HUMAN RESOURCES AND OTHER APPROACHES

QUESTION

DEAKIN UNIVERSITY

SOLUTION

Introduction

There have been many important changes in the economy and business during the last two decades. As the economies is emerging and it is creating a global market, the role of the Human Resource Manager is evolving with the change in competitive market environment and also the realization of HRM (Human Resource Management) to play a more strategic role for the success of an organization in times of crisis and uncertainty. Organizations that do not put emphasis on attracting and retaining talents may find themselves in dire consequences, as their competitors may be outplaying them in the strategic employment of their human resources.  This paper discusses the role of Strategic Human Resource Management in enhancing the organizational performance in both the good economic times and bad times. It provides us an in-depth analysis of how strategic HRM helps an organisation to attain success. As an organization, the HR always wants to empower and motivate the key employees into decision makers, leaders, motivators, and innovators. But they face various issues that are needed to be improved like interpersonal skills, job attitudes, and involvement with the organization. As they develop each employee, it is essential to focus on each strength, weaknesses, and interest. The organization is focused in making employees content and passionate in what they do.

Theoretical Perspectives of Strategic Human Resource Management:

Based on Torrington, Hall and Taylor (2008, pp.35-45) there are three types of theoretical perspectives of Strategic Human Resource Management to enhance business performance and to achieve organizational effectiveness are as follows:

Universalistic Approach: It is founded on basis of the concept that there is ‘one best way’ of managing human resources in order to improve performance of the business. This is the process of transforming HR practices into a correct set of HR procedures and policies.

Fit or Contingency Approach: The concept of “fit” has emerged as central to many attempts to theories about strategic HRM (Richardson and Thomson, 1999). Over the last decade the concept of fit has been further investigated by many scholars ( Delery and Doty, 1996; Youndt et al., 1996; Guest, 1997; Katou and Budhwar, 2006; 2007). An analysis of such work highlights that there are generally three modes of fit, or approaches to fit: “contingency”, “universalistic” & “configurational”. The core features of these modes constitute the structure called as strategic human resource management business performance models. It is based on the assumption that different types of HR strategies will be suitable for different types of business strategies. This approach focuses on the need to align employment policies and practices with the requirement of business strategy in order to achieve the latter and make business successful. It is based on two forms of fit. First is vertical integration or the external fit and second is horizontal integration or internal fit. The strength of this model is that it provides the framework for how appraisal, selection, development & reward can be mutually geared to achieve the required employee performance.

The ‘configurational’ or ‘HRM as bundles’ model argues that in order to claim a strategy’s success turns on combining vertical and horizontal fit. This approach makes use of the so-called ‘bundles’ of HR practices, which implies the existence of specific combinations or configurations of HR practices depending on corresponding organizational contexts, where the key is to determine which are the most effective in terms of leading to higher business performance (Guest & Hoque, 1994; MacDuffie, 1995; Delery & Doty, 1996; Huselid & Becker, 1996; Katou & Budhwar, 2006).

For a SHRM to enhance organizational performance in both good and bad economic times it has to implementation specific sets of policies and practices. All the traditional HRM functions need to be relevant to the overall strategy of the company and result-oriented at gaining the company’s strategic objectives during all times.

All those activities affect the behavior of individuals in their efforts to formulate and implement the strategic needs of business. (Schuler, Jackson, 1999, p. 256).

HRM strategy is based on the following factors in organizational setting:

1. Human factor (“best fit and best practice”) which means incorporating HR plans into the mainstream of the company’s strategy and management. While HRM administers human resources in order to gain the company’s objectives, HRM strategy finds ways of providing the appropriate administration in order to apply the personnel’s needs with the company’s goals. For example, if a construction company intends to increase its production by 5% within 2-years’ time, it’s the company’s strategy plan. HRM strategy would accordingly seek for exact methods of managing the personnel in order to achieve this figure. All the HRM practices should be tailored to achieve this specific company’s goal.

2. Close cooperation of Human Resource Management and top management, which means that HRM staff should be aware of the company’s plans and objectives, as it is the employees who produce goods or provide services. The appropriate HRM will result in realizing the plans and achieving the objectives successfully. Therefore, HR department is one of the key divisions within the company.

3. Constant monitoring of the company’s strategy through surveys, feedback, etc. Human Resource Management strategy is the integrity of two components – the people strategy (correlation of Human Resource Management policy with the corporate strategy), and the functional strategy (personnel management for achieving internal departmental goals).

