“All Managers are HR Managers? ” Executive summary: In this paper the relationship between managers and HR managers will be discussed with regard to some of the primary HRM practices, such as recruitment, performance appraisal, compensation and benefits, and training & development. The importance of HR to organizational success is discussed highlighting the importance of HR and its use as a strategic tool. Both HRM and management are reviewed and the interrelationship between the two is established within the structure of SME’s.
Many smaller companies don’t have separate HR departments and often don’t implement elaborate HR systems, but rather limit these activities to the processing of administrative tasks and the more strategic matters are controlled by senior management. There is particular attention given to SME’s as there is an interesting contrast between the HR elements in large corporate organizations and SME’s. Differences in organizational size leads to different ways of handling HR related tasks. So are all managers in fact HR managers?
This depends on the complexity within an organisation and because of this complexity this statement is both correct and incorrect. Table of Contents: ………………………………………. Introduction ……………………………………….. Organisational size and complexity ……………………………………….. Management and HRM [3. 1]………………Human Resource Management [3. 2]………………. Management [3. 3] ………………The importance of HR Practices in Organisational success [3. 4]………………. Importance of Management [3. 5] ………………Figure A: Skills needed at various Managerial levels ………………………………HR Practices and relevance to management 4. 1]……………… Recruitment [4. 2]……………… Performance appraisal [4. 3]……………… Compensation and benefits [4. 4]……………… Training and Development ………………………………Discussion …………………………….. Conclusion ……………………………. References “All Managers are HR Managers? ”  Introduction: Management approaches in both large and small organisations are very similar in structure and responsibility, HR management however differs between the two. There is a major difference between large firms and SME’s when it comes to handling their Human resources.
This paper discusses the relevance of the statement with regards to the size and complexity of the organisation, importance of HR practices to organisational success and the relation of HRM and management.  Organisational size and complexity: HRM procedures and activities in small to medium organisations are far less institutionalised and formalised than in larger organisations. Therefore many smaller companies don’t have separate HR departments and often don’t implement elaborate HR systems, but rather limit these activities to the processing of administrative tasks and the more strategic matters are controlled by senior management.
The reason for this can be attributed to complexity: This complexity greatly affects the managers’ freedom of choice and their control. In a large company the increased complexity leads to departments that involve specialized managerial expertise. This draws much of the HR responsibilities away from all managers and allows a specialized manager to control and monitor the HR responsibilities. This does not mean that the other managers have no HR skills and abilities but rather that most of the complex HR systems are controlled and implemented by one department.
Thus within large firms it can be suggested that all managers are not HR managers all though it is still vital that all managers are familiar with the importance of HR systems and have some HR skills themselves. In the case of an SME the structure is less complex and most of the general responsibilities fall on a fewer number of managers. Because of this less complex system these managers are required to have expertise in a number of areas and are often responsible for the control and implementation of HR systems.
One issue regarding smaller firms is that the complexities of HR practices often decrease with the decreased complexity of the firms’ structure. Because of this it is important that all managers are in fact also HR managers. So it can be said that the degree and complexity of HR practices will become more distant from normal managerial tasks as the size of the organisation grows. This does not mean that one system is superior to the other but more that one is an outcome of growth. So the HR-practices in SMEs are not better r worse than those in larger corporations, they just follow a different logic.  Management and HRM: [3. 1] Human Resource Management: (Raymond J. Stone, 2008, pp. 3) describes Human Resource Management as “The Productive use of people in achieving the organisations strategic objectives and the satisfaction of individual employee needs” Businesses that have implemented a specific HR department usually employ HR experts to operate and implement HR related tasks. A specialised manager or department is usually effective from a company consisting of 50 or more employees.
Obviously as stated earlier the complexity of which would increase with the size of the company. [3. 2] Management: (Cronje, Du Toit, Marais, & Motlatla, 2003, pp. 122) Defines management as “The Process whereby Human, Financial, Physical and Information Resources are employed in order to reach the goals of the organisation” There are generally 2 different types of managers; Functional (specialised for different departmental functions within the organisation) and General (integrates all the functional).
