Korean Business Management Human Resource Management Week

Korean Business & Management: Human Resource Management Week 12

Table of content 1. The concept of Human Resource Management (HRM) 2. The outlook of Korean HRM 2

1. The concept of Human Resource Management (HRM) Getting the Right People for Managerial Success • Strategic human resource management • The legal requirements • Recruitment & selection • Orientation, training, & development • Performance appraisal • Compensation & benefits • Promotions, transfers, disciplining, & dismissals 3

1. 1 (Strategic) Human Resource Management HOW DO MANAGERS MANAGE THEIR MOST IMPORTANT RESOURCE? • The activities managers perform to plan for, attract, develop, and retain an effective workforce is human resource management • The economic or productive potential of employee knowledge and actions is human capital • Human capital is now seen as being important to a company’s competitive advantage • The economic or productive potential of strong, trusting, and cooperative relationships is called social capital 4

1. 1 (Strategic) Human Resource Management Major activities in HRM 1. Planning & Attracting Human Resource : Demand supply forecasting, job analysis, qualification, core competence 2. Developing Human Resource : Recruiting, selection and deployment, training 3. Retaining Human Resource : Compensation, rewards, productivity improvement program 5

1. 1 (Strategic) Human Resource Management ■ Building Competitive Advantage Through People 60 s-70 s 80 s 90 s-

1. 1 (Strategic) Human Resource Management ■ Building Competitive Advantage Through People (cont. ) 60 s-70 s 80 s 90 s-

1. 1 (Strategic) Human Resource Management Strategic Human Resource Management activities 8

1. 1 (Strategic) Human Resource Management Strategic Human Resource Management activities 9

1. 1 (Strategic) Human Resource Management Environment of Human Resources Workforce Diversity Unions 10 Globalization Legislation

1. 1 (Strategic) Human Resource Management HR Issues in the New Workplace n Employer of choice n Teams and Projects n Temporary Employees n Technology n Work-Life Balance n Downsizing 11

1. 1 Strategic Human Resource anagement The Strategic Human Resource Management Process 12

1. 2 SHRM Planning n. Companies that engage in strategic human resources planning develop a systematic, comprehensive strategy for understanding current employee needs and predicting future employee needs n. Because companies need to understand the current employee situation before they can plan for the future, they do a job analysis (determine, by observation and analysis, the basic elements of a job) and write a job description (summary of what the holder of the job does and why), and a job specification (description of the minimum qualifications a person must have to do a job successfully) 13

1. 2 SHRM Planning n. Predicting future employee needs means that the manager needs a good understanding of what personnel the organization might need and likely sources for the personnel n. Managers should assume that the organization will change, and so then will staffing needs, and that personnel might come from inside or outside the firm n. Some companies create a human resource inventory (tracks employees by name, education, training, languages, and other important information) which is used when considering inside employees for new positions 14

1. 2 SHRM Planning Product Demand Internal Labor Market Labor Productivity Labor Demand External Labor Market Labor Supply Conditions and Select 1. Labor demand exceeds labor 2. Labor supply exceeds labor Responses supply § Training or retraining § Succession planning § Promotion from within § Recruitment from outside § Subcontracting § Use of contingent workers § Use of overtime 15 3. demand § Pay cuts § Reduced hours § Work sharing § Voluntary early retirements § Inducements to quit § Layoffs Labor demand equals labor supply § Replacement of quits from inside or outside

1. 3 Attracting (Staffing): Putting The Right People Into The Right Jobs HOW DO MANAGERS CHOOSE THE BEST PERSON FOR A JOB? n. The process of locating and attracting qualified applicants for jobs open in the organization is referred to as recruitment n. There are two types of recruitment: internal and external 16

1. 3 Attracting (Staffing): Putting The Right People Into The Right Jobs 1. Making people already employed by the organization aware of job openings is called internal recruiting • Companies use job postings where information about job vacancies and qualifications is posted on bulletin boards, in newsletters, and on the organization’s intranet to find internal personnel 2. Attracting job applicants from outside the organization is external recruiting • The most effective source of external employees is referrals 17

1. 3 Attracting (Staffing): Putting The Right People Into The Right Jobs • Because people are often disillusioned after taking a job, some companies provide realistic job previews where candidates are given both positive and negative features of the jobs and the organization before being hired • The process of screening job applicants and hiring the best candidate is the selection process • There are three types of selection tools: background information, interviewing, and employment tests 18

1. 3 Attracting (Staffing): Putting The Right People Into The Right Jobs 1. Background Information - application forms and resumes are basic sources of information about job applicants 2. Interviewing - can be unstructured (asks probing questions to find out what the applicant is like), or structured (asks each applicant the same questions and compares responses to a standardized set of answers) 19

