Dhrm lecture 1 continued

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DAR ES SALAAM COLLEGE OF HOTEL AND BUSINESS STUDIES

BMA

HUMAN RESOURCES MANAGEMENT IN SMALL BUSINESS

LECTURE 1

October, 8, 2012

HUMAN RESOURCE MANAGEMENT;

Refers to activities undertaken attract, develop and maintain an effective and

efficient work force within an organization.

In essence it is concerned with management decisions of the personnel function

in an organization. Although small businesses do not usually employ a lot of

workers it is important that their owner managers have clear human resource or

manpower plans for their efficient operation.

ACTIVITIES OF HR PROCESS

They include the following;

1. Human resource planning

2. Human resource recruitment

3. Human resource selection and placement

4. Human resource training and development

5. Human resource performance appraisal/evaluation

6. Human resource compensation administration.

1. HUMAN RESOURCES PLANNING:

Is the process of forecasting of human resource needs and the projected

matching of individuals with expected vacancies.

In order to be in a position to forecast HR requirements, it is necessary to have

information about the organization and its environment.

Some basic questions to be answered would include;

Will there be an increased demand in the future or a drop in sales? An

increase in demand could justify an increase in staff level and vice-versa.

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Will an organization introduce new technology?

The introduction of new working methods could mean reduction of staff

or a demand of different skills.

How is an organization going to attract staff with the necessary skills and

qualification?

The answer will affect the management structure, payment policies,

training schemes and promotion possibilities.

Are there likely to be staff shortages in the future as a result of

demographic features, government policies or changing social attitudes?

Demographic changes, government policy and social attitudes can have an

influence both on who is available for work and the types of vacancies.

In formulating HR plan internal and external factors influencing the demand for

labour and those influencing the supply of labour are considered.

Internal factors influencing the demand for labour could include;

Demand for the product-growing demand for labour is influenced by

rising demand for the products.

Changing Patten of work e.g. through changing technology the use of

machine at workplace.

Estimates of staff requirements e.g. indicated by high labour turnover or

absenteeism.

Changing strategies regarding marketing, finance or production may

require specialist managerial skills.

External factors influencing the demand for labour could include;

Change in government economic policies- affect demand for products.

Nationally negotiated wage agreements - organization forced to comply.

Internal factors influencing the supply of labour;

Company policy and working conditions e.g. promotion and training

A good reputation

External factors influencing the supply of labour;

Local unemployment levels

Demographic changes e.g. rise or fall in the birthrate

Competition available

Government training schemes

Technology change and education



2. HUMAN RESOURCE RECRUITMENT

Recruitment involves activities that define the desired characteristics of

applicants for specific jobs.

It is essentially a question of matching the talents and skills of a prospective

employee with the demand of a particular job.

Recruitment could be internal or external.

Internal Recruitment;

It involves promoting from within to fill a higher level position.

Merits of internal Recruitment:

1 Recruitment costs are considerably less as there is neither advertising nor

interviewing

2 Offers opportunities for career advancement to employees.

3 Build morale and downsizes labour turnover

4 The persona appointed is already familiar with the company and its

manner of operation

5 Recognises the value of experience

6 The strengths and weaknesses of the recruitment will be known

Drawbacks of internal Recruitment;

1 There is no infusion of new ideas from outside

2 A newly promoted person may not be accepted in the new role by

collegues

3 Where there are many aspirants to the post it could create jealous and lack

of cooperation.

External recruitment

It involves recruiting new people from outside the organization.

Merits of external recruitment

Bring in a fresh view point on business problems

Bring in persons with wider experience gained else where

It is the best method of appointing the best person for the job.

Appointment is based on ones abilities and qualities

Qualified and specialized persons are engaged with minimum

training



Keeps workers “on their toes” and encourages them to train for

promotion

Drawbacks of external Recruitment;

Its initially more costly –in terms of advertising and interview expenses

Demolishes long serving employees with aspirations for promotion.

3. Human resources selection and placement

Selection is the process of determining the skills, abilities and other

attributes needed to perform s particular job and selecting desired employees

from the pool of recruited applicants.

Selection devices used to assess applicants’ qualifications include the

following.

o Application form/ letter

o Interview

o Paper and pencil test

o Physical ability

o Assessment centre

1) Interview

It is costly method of recruitment, but the most commonly used

The aim is to elicit information from the applicant about himself

and to give him information on conditions of work, prospects of

promotion and to motivate him.

Some qualities can be judged only in an interview, for example;

manners, neatness appearance, ability to communicate and make

in good impression.

Interviews also provide clues to intelligence, breath of interests and

general attitude towards work.

