BBM 207/05:

Human Resource
Management

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Unit 1
Introduction to HRM
and Associated Acts
in Malaysia

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Section 1.1
The strategic role of
human resource
management

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The managers human

resource management (HRM
activities
Management process
The five basic functions of planning, organizing, staffing,
leading, and controlling.

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The managers human

resource management (HRM
activities
Human resource management (HRM)
The policies and practices involved in
carrying out the people or human resource
aspects of a management position, including
recruiting, training, appraising and rewarding.

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HR Aspects Of A Managers
Job

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Conducting job analyses (determining the nature of each employees

job)

Planning manpower needs and recruiting job candidates

Selecting job candidates

Orienting and training new employees

Managing wages and salaries (compensating employees)

Providing incentives and benefits

Appraising performance

Communicating (interviewing, counseling, disciplining)

Building employee commitment

Understanding employment laws

Knowing employee health and safety issues

Handle grievances and employment relations

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Personnel Mistakes

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Hire the wrong person for the job

Experience high turnover

Your people not doing their best

Waste time with useless interviews

Have your company sued for discriminatory actions

Hire the wrong person for the job

Experience high turnover

Your people not doing their best

Waste time with useless interviews

Have your company sued for discriminatory actions

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Basic HR Concepts
Getting results
The bottom line of managing
HR creates value by engaging in activities that
produce the employee behaviors the company
needs to achieve its strategic goals.

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Line and Staff Aspects of HRM

Line manager (Line Authority)

Authority

The right to make

decisions, direct others
work, and give orders.

Staff authority (Advisory)

The authority gives right

to the HR manager to
advise other managers
or employees.

Line authority (SuperiorSubordinate)

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The authority of
managers to direct
people in his or her own
department.

A manager who is
authorized to
direct the work of
subordinates and
is responsible for
accomplishing the
organizations
tasks.

Staff manager (Staff Authority)

A manager who
assists and
advises line
managers.

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Line Managers HRM

Responsibilities
1.

Place the right person on the right job

2.

Orientate new employees

3.

Train employees for jobs new to them

4.

Improve the job performance of each person

5.

Gain creative cooperation and developing smooth working

relationships

6.

Interpret the companys policies and procedures

7.

Control costs

8.

Develop the abilities of each person

9.

Maintain morale

10. Protect employees health and physical condition

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Functions of the HR Manager

Carries out 3 distinct functions:
Line function
Coordination function
Staff function

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Size of HR Department
Depends on company size

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Small Company:

Only a few personnel

Large Company:

Full range of HR specialist for each different

function

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Duties of HR Specialists
Training Specialist

Plan, organize and direct training

Advise managers on training

Job Analyst

Collect information about jobs

Prepare job description

Recruiter

Collect information about jobs

Interview and recommend suitable candidates

EEO (Equal Employment Opportunity) Coordinator

Investigate EEO grievances

Examine HR practices for potential violations

Compensation Manager

Develop compensation plans

Handle employee benefits program

Employment relations specialist

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Advise managers on ER issues

Negotiate with unions

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Cooperative Line and Staff HR

Management
Differentiating HR duties to be carried out by line
managers and HR managers:

No standard rule for all organizations

Some common practices:

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The Changing Environment Of

HR Management
HR managers must be able to respond to
changes that are happening every day
Major changes or trends as follows:

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Globalization
Technological advances
Changes in nature of work
Changes in workforce demographics

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The Changing Environment Of

HR Management
Globalization
Tendency of companies to extend sales, ownership,

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or production to other countries

More competition -> more pressure to be world
class -> Lower costs and to increase productivity of
employees
E.g. Toyota produces cars in China, Thailand and
many other countries.

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The Changing Environment Of

HR Management
Technological Advances

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Use of internet and information communication

technology (ICT) to increase competitiveness in
business
Enabled businesses to outsource their non-core
activities to other countries where costs are lower
Causes changes in nature of work

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The Changing Environment Of

HR Management
Changes in nature of work

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Caused by technological advances as well

From manufacturing jobs to service jobs
Usage of non-traditional workers -> staff holding
multiple jobs, or part-time staff

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The Changing Environment Of

HR Management
Changes in workforce demographics

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Diversified workforce -> staff employed are of

different race, religion, nationality, gender, age and
culture
Challenge for HR managers
E.g. Workers from Bangladesh, China, India,
Indonesia, Pakistan and Thailand in Singapores
construction sector

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Section 1.2
Malaysian labour
laws and their
enforcement

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Malaysian Labour Laws

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The Employment Act 1955 (latest amendments in 1998)

The Wages Council Ordinance 1947
The Employees Provident Fund (EPF) Act 1951
The Workmans Compensation Act 1952
The Employees Social Security Act (SOCSO) 1969
The Occupational Safety and Health Act 1994
The Children and Young Persons (Employment) Act 1966

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The Employment Act 1955

(latest amendments in 1998)
The employment Act is applicable only to employees and their respective
employers. It does not cover self-employed (those who work in their own
firm/business) and other workers who are not employees.
You need to differentiate workers who are employed under a contract of
services (termed as employees) from those who are hired under a
contract for services (known as non-employees).