1. 3 Attracting (Staffing): Putting The Right People Into The Right Jobs 3. Employment Tests - legally considered to consist of any procedure used in the employment selection decision process • Three common employment tests are: -ability tests - measure physical abilities, strength, stamina, and so on -performance tests - measure performance on actual job tasks -personality tests - measure personality traits like adjustment, energy, sociability, independence, and so on using tests like the Myers-Briggs assessment 20

1. 3 Attracting (Staffing): Putting The Right People Into The Right Jobs Application Forms Performance Simulation Tests Psychological Tests Interviews 21 Letters of Recommendation SELECTIO N TOOLS Ability Tests Personality Tests Honesty Tests Physical Exams

1. 3 Attracting (Staffing): Putting The Right People Into The Right Jobs Validity and Reliability of Selection Tools n Validity is how well a technique used to assess candidates is related to performance on the job. n Validity can be demonstrated by: Ø Content Validity Ø Empirical Validity n Reliability is a measure of the consistency of results of the selection method. 22

1. 4 Development: Orientation & Training HOW DO MANAGERS HELP NEW HIRES BE SUCCESSFUL? n. Helping newcomers fit smoothly into the job and the organization is referred as orientation n. Orientation should provide information on: n-the job routine n-the organization’s mission and operations n-the organization’s work rules and employee benefits 23

1. 4 Development: Orientation & Training n. Managers can also improve employee performance by providing training and development n. Training refers to educating technical and operational employees in how to better do their current jobs n. Development refers to educating professionals and managers in the skills they need to do their jobs in the future 24

1. 4 Development: Orientation & Training Figure: 9. 2: Five Steps in the Training Process 25

1. 4 Development: Orientation & Training n. Training that takes place at work is called on-thejob-training n. Training that takes place using classroom programs, videotapes, and so on is off-the-job training n. When computers are used to provide additional help or reduce instructional time, there is computer -assisted instruction 26

Training Presentation Techniques Slides and Videotapes Computer. Assisted Instruction (CAI) Classroom Lectures Simulations Cross-functional Training 27 Vestibule Training Virtual Reality

1. 5 Retaining: Performance Appraisal HOW SHOULD MANAGERS ASSESS THEIR EMPLOYEE’S PERFORMANCE? • Performance appraisal consists of assessing an employee’s performance and providing him or her with feedback • This provides employees with an understanding of how they are doing relative to the firm’s objectives and it helps with their development and training 28

1. 5 Retaining: Performance Appraisal • There are two types of appraisals: 1. Objective appraisals are based on facts and are often numerical 2. Subjective appraisals are based on a manager’s perceptions of an employee’s traits (attitudes, initiative, leadership) or behaviors (specific observable aspects of performance) • Most performance appraisals are done by managers, but sometimes information comes from other sources like peers and subordinates 29

1. 5 Retaining: Performance Appraisal n. There are two types of feedback: 1. Formal appraisals are conducted at specific times throughout the year and are based on performance measures that have been established in advance 2. Informal appraisals are conducted on an unscheduled basis and consist of less rigorous indications of employee performance 30

1. 5 Retaining: Performance Appraisal WHAT ABOUT COMPENSATION & BENEFITS? • Compensation has three parts: 1. Wages or salaries - the basic wage or salary paid to employees in exchange for doing their jobs is called base pay 2. Incentives - commissions, bonuses, profit sharing, and stock options are all examples of incentives that are paid to top performers to encourage repeat performances 3. Benefits - non-monetary forms of compensation (health care, life insurances, and so on) are benefits that are designed to enrich the lives of employees 31

1. 5 Retaining: Performance Appraisal WHO SHOULD BE PROMOTED, WHO SHOULD BE DISMISSED? • Deciding who to promote, transfer, or dismiss are all part of the manager’s responsibilities • Managers can recognize an employee’s superior performance by giving the individual a promotion • When an employee is moved to a different job with similar responsibility, the employee has been transferred 32

1. 5 Retaining: Performance Appraisal n. Employees that are not meeting expectations may be warned or reprimanded, and then disciplined n. There are three types of dismissals: n-layoffs imply that the dismissal is temporary n-downsizing is a permanent dismissal n-firing implies that the dismissal is permanent and that there was cause for the dismissal 33

2. The outlook of Korean HRM n n Korean has a large pool of well-educated and devoted human resources Literacy rate is 98% More than 80 % of populace can read and write The priority of Korean companies’ HRM includes the best candidates, operating OJT programs, and instituting reward and appraisal system 34