Wilkinson et al (1994) lists down some useful rules to remember when

interviewing as follows;

a) Be a good listener

b) Avoid assumptions, arguing or being critical

c) Follow –up important leads

d) Listen out for what is not said as well as to what is said



e) Use open-ended question which give opportunity for further

answers.

f) Repeat what the candidates has said for conformation

g) Don’t judge the interviewee on the basis of one attribute

h) Give the candidate a chance to ask questions

i) Summarise the interview

j) Take notes so as not to forget what has been said.

4. Human resource Training and development

Training refers to equipping lower-level or technical employees on how to

do their present jobs more effectively and efficiently.

Development- refers to equipping managers and professionals the skills

needed for both present and future jobs.

Types of Training

i. Induction training

It is intended to introduce the new employee to the organization.

ii. On-the Job Training

It teaches the skills of the job while the trainee is actually working.

iii. Apprentice Training

It’s provided for graduate, student and craft apprentices. An individual

craftsman teaches the practical skills to the apprentice.

iv. Supervisory Training

Is provided to potential foremen and other supervisory grades.

v. Management Training

Is designed to give a final polish to potential managers.

Importance of Training

It leads to greater efficiency of the whole organization

It improves the morale of staff.

Reduces labour turnover, thus saving in costs of recruitment.



Increases loyalty and adaptability of staff

Enhances the reputation of a firm for caring about its staff

Assists the recruitment of staff by attracting better quality of applicants.

Reduces/downsizes accident rates, scrap and wastage rates workers

become more skilled.

Develops more staff suitable for internal promotion.

4 Human Resources Appraisal/Evaluation

Involves assessing the employee’s performance using appraisal forms.

Purposes of appraisal schemes are outlined as follows;

I. To determine whether employees are making full contribution to

their jobs and the organization

II. To identify any areas of weakness that needs more training,

improvement in some conditions or workflow systems.

III. To identify any skills or other talents which an employee would

like to develop and which would be useful to an organization

IV. To discover whether current training and recruitment policies are

suitably effective.

Summary implication.

Appraisal schemes should ideally be totally unrelated to salary reviews.

However, although not openly related to salary rises, appraisals must help when

promotions are a possibility.



(CONT…..)

5. Compensation Administration

It involves the management of wages, salaries and fringe benefits to

employees. Fringe benefits could include; bonuses, health insurance, paid

vacations pension schemes etc. the degree to which money is a motivational

factor for the workforce depends very much on where they stand in the

hierarchy.

The following are the factors which could influence the small business

manger’s decisions in establishing wage levels for employees:

The going rate.

This is what a skilled or qualified person can expect to earn for a

particular job.

Trade Unions negotiated rate of pay.

Wages can not be established on an individual basis when employees

are represented by a union.

The level of wages and salaries being paid by a firm’s

competitors.

A small firm can not afford to pay more than its competitors unless

the higher wages stimulate greater productivity.

Government Legislation.

The minimum wage is usually set and revised by the government from

time to time.

The rate of inflation.

It is generally the case that incomes rise as prices rise owing to

inflation.

Government Policies.

These can affect the wage rates indirectly. If the government sets high

interest rates, the cost of borrowing for investment rises and makes

business enterprises cut back expenditures including wage and salary

levels.



Payment systems

The common systems are:

Time rate system- employees are paid a fixed amount per hour.

Piece rate system- payment by results

Incentive payment schemes – merits payments or bonus payments.

CONDITIONS FOR GOOD HUMAN RELATIONS:

Successful human relation in small businesses involves taking the following

criteria into account:

a) Development open communication.

There should be established an effective communication channel from

top to bottom and vice versa.

Open communication involves a full disclosure by all parties concerned

and receptive to feed back from all.

Management should communicate fully to workers the nature and effects

of operations and future plans. On other hand workers should be enabled

to communicate to management their ides, opinions, problems and

misgivings.

b) Personal contact between employees and owner managers.

Day to day contacts between an employees and the owner-manager may

consolidate understanding between the parties and create a feeling of

personal loyalty to the employer.

c) Informal personnel relationships.

Small firms ordinarily do not have written personnel policies. Individual

considerations are taken into account in solving personal problems.



d)Pervading influence of the owner-manger.

The owner-manger should have a pervading influence on all policy issues

of the business. He or she should not for instance ignore human relations

factors and indulge him in solving problems of other functional areas like

finance, sales, production, and so on.

e) Participation.

Workers participation in decision should be considered an important

basis for gaining acceptance of their implementation. Participation makes

the workers understand the implication of decision and increases their

commitment to the success efforts.

Thank you for listening me;

By Tutor: J. Kasika

[email protected]

Mob: +255 0717 410 811

Note: Advancing Knowledge, Creating Futures



Dhrm lecture 1 continued

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