In a small company these functions could be combined under a single manager but in a large firm these functions would require a great deal more detail and specialised skills. [3. 3] The importance of HR Practices in Organisational success: Ap Eigenhuis, a former senior vice-president of human resources at Unilever, said: “Talent has to be managed and developed at all levels of the organisation, top to bottom. In a small company it is the responsibility of the business leader, and with business growth, the line manager. Done roperly it will secure talent for the future and can transform a company’s performance. ” Research has shown that there is a positive relationship between HRM practices and important organizational outcomes such as productivity, turnover, and firm performance (Delaney and Huselid 1996; Huselid 1995; Arthur 1994). This suggests the importance of HR not only from employee relations point of view but also a strategic tool for managers in leading an organization to success. Studies show that less than 40% of SME’s implement formal HR systems to recruit, train, develop and reward employees.
Even less seek HR advice from external consultants. This is a cause for concern as managers are not taking this responsibility seriously; HR department is only needed once the organization exceeds 50 people. In smaller firms it is essential to the firms success to have efficient and appropriate HR systems in place that are maintained and controlled by management. [3. 4] Importance of Management: Management is indispensable because it directs an organisation towards its goals and objectives. The performance and success of any organisation depends on the quality of its management.
Management establishes a balance between the four basic resources (HR, Financial, Physical and information). Managers achieve this balance through planning, organising, leading, and controlling. It is clear that these simple tasks are evident in all management styles throughout the organisation. No matter what style of management there is going to be other people involved thus all managers must have leadership capabilities and knowledge of human resource management. [3. 5] Figure A: Skills needed at various Managerial levels: [pic] Source: Pg. 129, chp 5, Introduction to Business management, 6th edition, Cronje, Du Toit, Marais, Motlatla.
This diagram is more relevant to a SME as the hierarchal structure in smaller organisations is more linear, as large organisations have a more lateral structure, again falling back on the concept of complexity. Although the skills vary across different levels of management the Interpersonal skills are constant all the way through the organisation.  HR Practices and relevance to management: Kotley and Slade (2005) suggest that with an increase in size of an organization there is a shift from informal procedures to a more formal HR structure.
Increasing formality, according to Hornsby and Kuratko (1990), is noticeable in companies with 20 or more employees when informal networks are no longer apparent, informal styles of communication are stretched, and the owner becomes overwhelmed and needs to delegate responsibilities. Less than 40% of SME’s have formal HR plans in place for recruitment, selection, and training and development. This means that in SME’s this should be a strategic decision made by management this process isn’t viewed as a strategic decision, but it should be both an HR and managerial issue.
Following are some of the HR Practices that change and evolve with organisational complexity. [4. 1] Recruitment: “The process of seeking and attracting a pool of qualified applicants from which candidates for job vacancies can be selected. ” (Raymond J. Stone, 2008, pp. 197) Recruitment is undoubtedly an indispensable HR function. Every organization needs good staff and therefore need procedures and systems to obtain these new members. The bigger the organization the more formal the recruitment systems tend to be. With the recruitment process it is important that efficient HR records exist and are kept up to date.
In a large firm this activity would be the responsibility of the HR department, but with many SME’s it is the responsibility of management. Thus SME managers must be fully aware of the process and involve it as an interactive practice in building the right team. [4. 2] Performance appraisal: In essence the performance appraisal determines where an employee performed well, where they complied with the job requirements, and where they did not comply with requirements, and offers feedback for learning and improvement. This is one practice that is evident across all departments and effects everyone in the company.
It is not limited to the HR department and in SME’s the situation is no different. It is the responsibility of any manager to review their subordinates’ performance and offer them feedback. This is a process of learning and is vital to the success of any organization. It is critical that management in SME’s implement appraisal systems throughout the organization, and offer truthful and sincere feedback. This is not restricted to HR, although the HR department may be responsible for compiling and structuring these processes.
Through these appraisal systems the organization communicates its expectations and emphasizes its expected employee behavior, thus maintaining its business culture. It therefore is without a doubt a managerial decision, as many factors such as cost and time will affect the detail in which this process will be undertaken and these managers will decide how much emphasis is to be appropriately placed on these activities. [4. 3] Compensation and benefits: “Compensation refers to all forms of financial returns and tangible services and benefits employees receive as part of an employment relationship. (Cronje, Du Toit, Marais, & Motlantla, 2003, pp. 212). Compensation is one of the most motivating factors that drive people to seek employment in an organization. There are two types of compensation Direct compensation (monetary rewards), and Indirect compensation (benefits such as leave etc. ) Both these types have to be offered on a strategic motivational level. In SME’s it is very much the managers’ responsibility to establish the appropriate compensation. This must be an incentive (but not the only one) for employees to commit to their jobs and to encourage employee engagement.
