Chapter 1:

Introduction to Human Resource Management

LIM Soon Chong, Johnson (Ph.D.)
Universiti Tun Hussein Onn Malaysia (UTHM)

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Outline I
1

Introduction
Management and Organization
Management Functions
Human Resource Management (HRM)
Different HR Practices

Theories of HRM
Theory X and Y
Maslows Hierarchy of Needs
ERG Theory
Three Needs Theory

Purpose of HRM
Importance of HRM
HRM and Human Resource Development
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Outline II
4

Legal Bodies and Laws

Ministry of Human Resources
Labour Laws in Malaysia

References

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Management and Organization

Definition
General management is the process of planning, organizing, staffing,
coordinating and controlling [6].
These are general management concepts applicable to all types of
organizations, either large or small.

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Management Functions

In a large organization, there is division of labor whereby people are

involved in different functions such as production or marketing of the
products [6].
There are essentially two types of functions:
1

Line functions: directly related to main activities - production, marketing

departments.
Staff functions: not directly related to main activities - finance, HR
departments.

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Human Resource Management

Definition
Human Resource Management (HRM) is the part of management that deals
with people working in an organization. It takes care of the well-being of these
people so that they can work effectively as a group and contribute to the
success of the organization [6].
Human Resource Management (HRM) is considered a staff function.
Basic Functions of HRM is to match two sets of needs:
1
2

What people want from their work.

What an organization wants from its people.

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Are HR practices applicable to all?. . .

HR practices actually differs under different scenario such as:

Labor-intensive factories versus automated factories
Manufacturing versus retailing
Unionized versus non-unionized
Local versus foreign companies
Family-owned versus public company
...

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Theory X and Y

Theory X and Theory Y were proposed by Douglas McGregor who was

an American social psychologist. He presented his theory in his 1960
book, The Human Side of Enterprise.
The two theories has been used by management to formulate and
develop motivation and positive management styles, strategies and
techniques.

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Theory X and Y

Theory X
Theory X assumes that people dislike work and will avoid it if they can.
Because of this dislike of work, people must be directed and threatened with
punishment to get them to achieve organizational objectives [6].
Theory X assumes autocratic management.
Managers under this theory assume that most people are naturally lazy
and need to be controlled and supervised.
They think that people need to be motivated all the time.

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Theory X and Y
What are the characteristics of Theory X Managers [2]?
Results-driven, concerned with the completion of a given task by issue
deadlines.
Intolerant in nature.
Distances themselves from workers.
Issue threats and warnings to make people follow their instructions.
Do not participate in the process of team building.
Unconcerned about the welfare or morale of the employees.
One-way communicators and poor listeners.
Withhold rewards and suppress pay and remuneration levels.
Poor at delegating responsibilities and think giving orders is delegating
responsibility.
Hold on to responsibility but shift accountability to subordinates.
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Theory X and Y
What are the characteristics of Theory X Managers [2]?
Results-driven, concerned with the completion of a given task by issue
deadlines.
Intolerant in nature.
Distances themselves from workers.
Issue threats and warnings to make people follow their instructions.
Do not participate in the process of team building.
Unconcerned about the welfare or morale of the employees.
One-way communicators and poor listeners.
Withhold rewards and suppress pay and remuneration levels.
Poor at delegating responsibilities and think giving orders is delegating
responsibility.
Hold on to responsibility but shift accountability to subordinates.
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Theory X and Y

Theory Y
Theory Y assumes that people will work as naturally as play or rest. They will
exercise self-direction and are committed to their work. Under proper
conditions, people accept responsibility. [6].
Theory Y assumes democratic management.
Managers under the Theory Y paradigm assume that most people like to
work, have self-control, smart and able to motivate themselves and want
to do a good job.
Even Theory Y managers are results-oriented, after all, but they are also
concerned with not just the completion of work, but they assist their
subordinates in doing things.