Workers covered by the Employment Act are:

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All those who earn not more than RM1,500 per month
All those who conduct manual labour
All those who supervise manual labour
All those who are employed to drive or maintain vehicles for the
transportation of passengers or goods.
All those employed as domestic servants. One section of the
Employment Act that applies to domestic servants to include all those
workers employed in private home (maids, butlers, nannies, cooks) is
that the servant must give 14 days notice prior to resignation.

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The Wages Councils Act 1947

Currently, there are four sectors covered by the Wages
Councils. These are:

Cinema workers;
Shop assistants;
Hotel and catering industry workers; and
Port of Penang stevedores.

Stipulates minimum wages for certain industries although

Malaysia does not require minimum wage for all workers.

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The Employees Provident Fund (EPF) Act

1951, (The Employees Provident Fund
Board)
Membership
1. All employers are required to register with the Fund. They must
contribute 12% of the employees monthly wages to the Fund, and deduct
and forward another 11% of the employees monthly wages to this Fund.
2. All employees are required to register with the Fund. All workers
employed under a contract of service, including part-time and temporary,
must contribute to the Fund. Domestic servants and foreign workers are
exempted from joining the Fund. Those over 55 years of age who have not
withdrawn all their savings from the Fund remain as members and can
continue to contribute if they are still working. Or they can re-contribute
even after they have withdrawn their fund, as they are still employed.
3. Self-employed employees are not required to contribute although they
may opt to do so. This poses a weakness in the current system.

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The Employees Provident Fund (EPF) Act

1951, (The Employees Provident Fund
Board)
Withdrawal
1. Currently, members savings in the Fund are made up of three (3)
accounts. The first account, which is the biggest, will not allow the member to
withdraw from it until the employee reaches the age of 55 years. The second
account, which has 30% of the monthly contribution deposited, can be
withdrawn for housing and , education purposes once the employee reaches
50 years of age. The third account, the smallest, allows members to withdraw
from it to pay for medical treatment, buying a computer, and paying for other
pressing living needs due to accident or serious illness.
2.Upon reaching 55 years of age, members can withdraw all the balance
money in their accounts. This amount represents the total accumulated sum,
contributed by the employer and that paid by themselves through the monthly
wage deduction with the annual dividend declared by the EPF Board.
3. If the member dies before the withdrawal is made, his dependents or family
members will receive the remaining funds available from his accounts.

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The Workmans Compensation Act

1952
Workmans Compensation Act 1952 provides compensation to workers
who meet with accidents at work or who contact employment related
diseases. This Act, similar to the Employees Social Security Act
(SOCSO) requires employers in the private sector who employ foreign
manual workers or other foreign workers earning less than RM500 per
month to buy an insurance policy to cover this liability under the Act and
must inform the Labour Department of any accident within 10 days of its
occurrence.

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The Employees Social Security Act

(SOCSO) 1969
The Employees Social Security Act (SOCSO) first
introduced in 1969 has expanded its coverage in all
industries in the Malaysian private sector. The main
purpose of the Act is to set up an insurance system to
enable the employees involved in an accident at work or
who contacted a work-related disease to receive
compensation and financial assistance.

The Occupational Safety and Health

Act (OSHA) 1994
This Act was introduced in 1994 by the Department of
Occupational Safety and Health, to impose on employers
the need to provide a safe working environment for their
workers.

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The Children and Young Persons

(Employment) Act 1966
The employment of children and young persons under the Employment
Act must adhere to the following conditions:
1. They may work in light work suitable to his capacity in his familys
business.
Children may be employed in public entertainment or in activities related to his studies in
school or training institution. Or if he works as an apprentice, he
needs a written
apprenticeship contract and to submit it to the Director-General
of Labour. Young
persons may be employed in work suitable to their capacity,
not necessarily for
family, in offices, shops, cinemas, clubs, factories and the like.
2. Children however, are not allowed to work between 8.00pm and 7.00 am, unless they
work in public entertainment and they are entitled to a rest of 30
minutes after every 3
consecutive hours of work
3. Young persons are not allowed to work between 8.00pm and 6.00 am, and they are
entitled to a rest for 30 minutes after every four hours. If they work in
the public
entertainment or agricultural sectors, working at night restrictions are
not.
4. The Factories and Machinery Act does not allow young persons to conduct
work involving machinery or coming into contact with such machinery.
5. Parents need to give employment consent for their children to work in any of
the
permitted work activities.

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Section 1.3
Strategic human
resource
management

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HRs Strategic Challenges

Strategic plan
A companys plan for how it will match its internal
strengths and weaknesses with external
opportunities and threats in order to maintain a
competitive advantage.

Three basic questions in planning

Current business position?
Future business position?
How to reach the future business position?