For example for a company like McDonald’s the HRM performs a variety of traditional activities. However, the key to HRM is that it is regarded as a strategic concern of the company. The McDonald’s HRM staffs is responsible for recruiting, selecting, training, developing, evaluating, remunerating and motivating the company’s employees. All managers are, therefore, taking on human resource responsibilities. Employees are the most important resources in McDonald’s, particularly in creating a competitive edge. Even in times of economic slow down the company was able to retain its employees and this help them to enhance their performance.

McDonald’s is a large-scale employer. There are about 60 employees in each typical McDonald’s restaurant. They are mostly hourly-paid and referred to as ‘crew members’. Their primary responsibilities are to prepare the food and serve it to the customers. They also carry out certain tasks of running the restaurants efficiently.

Alongside, there work other hourly-paid employees: Administrative Assistants Maintenance Staff, Floor Managers, Shift Running Floor Managers, Training Squad Members, Dining Area Hosts or Hostesses, Party Entertainers, Security Coordinators, and Night Closers. These employees carry out more specific job functions. Their general role, however, is to ensure the efficient running of the restaurants.

Human Resources Planning

HR planning in the context of strategic Human Resource Management is traditional administrative functions of evaluation and identification of HR requirements for gaining the company’s objectives which are enhanced by the assessment of the availabilities of qualified and talented HR that will be needed. Today, however, HRM staff should develop effective strategies to involve sufficient personnel and recruit fresh talents to perform their jobs where and when it is or will be needed. It is an important component in the value chain which adds value to the company. (Hodgetts, Luthans, and Doh, 2006, p. 213).

Professional and experienced HRM staff can anticipate future personnel requirements and find the right recruiting solutions for long-term company’s performance in challenging economic environment. They also identify and document the already-existing talents and skills, and keep trained, talented, and dedicated employees in place in case of future needs. Their competence in handling matters like these effectively results in the company’s gaining significant advantages in the tough market competition.

An organisation HR planning concerns employing the right people, using them effectively and developing them in order to achieve the company’s goals. To conduct the planning successfully, HRM seek for ways of employing talented people with proper skills and abilities.

To forecast the demand the HRM staff applies the following methods:

• Management estimates – forecasting personnel requirements on the basis of past, present and perspective requirements.
• Work study techniques – estimation of working hours based on the company’s data. Provided they can predict the amount of expected sales, for example, they calculate the numbers of employees required and the hours they will need to work. (Typepad, 2009)

Job Analysis

Another important function of Human Resource Management is job analysis. It involves collecting information about a particular job and giving its description. The information should include duties, responsibilities, required skills, results and work environment of the job analyzed. The outcome of job analysis is not only getting the description of current jobs, but also recruiting plans, position postings and advertisements, as well as development planning within HR departmental management. (Beardwell, Claydon 2007 p. 257).

Properly conducted job analysis results in clear and precise share of responsibilities among the company’s employees this in turns helps to organize the operations within the company in the most efficient way.

Also, the inventory of current employees’ skills helps the HR staff to indicate those who do not need training and those who do require training. In some cases, they find other than external ways to meet the company’s HR requirements, for example by training and developing the current personnel.

  Job Design/ Description

Job design is Human Resource Management practice which is aimed at putting together various work responsibilities, tasks and duties to form a complete job which will fit well into the organization. Frederick Winslow Taylor (1856–1915), the father of scientific management and one of the first management consultants, viewed job design as purely mechanistic procedure, but it has evolved into a more personal approach since. It bears in mind the importance of employees’ attitude to their work and stresses the importance of job satisfaction.

The job design should allow the employee to vary his job activities according to his personal needs, habits and workplace environment, give him a sense of accomplishment, include trial tasks for him to better understand what exactly he is expected to do and how to duly do it, plan a convenient working schedule and provide feedback about his expected performance and adequate support for the position. Properly conducted, job design helps them to structure and prioritize the job responsibilities and adjust them to the company’s objectives and values. It is performed through questionnaire (the employees fill in the company’s questionnaires once in two months about the performance of the restaurants, about their duties, responsibilities and activities) and through observation (monitoring and watching the employees performing in their workplaces). The information is collected, sorted out, put together in order to form a complete job description which will fit well into the organization. (Robbins, Millet, Waters-Marsh, 2004 p. 56).

Recruitment, Selection

The reputation of a business depends on the quality of its products. This needs highly- skilled employees to produce, design and deliver it. Therefore, to maintain the reputation the company needs to do well at recruiting high- quality personnel.

