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HRM Best Practice
In recent years business ambience has become highly competitive. It has forced the manager to develop different strategies to cope with competitiveness. These strategies help organizations to survive in competitive environment. One area that has been important as a means of providing a competitive advantage is the management of the Human Resource function. Over the past decade there has been a dramatic shift in the field of Human Resource Management, with great emphasis being applied to the human resource management function and its significant contribution to organisational performance.
However in order to influence organisational performance it is required that there are certain ‘practices' of human resource management that must be abided by in order for improved performance to be achieved. These are
Definition of Human Resource Management Best Practice
Unfortunately there has been no authoritative definition of best practice that has been agreed by academics or practitioners. This leads to a lack of conceptual clarity of the HRM best practice definition. However there have been several definitions that have come up and many of the underlying factors of HRM best practice, allowing us to gain some understanding of the topic.
This definition relates to the fact that the more best practices that the organisation employs, each will add to the previous, thus compounding the resulting performance of the organisation. As I will discuss later each of these best practices must complement each other, as if this is not the case the other will ultimately negate any advantage that could possibly result from its inception. The main area that needs discussion relates to the purpose and benefits of the best practices that can be implemented within an organisation.
HRM best practices are designed to increase the overall performance of employees within the organisation, ultimately resulting in increased organisational performances and this is what the policy of LVMH is, as they train their employees by extensive learning programmes and experience through international mobility.. Commitment shown by the employer with regard to areas such as training and development for example, is ultimately reciprocated by the employee, with this increased commitment toward the organisation, performance enhances as employees are more skilled and committed to the profession, resulting in a win win situation for both parties.
In simple terms, each best practice technique is aimed at developing the employee, increasing commitment, with the resulting intention to improve the organisational performance ultimately create a sustainable competitive advantage. All of this stems from the nurturing of the human resources of the organisation, through the best practices that will be discussed within this review. Ultimately these measures are taken by an organisation as employees are viewed as extremely valuable resources, which undoubtedly have the ability to provide the organisation with a competitive edge. Coupled with this is the additive effects of implementation of numerous complementing best practices that enable the organisation to create a significant competitive advantage through the human resources held within the organisation.
Core competencies are resources and capabilities that serve as a source of competitive advantage over a company's rivals and represent the dominant influences on the appropriateness of a company's strategic actions.
One strategy that may enable a company to transform or develop its resources and capabilities into core competencies is to organise itself to take advantage of them through firm-specific patterns of combinations of its human resources. Using these resources companies may be able to better utilise their managerial competencies to better organise and manage diverse, complex operations, develop and communicate a strategic intent and mission or to reengineer products to better meet changing customer expectations.
The Resource-Based Model
The Resource-Based model adopts an internal perspective to explain how a company's internal resources and capabilities represent the foundation upon which v strategies should be built.
Resources are inputs into a company's production process, such as capital equipment, individual employee's skills, brand names, finance and talented managers. These resources can be tangible or intangible.
Thus, according to the Resource-Based model, a company's resources and capabilities are more critical to determining the appropriateness of strategic actions than are the conditions and characteristics of the external environment. Thus, strategies should be selected that enable the company to best exploit its core competencies, relative to opportunities in the external environment.
The Resource-Based model of above-average returns is grounded in the uniqueness of a company's internal resources and capabilities. The five-step model describes the linkages between resource identification and strategy selection that will lead to above-average returns as shown in the figure above.
1-Companies should identify their internal resources and assess their strengths and weaknesses. The strengths and weaknesses of company resources should be assessed relative to competitors.
2-Companies should identify the set of resources that provide the company with capabilities that are unique to the firm, relative to its competitors. The company should identify those capabilities that enable the company to perform a task or activity better than its competitors.
3-Companies should assess or determine the potential for their unique sets of resources and capabilities to outperform its competitors in terms of returns. Determine how a company's resources and capabilities can be used to gain competitive advantage.
4-Locate and compete in an attractive industry. Determine the industry that provides the best fit between the characteristics of the industry and the company's resources and capabilities.
5-To attain a sustainable competitive advantage and earn above-average returns, companies should formulate and implement strategies that enable them to better exploit their resources and capabilities to take advantage of opportunities in the external environment than can their competitors.