2. The outlook of Korean HRM n n (cont. ) In general, most Korean companies classify employees into three categories: core (topmanagement), basic (permanent employees) and temporary (part-time employees) Korean companies hire people through -reference checks, -test for knowledge in specific fields, -test for English proficiency, -personal interview, -physical examination 35

2. The outlook of Korean HRM n n n (cont. ) Korean companies prefer collage graduates or experience professionals Recruit twice a year (June & November) Prefer to recruit their management trainees SMEs tend to recruit once a year The recruitment of Korean large firms is very competitive Most of elite group tends to be assigned in planning and finance group 36

2. The outlook of Korean HRM n n (cont. ) Most of Korean companies has their own employee training centers and set 5 % of working hours formal training The emphasis of employee training is in conformity with traditional Korean culture values, which attach great importance to education 37

2. The outlook of Korean HRM (cont. ) Reward and promotion system - It is generally based on seniority - But, performance is increasingly important factor - Companies are gradually combining seniority and with performance in distributing rewards - Nevertheless, the seniority becomes still the dominant factor in most company decision -In general, high growing firms put greater importance to performance more than low growing one n 38

2. The outlook of Korean HRM (cont. ) Reward and promotion system - In appraisal systems, many Korean firms consider not only performance, but also job attitude and special ability - Subject judgment may hamper an objective evaluation of job attitude and special ability - Many managers are unwilling to give their subordinates too negative an evaluation because they tend to value harmony n 39

2. The outlook of Korean HRM (cont. ) Reward and promotion system - A negative evaluation may undermine harmonious relations - Thus, most managers evaluate their subordinates leniently - Korean value (that is good enough) also hampers critical evaluation - It justifies tolerance and appreciation of other people’s effort - The key part of (that is good enough) is one should not be excessively picky in assessing someone else’s sincere efforts n 40

2. The outlook of Korean HRM (cont. ) Severance and retirement - Lay-offs are common practice in Korean firms - In business downturn, the firms feel free to lay off employees at all level - Korean employees change jobs fairly freely, even though many of them work in one firm till retirement - Korean employees attach great importance to their firms n 41

2. The outlook of Korean HRM (cont. ) Severance and retirement - Skill employees tend to have higher rate of jobhopping - As the concept of loyalty in Korea is based on individual relationship, loyalty is often devoted to a specific superior - When a manager moves to another company for a better job, often he or she may bring many his or her subordinates with them n 42

2. The outlook of Korean HRM (cont. ) Severance and retirement - Korean firms do not have a uniform retirement age, though may require their employees to retire at 55 to 60 - Retirement age is also determined by rank and senior executives and managers usually have an extended retirement age - Korean firms do not make distinction between resignation and retirement in calculating severance or retirement pay - Some pay one month salary or some pay 2 -3 43 months in calculating total period of service n

2. The outlook of Korean HRM (cont. ) Trade unions - After Korean War, US style guranteeing the workers’ right to organize and to bargain collctively was enacted - Nevertheless, this right did not materializ as government had not enforcement measures - The government-Dominated Frederation of Koran Trade Union(FKTU) helped employers control workers n 44

2. The outlook of Korean HRM (cont. ) Trade unions - In 60 s, embittered workers joined radical students in overthrowing the government - Through 60 s and 70 s, Park Jung Hee government upheld a policy of growth first and distribution later and suppressed the labor movement - The Special Act on National Security of 1971 required workers to obtain government approval prior to any labor confrontation n 45

2. The outlook of Korean HRM (cont. ) Trade unions - In 60 s, embittered workers joined radical students in overthrowing the government - Through 60 s and 70 s, Park Jung Hee government upheld a policy of growth first and distribution later and suppressed the labor movement - The Special Act on National Security of 1971 required workers to obtain government approval prior to any labor confrontation - Although it was lifted in 1981, new restriction 46 were instituted n

2. The outlook of Korean HRM (cont. ) Trade unions - The government banned industry-wide national unions in 80 s and initiated “enterprise unions”, which were managed by labor-management councils -This was designed to promote common interests between management and labor n 47

2. The outlook of Korean HRM (cont. ) Trade unions - The labor-management councils are required to meet on a quarterly basis to coordinate the conflict between productivity and welfare - But, the labor-management councils tend to favor the interests of management, with many labor-representatives being appointed by management n 48

2. The outlook of Korean HRM (cont. ) Trade unions - The political reform of 1987 removed the government intervention in labor-management relation and granted workers the right to unionize - Industry-based national unions were also allowed to be established - The amended Trade Union Act protects workers from unfair labor practices by employers, allowing them to organize, negotiate and take collective action - Since then, the trade unions have been growing, actively promoting wages and working conditions 49 n