Studies have shown that many SME’s struggle in retaining staff compared to larger organizations. According to (Graham Smith, 2007) about half of new employees in SME’s decide to leave their jobs in the first month and 8% deciding on the first day whether to stay or not. Smaller firms often can’t compete with larger firms with the compensation they offer. They can however tailor benefits to suite employees on a more individual level, i. e. focusing on more indirect compensation, something that large firm’s often fail to provide.
Research shows that SME’s have a higher staff turnover rate and bosses are reluctant to invest in employee retention strategies. This highlights the importance of an effective balance and the management of HR practices from a strategic point of view. [4. 4] Training and Development: “Training involves providing employees with the knowledge and skills needed to do a particular task. Development refers to a longer-term focus on preparing for future work responsibilities, while at the same time increasing the capacities of employees to perform their current jobs” (Cronje, Du Toit, Marais, & Motlantla, 2008, pp. 207).
As mentioned earlier many small businesses are unwilling to invest additional funds into strategies to retain staff, especially when it comes to development. This is often the reason why many employees leave SME’s, as they experience a lack of training and fail to see a clear career path. Training and development is an ongoing process throughout a person’s career regardless of their role in an organization. It must be continuous and evolve with the company. Through effective training and development management is able to offer more job enrichment and motivation to the employees, as well as establishing growth within the company.
This too increases employee engagement and increases retention rates, which as discussed earlier is a major challenge for SME’s. This therefore is a strategic tool for performance and is ultimately a managerial responsibility. In SME’s management must place emphasis on these programs and continually monitor them as well as undergoing training and development themselves. With regard to these HR practices it is important for management to look for people with the right skills, to get specialists in HR to help recruit and retain employees, and develop an HR plan to manage staff turnover and encourage professional development.
In other words it is important in SME’s that management has an extensive knowledge of HR and uses it as a strategic tool to work towards organisational success.  Discussion “All managers are HR managers! ” is a very broad statement and is dependent on a vast number of circumstances. But in this paper the statement was evaluated on the basis of the definitions, complexity, and a selection of HR practices. Through this information the statement “All managers are HR managers” holds both true and false.
It holds true in terms of SME’s and early stages of company life cycles as there is less complexity and less need for detailed systems. It is essential however that management is familiar with HR practices and implements HR systems at an early stage, but just on a less complex scale. Figure A supports this conclusion as HR skills are needed to the same extent throughout all managerial levels. This illustrates the importance of human interaction and thus Human resources, suggesting that all managers are in some way HR managers.
In these SME’s it is also very much the managers responsibility to implement the HR practices discussed in section , because their company structures are less complex and separate departments often are unnecessary it is important that management appreciate the importance of these systems and thus implement them strategically. Other conclusive evidence was given by Ap Eigenhuis in section [4. 3] when he emphasized the fact that talent has to be managed at all levels of the organisation and in SME’s that would be the managers and leaders. Through this evidence I say that all managers are HR managers.
But; as the company grows and with further delegation the HR responsibilities can become more specialised. With increased complexity come departments, which draw HR practises away from all managers. Although all managers still require many HR skills it is not the primary concern for them, because of the complexity the HR process becomes far more specialised and strategic and thus all managers are not HR managers.  Conclusion: In conclusion it can be safely assumed that managers within SME’s are HR Managers and managers in larger corporations are not.
Clear evidence has been given to support the fact that this statement differs in correctness with changes in complexity and business layout. So finally the statement “All managers are HR managers” is both correct and incorrect.  REFERENCES: Raymond J. Stone, (2008). Managing Human Resources (2nd edition). Queensland, Australia: Wiley & Sons. Cronje, De Toit, Marais, & Motlantla, (2003). Introduction to Business Management (2nd edition). Cape Town, South Africa: Oxford University Press. Michael G. Aamodt, (2004). Applied Industrial/ Organisational Psychology (4th edition). Belmont, USA: Thomson, Wadsworth.
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