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Theory X and Y
What are the characteristics of Theory Y Managers [2]?
Tolerant in nature.
Do not distance out from their employees. Think oneself as part of a team
and provides motivation and encouragement to the team.
Do not threat employees for non-compliance. Instead, they explain them
about the norms and compliance issues and make them realize that
instructions are for the betterment of work.
Actively participate in the team building process.
Very much concerned about the welfare and morale of employees.
Good communicators and listeners, take suggestions and constructive
criticism seriously.
Rewards and compensations.
Good at delegating responsibilities.
Hold on to responsibility and also accountability.
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Theory X and Y
What are the characteristics of Theory Y Managers [2]?
Tolerant in nature.
Do not distance out from their employees. Think oneself as part of a team
and provides motivation and encouragement to the team.
Do not threat employees for non-compliance. Instead, they explain them
about the norms and compliance issues and make them realize that
instructions are for the betterment of work.
Actively participate in the team building process.
Very much concerned about the welfare and morale of employees.
Good communicators and listeners, take suggestions and constructive
criticism seriously.
Rewards and compensations.
Good at delegating responsibilities.
Hold on to responsibility and also accountability.
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Maslows Hierarchy of Needs

Figure 1 : Abraham Maslows Hierarchy of Needs [8]

Hierarchy of Needs was proposed by Abraham Maslow in his 1943 paper A

Theory of Human Motivation[4].
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Maslows Hierarchy of Needs I

Theory
Maslow assumes the existence of a hierarchy of five needs within each
individual. Low-level needs such as physiological requirements and safety
must be satisfied before higher-level needs such as self-fulfillment are
pursued. In his hierarchical model, when a need is mostly satisfied, it no
longer motivates and the next higher need takes its place.
Hierarchy description [3]:
1

Physiological needs: These are the need for basic amenities of life: air,
water, food, clothing and shelter.

Safety needs: Safety needs include physical, environmental and

emotional safety and protection. For instance,job & financial security,
protection from threats,etc.

Social needs: Social needs include the need for love, affection, care,
belongingness, and friendship.
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Maslows Hierarchy of Needs II

Esteem needs: There are two types: internal esteem needs

(self-respect, confidence and freedom) and external esteem needs
(recognition, status, attention).

Self-actualization need: The urge to become what you are capable of

becoming, the need for growth and self-contentment. It also includes
desire for gaining more knowledge, social service, creativity and being
aesthetic.

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Applying Hierarchy of Needs in HRM

Application in the HRM Context [3]:
1

Physiological needs: the managers should give employees appropriate

salaries to purchase the basic necessities of life. Breaks and eating
opportunities should be given to employees.

Safety needs: the managers should provide the employees job security, safe
and hygienic work environment, and retirement benefits so as to retain them.

Social needs: the management should encourage teamwork and organize

social events.

Esteem needs: the managers can appreciate and reward employees on

accomplishing and exceeding their targets. The management can give the
deserved employee higher job rank / position in the organization.

Self-actualization needs: the managers can give the employees challenging

jobs in which the employees skills and competencies are fully utilized. Moreover,
growth opportunities can be given to them so that they can reach the peak.

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Limitations of Maslows Hierarchy of Needs

What are the limitations of this theory [3]?

It is essential to note that not all employees are governed by same set of
needs. Different individuals may be driven by different needs at same
point of time.
It is always the most powerful unsatisfied need that motivates an
individual.
The theory is not empirically supported.
The theory is not applicable in case of starving artist as even if the artists
basic needs are not satisfied, he will still strive for recognition and
achievement.

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ERG Theory
Theory
There are three categories of human needs that influence a workers behavior:
existence, relatedness and growth.
A model that appeared in 1969 in a Psychological Review article entitled
"An Empirical Test of a New Theory of Human Need", by Clayton P.
Alderfer.
The ERG Theory categories human needs are:
1

Existence Needs: physiological and safety needs (such as hunger, thirst

and sex). The 1st two levels of Maslow.
Relatedness Needs: social and external esteem (involvement with family,
friends, co-workers and employers). The 3rd and 4th levels of Maslow.
Growth Needs: internal esteem and self actualization (the desire to be
creative, productive and to complete meaningful tasks). Maslows 4th and
5th levels.

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ERG Theory Vs. Maslows Theory

Some point-of-views[2]:
Contrarily to the idea by Maslow that access to the higher levels of his
pyramid required satisfaction in the lower level needs, the ERG areas of
Alderfer are simultaneous needs.
ERG Theory recognizes that the importance of the three categories may
vary for each individual.
According to the ERG theory, if you focus exclusively on one need at a
time, this will not effectively motivate.
Managers must recognize that an employee has multiple needs, which
must be satisfied simultaneously.