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The Strategic Management Process

Strategic management
The process of identifying and executing the
organizations mission by matching its
capabilities with the demands of its
environment.

Strategy
A strategy is a course of action.
The companys long-tem plan for how it will
balance its internal strengths and weaknesses
with its external opportunities and threats to
maintain a competitive advantage.

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Strategic Management Process

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Types of Strategic Planning

Three types of strategies
Corporate strategy
Competitive strategy
Functional strategy

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Types of Strategic Planning

Corporate strategy
Company-wide
Identifies the portfolio of businesses that, in total, comprise
the company and the ways in which these businesses relate
to each other.

Four possible corporate strategies

Diversification strategy implies that the firm will expand by adding
new product lines.
Vertical integration strategy means the firm expands by, perhaps,
producing its own raw materials, or selling its products direct.
Consolidation strategy reduces the companys size
Geographic expansion strategy takes the company abroad.

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Types of Strategic Planning

Business-level/Competitive strategy
Identifies how to build and strengthen the businesss longterm competitive position in the marketplace

Three possible competitive strategies

Cost leadership: the enterprise aims to become the low-cost leader
in an industry.
Differentiation: a firm seeks to be unique in its industry along
dimensions that are widely valued by buyers.
Focus: a firm seeks to carve out a market niche, and compete by
providing a product or service customers can get in no other way.

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Types of Strategic Planning

Functional strategy
Identify the basic courses of action that each department will
pursue in order to help the business attain its competitive
goals.

HR and Competitive Advantage

Competitive advantage
Any factor that allows an organization to differentiate its
product or service from those of its competitors to
increase market share.
Superior human resources are an important source of
competitive advantage
E.g. Toyotas self-managed teams

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Strategic Human Resource Management

Strategic Human Resource Management
The linking of HRM with strategic goals and objectives in order to improve
business performance and develop organizational cultures that foster
innovation and flexibility.
Formulating and executing HR systemsHR policies and activitiesthat
produce the employee competencies and behaviors the company needs to
achieve its strategic aims.

Linking Corporate and HR

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Strategies

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HRMs Strategic Roles

Effective HR managers are able to:
Handle a larger portfolio
Work closely with top management to formulate and implement
companys strategic plans
Two basic planning roles:
Strategy Execution
Strategy Formulation
HR helps top management formulate
strategy by:
Supplying competitive intelligence
in the strategic planning process.
Supplying information on
companys internal human
capabilities
Build a persuasive case

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The HR departments
strategies, policies, and
activities must make
sense in terms of the
companys corporate
and competitive
strategies, and they
must support those
strategies.

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Creating A Strategic HR System

Components of the HR process
HR professionals who have strategic and other skills
HR policies and activities that comprise the HR system itself
(Recruitment, Selection, Training and Reward)
Employee behaviors and competencies that the companys
strategy requires.

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Translating Strategy into HR Policy and

Practice
HR managers to
translate:
Companys
strategy into
employee
competencies
and behaviors
These
employee
competencies
and behaviors
into specific
HR policies
and practices
to achieve
companys
goals.

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Formulate
Formulate business
business strategy
strategy
What
What are
are the
the strategic
strategic goals
goals of
of the
the business?
business?

Identify
Identify workforce
workforce requirements
requirements
What
What employee
employee competencies
competencies and
and behaviors
behaviors must
must HR
HR
deliver
to
enable
the
business
to
reach
its
goals?
deliver to enable the business to reach its goals?

Formulate
Formulate HR
HR strategic
strategic policies
policies and
and activities
activities
Which
Which HR
HR strategies
strategies and
and practices
practices will
will produce
produce these
these
employee
competencies
and
behaviors?
employee competencies and behaviors?

Develop
Develop detailed
detailed HR
HR Scorecard
Scorecard measures
measures
How
How can
can HR
HR measure
measure whether
whether itit is
is executing
executing well
well for
for the
the
business,
in
terms
of
producing
the
required
workforce
business, in terms of producing the required workforce
competencies
competencies and
and behaviors?
behaviors?

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The HR Scorecard Approach

HR Scorecard
Measures the HR functions effectiveness and efficiency in
producing employee behaviors needed to achieve the
companys strategic goals.
To create an HR scorecard, you:
Must know what the companys strategy is.
Must understand the causal links between HR activities,
employee behaviors, organizational outcomes, and the
organizations performance.
Must have the metrics to measure all the activities
and results involved.

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Using HR Scorecard Approach

1.
2.
3.
4.
5.
6.

Define the Business Strategy

Outline the Companys Value Chain
Outline a Strategy map
Identify the Strategically Required Organizational Outcomes
Identify the Required Workforce Competencies and Behaviors
Identify the Strategically Relevant HR System Policies and
Activities
7. Create HR Scorecard
8. Design the HR Scorecard Measurement System
9. Summarize Scorecard Measures in a Digital Dashboard
10. Periodically Evaluate the Measurement System

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