to the organisation and/or a severe loss of talent. Such analyses may also
indicate the reasons for their departure (eg inadequate salaries, lack of training
and development or career opportunities, bad management, ineffective
recruitment or selection procedures) and can suggest how these turnover
difficulties may be remedied.
Sometimes, such analyses may indicate that turnover rates are too low, and
that there is a need to bring new blood into old-style organisational cultures.
In either case, carefully conducted labour turnover analyses can yield essential
information for human resource planning, and can help to focus recruitment
plans on the precise types of skills and experience that the organisation needs,
and the most likely sources and processes to attract them. Such attractors may
include more competitive salaries and conditions, ongoing human resource
development, or promotional opportunities.
Career and succession planning
From the organisation’s point of view, the object of career planning for
individual employees is to retain them working enthusiastically and
productively. For the employees themselves, it provides achievable goals,
gives satisfaction and maintains morale, and is perceived as a reward for their
hard work. As vertical careers become scarcer due to the de-layering of
management in many organisations, and as the market for good employees
becomes more competitive both nationally and internationally, the ability of
employers to retain high-performing employees has become more difficult.
Thus, organisations that can find ways of designing stimulating career paths,
whether through job rotation, different projects, new technology or gradual
promotion, are the most likely to be able to retain their employees against
their competitors and, in turn, are likely also to be ‘‘employers of choice’’ (see
Chapter 5), attractive to prospective new employees.
Succession plans are plans that select employees with the greatest potential to
become future managers and then prepare them for the task through extensive
training, ‘‘acting’’ opportunities and individually designed career strategies.
They thus represent both rewards to retain good employees, and internal
selection techniques for the most senior jobs in organisations.