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Three Needs Theory I

Theory
An individuals specific needs are acquired over time and are shaped by ones
life experiences. Most of these needs can be classed as either achievement,
affiliation, or power. A persons motivation and effectiveness in certain job
functions are influenced by these three needs [7].
Also known as earned needs theory.
Proposed by David McClelland in his acquired-needs theory.
The three needs are[5]:
1

Need for Achievement (nAch):

People with a high nAch seek to excel and thus tend to avoid both low-risk
and high-risk situations.
Achievers avoid low-risk situations because easily attained success is not a
genuine achievement.
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Three Needs Theory II

High nAch individuals prefer work that has a moderate probability of

success, ideally 50% chance.
Achievers need regular feedback in order to monitor the progress of their
achievements. They prefer either to work alone or with other high
achievers.
2

Need for Affiliation (nAff):

People with a high nAff need harmonious relationships with other people
and need to feel accepted by other people.
High nAff individuals prefer work that provides significant personal
interaction.
They tend to conform to the norms of their work group.
They perform well in customer service and client interaction situations.

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Three Needs Theory III

Need for Power (nPow):

A persons nPow can be one of two types - personal and institutional.
Those who need personal power want to direct others, and this need often
is perceived as undesirable.
Persons who need institutional power (also known as social power) want to
organize the efforts of others to further the goals of the organization.
Managers with a high need for institutional power tend to be more effective
than those with a high need for personal power.

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Importance of HRM

Why HRM is important? [9]

To achieve organizational objectives through human workforce.
To empower workers towards achieving optimal individual performance
and potential
To increase individual commitments and sense of belonging towards
organization
To integrate human resource policy with business strategies towards
strengthening organizational cultures

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HRM and Human Resource Development

Human resource management exists to ensure organizations have the right
people who will be able to achieve the organizational objectives. Among the
functions of a human resource specialist are [1]:
Recruit suitable workers
Ensure the workers receive appropriate training
Establish systems for compensation and rewarding employees
Help heads of departments keep their subordinates free from injury and sickness
Design and implement appropriate disciplinary systems so workers who defy
organizational rules and thus jeopardize its success can be dealt with
Develop a working relationship with the employees trade union representatives,
where the workers are unionized
Ensure the organization is complying with the countrys employment laws
Maintain staff records

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Ministry of Human Resources

The Ministry of Human Resources plays a major role in HRM by

developing policies and laws which affect employers and employees[1].
There are several key departments of the ministry:
Labour
Industrial Relations
Manpower
Trade Union Affairs
Occupational Safety and Health
Skills Development

There are also a few statutory bodies/companies under the ministry:

Employees Social Security Organization
Human Resources Development Berhad
National Institute of Occupational Safety and Health
Skill Development (Loan) Fund Corporation

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Labour Laws in Malaysia I

There are several labour laws that are currently enforced in Malaysia. These
includes[1]:
1

The Employment Act 1955, The Sabah Labour Ordinance, The Sarawak Labour
Ordinance
Under The Labour Department
Covers area such as contracts of service, payment of wages, employment
of women, working hours and holidays, registers, returns, complaints and
inquiries.
Example: setting minimum labour standards for workers and seek to
protect them from exploitation, employers are required to keep a register of
employees containing specific personal particulars, inquire into and decide
on the disputes between employers and employee etc.

The Wages Council Act 1947

Under The Labour Department
Orders on minimum wages are made under this legislation for industries in
which the employees are not organized into unions.
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Labour Laws in Malaysia II

Presently there are four sectors covered: shop assistants, hotel and
catering industry workers, port of Penang stevedores, cinema workers.
3

The Employees Provident Fund (EPF) Act 1991

Under the Employees Provident Fund Board
This act ensure workers have funds available on their retirement.
All employers must register with the Fund and they are responsible for
contributing to the Fund for their employees and to forward to the Fund the
employees contribution.
Currently, the amount to be sent are 12% and 11% respectively for the
employees monthly wages (inclusive of fixed allowances, commissions
and bonus payments)

The Workmans Compensation Act 1952

Under The Labour Department.
To provide compensation to workers who have accidents at work or who
contract employment-related diseases.