Recruiting can be done either internally by recruiting people within the firm, or externally, from outside. Inside recruitment has the advantage of saving costs for training as the employee already knows how the business operates and needs shorter time for fitting in. In case of promotion it gives the personnel of the company an incentive to work harder within the company. External recruitment makes it possible to attract a fresh talent, new experience and new ideas to the business.

In case of inside recruitment regarded as promotion, the process depends on acquiring qualifications to do a more advanced job. Employees generally have to pass certain exams and show a flair and aptitude for the job. (Torrington, Hall, Taylor, 2002, p. 214)

Training and Career Development

The process of training is aimed at facilitating the learning and developing new and existing skills in order to improve the performance of specific tasks. It is a mistake to consider training as important for new employees only. To adjust to rapidly changing job requirements, ongoing training is important for current employees as well. Companies provide training in order to create replacements for personnel who may leave the company or be promoted, to enhance its ability to adopt new technologies through knowledgeable personnel, to build an efficient and motivated team who would create advantages for the company in the competitive business environment, and secure adequate human power for future new projects.

Training needs analysis is conducted beforehand to maximize the effectiveness of the process. The training strategy is based on understanding two important questions: What is your business? and: What do you want your business to be? Clear answers to these questions, a clear vision of its strategy and goals enable the company to identify the training needs, i.e. where, what kind of and for whom training should be provided, and develop the proper content of the training course. Course objectives should determine what skill is to be developed, and should relate to the strategic plan of the company.

Performance Appraisal

Performance appraisal is an important part of performance management. Although it is not directly performance management, performance appraisal is one of the tools to contribute to the overall goals of performance management and achieve high level of organizational performance.

Performance appraisal is an interaction, or a dialogue, between a subordinate and supervisor in form of a periodic annual or semi-annual interview, which is designed to examine and discuss the work performance and development of the subordinate, and support required from the manager. It helps to identify weaknesses and strengths, and find opportunities for skill development and improvement. A number of companies implement this method to identify better-performing employees to offer them pay increases, promotions and bonuses. Vice versa, those who perform poorly can be provided with counseling or in some cases, may be demoted or even dismissed. (Harvard Business Press, 2009, p. 26).

 Remuneration

This term generally means compensation or pay, namely the money that is paid for the employee’s work including his base salary or wages, bonuses, commissions and benefits under the terms of the contract. More specifically, remuneration package can include wages or salary, commission, compensation, executive compensation, deferred compensation, employee stock option, fringe benefit and performance – linked incentives.

The skills of the employees developing, the company grows. However, it can make them of more value for other companies. Therefore, employee remuneration is a vital policy to be applied in the company. It may have significant implications for the company’s business. If the employees are paid too little, they may become someone else’s employees. If they are paid too much, the company may incur unnecessary overheads.

HRM staff should practice flexible employee remuneration and reward the employees with non-cash benefits. Based on the employee performance reviews or job analysis, standard salary levels within the company’s industry and position budgets, the remuneration component enables HRM staff to make decisions about the worth of each employee to the company.

Basic remuneration is the salary or wages. It may be computed in different ways –hourly wages, yearly, monthly or weekly set salaries with no regard to how many hours the employee works, or commission-based payments after products or services have been sold, or a set salary in addition to the commission based on the sales. (Tricia E.C. 2010).

Motivation

An issue of a great importance for HRM is employee motivation. Motivation is definitely a primary factor of getting the work done and getting it done well. No matter how talented an employee might be, he or she will only apply his or her full potential providing the proper motivation factor is here. This will encourage the employee to perform the work on time, with the right attitude and perfect results, and save the company’s expenses in the long run.

Employee motivation has proven to work in almost every case when the right stimuli are added into their package. Fast-acting techniques are known to motivate the employees who need higher levels of motivation to get their work done well and on time, whilst well-structures and objective-producing incentive enhancement is well- advised for those whose levels of inherent motivation might be absolutely different.

Another thing is not to focus more on those with lower level of motivation, but elaborate appropriate systems for each department and the entire personnel. In other words, the best-applied motivation policy is the one which is universal. When a well-structured and incentive-based system of rewards for job performance is created within the company, its employees will doubtfully respond quite well, and will be ready to work as a team to achieve high-level goals.

Conclusion

For any organisation to be successful and to grow during both bad and good economic times it has to apparently implement a good strategy .Through adapting to each culture correctly, and implementing the right Human Resource Management functions and policies. An organisation can only become a successful business owing to its system of corporate standards and individual opportunities, enhanced by the philosophy of values and clear expectations.

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