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Labour Laws in Malaysia III

Employers in the private sector who employ foreign manual workers or
other foreign workers earning less than RM500 per month must take out an
insurance policy to cover liability under the Act and must inform the Labour
Department of any accident involving a foreign worker within 10 days of its
occurrence.
5

The Employees Social Security Act (SOCSO) 1969

Under the Social Security Organization
Provide protection to workers who may be involved in an accident at work
or who contract some occupational disease, ensuring workers receive
financial compensation.
The act covers workers benefit such as free medical care, disablement
benefit, dependants benefit, funeral benefit, etc.
Those eligible are employees in the private sector who earn less than
RM3000 per month.
Once in, always in principle: if an employees wage subsequently raised
beyond the limit, he and his employer are still liable to continue contributing
on a monthly basis to the Organization.
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Labour Laws in Malaysia IV

6

The Occupational Safety and Health Act 1994

Under the Department of Occupational Safety and Health.
This act empowers the department to perform safety inspections at
workplaces, organize promotional activities to improve employers and
workers understanding of good safety practices, etc.

The Children and Young Persons (Employment) Act 1966

Under The Labour Department
Preventing the exploitation of child labour.
Children under 14 years of age can only be engaged in light work in their
familys business.
Young persons aged 14-16 are restricted to working in light work which
does not involve the use of machinery, maximum 7 hours per day and may
not work between 8.00pm and 6.00am.

The Employment (Restriction) Act 1968

Under The Labour Department
This act requires non-Malaysian citizens to obtain a valid work permit
before they can be employed locally.
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Labour Laws in Malaysia V

9

The Trade Unions Act 1959

Under the Trade Union Department.
Workers are permitted to form and join trade unions provided these are
registered organizations.

10

The Industrial Relations Act 1967

Under the Industrial Relations Department.
The purpose of this law is to provide systems which will encourage
industrial harmony.
This act establishes an Industrial Court for arbitration of disputes and lays
down procedures for union recognition and collective bargaining.
The act also includes machinery whereby an employee can claim
reinstatement if the employee has been unfairly dismissed.

11

Pembangunan Sumber Manusia Bhd Act 2001

Under Human Resource Development (HRD) Bhd.
The purpose of this Act is to ensure employers conduct taining for their
workers so as to upgrade their skills and abilities.
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Labour Laws in Malaysia VI

Employers are required to pay a monthly levy into a Fund administered by
HRD Bhd. When they organize training programmes or send their workers
to approved training programmes, they can apply for reimbursement for the
cost incurred.
12

The Skills Development Fund Act 2004, The National Skills Development Act
2006
Under the Skills Development Department
The purpose of these two laws is to establish a fund for the purpose of
granting loans to trainees who attend approved programmes to develop
and upgrade their skills.
A council has also been formed to approve National Occupational Skills
Standards (NOSS), which will be used to develop national curriculum for
skills training programmes.
Trainees who achieve the required competencies will be awarded a
certificate.

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References I
[1] A MINUDDIN , M. Human Resource Management: Principles and Practices, first ed.
Oxford University Press, Malaysia, 2008.
[2] H ELP W ITH A SSIGNMENT. Theory x and theory y in human resource management,
2011. Online: http://www.helpwithassignment.com/blog/theory-x-and-theory-y-inhuman-resource-management-from-helpwithassignment-com/.
[3] M ANAGEMENT S TUDY G UIDE. Maslows hierarchy of needs theory, 2011. Online:
http://www.managementstudyguide.com/maslows-hierarchy-needs-theory.htm.
[4] M ASLOW, A. A theory of human motivation. Psychological Review 50, 4 (1943),
370396.
[5] N ET MBA. COM. Mcclellands theory of needs, 2011. Online:
http://www.netmba.com/mgmt/ob/motivation/mcclelland/.
[6] TAN , C. H., AND TORRINGTON , D. Human Resource Management for Southeast
Asia and Hong Kong. Prentice Hall, Singapore, 1998.

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References II
[7] UMUC. David c. mcclelland - three needs theory, 2011. Online:
http://info.umuc.edu/mde/Portfolios/jdeguara/mcclelland.html.
[8] W IKIPEDIA. Maslows hierarchy of needs, 2013. Online:
http://en.wikipedia.org/wiki/Maslow
[9] Y USOF, A. A. Pengurusan Sumber Manusia:Konsep, Isu dan Perlaksanaan,
first ed. Prentice Hall, Malaysia, 2002.

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The End

Thank You.

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