However, taking advantage of or exploiting resources and capabilities in the new competitive landscape may not always result in a company achieving a sustainable competitive advantage and above-average returns. The potential to achieve a sustainable competitive advantage will be realised when company resources and capabilities are:
Valuable, allowing the company to exploit opportunities or neutralise threats in the external environment
Rare or possessed by few, if any, current and potential competitors
Costly to imitate such that other companies will be able to obtain them only at a cost disadvantage relative to companies that already have them
Non-substitutable as there are no strategic equivalents
Best fit model:
Best fit model is also known as matching model or Michigan Model.
Michigan model has a harder, less humanistic edge, holding that employees are resources in the same way as any other business resource. People have to be managed in a similar manner to equipment and raw material. Requires that human resource strategies have a tight fit to the overall strategies of the business.
The matching model has attracted criticism. At a conceptual level, it is seen to depend on a rational, mechanical form of organizational decision-making. In reality, strategies are often determined and operationalised on a more intuitive, political and subjective level. Certainly, the decision-making is more complex than the model allows. It is also both prescriptive and normative, implying that the fit to business strategy should determine HR strategy.
Randall Schuler and colleagues subsequently presented a more complex version of the matching model that took into account significant wider factors such as technology, organizational structure and size, unionization and industry sector.
Increasingly, organizations have recognized that their success depends on well-trained, highly motivated human resources. In the recruiting process discussed has identified a number of sources of potential candidates. If they have achieved their goal and located a number of qualified applicants, it is time to begin to formally whittle down the applicant pool by using the screening tools explained which include interviewing, tests, assessment centers, and background reference checks. This is called selection.
Selection is the process of obtaining and using information about job applicants in order to determine who should be hired for short- or long-term positions. Placement involves matching individuals to jobs, based on the demands of the job and the competencies, preferences, interests, and personality of the individual. Selection and placement yield a match between the organization's needs for specific qualified individuals and the different needs of employees that determine the type of work that's satisfying for them.
ACHIEVEMENT OF ORGANIZATIONAL OBJECTIVES.
WHAT IS HRM?
How human resources management contributes to the one organization successful whereas another fails to make use of the same opportunities. For our purposes, the key to continued survival and organizational success lies not in the rational, quantitative approaches, but increasingly in a commitment to things like people, employee involvement, and commitment. Success for the organizations of today and tomorrow is being increasingly seen as dependent on effective HRM. Effective HRM positively affects performance in organizations, both large and small.
Human resources management is the term increasingly used to refer to the philosophy, policies, procedures, and practices related to the management of an organization's employees. Human resources management is particularly concerned with all the activities that contribute to successfully .
Anyone who is familiar with the major organizations in their area probably has observed firsthand how dramatically the business environment has changed in recent years. These changes have had a significant impact on organizational efforts to be successful. In practically every instance organizations have tried to more clearly identify and then focus on factors that impact their success. One factor that seems to be receiving more attention than any other are the people who work for organizations. What organizations are realizing is that their likelihood of sustained success is most dependent on learning to get the maximum out of their employees. Such a realization has had a significant impact on the practice of human resources management (HRM). What's more, business forecasters predict that the role of employees, managers, and HRM personnel are likely to see more changes in the decades ahead. Thus, individuals entering the business environment today and tomorrow require both an understanding of the importance of human resources and effective HRM to organizational success.
As we move further into the twenty-first century, it's becoming absolutely clear that the effective management of an organization's human resources is a major source of competitive advantage and may even be the single most important determinant of an organization's performance over the long term. This book is designed to be a tool to help teach future employees about the importance of HRM and provide some ways to manage those resources more effectively.
An important element of organizational success is an HRM strategy where every manager every manager must be expected to set goals for the development and satisfaction of employees. Second, every employee is viewed as a valuable resource, just like buildings and equipment. The organization's success is dependent upon high-performing employees, and without such employees there is no competitive advantage for the organization. Finally, through effective HRM programs the organization's goals are successfully integrated with individual employee needs.
In the process of HRM, there is an increasing emphasis on the personal needs of the organization and its members. How effectively employees contribute to organization goals depends to a larger extent upon the ability of its HRM staff. The challenge is to create an organizational environment in which each employee can grow and develop to his or her fullest extent. Such an environment increases the likelihood of a successful organization, and this is what HRM is all about, making organizations successful.
The purpose of HRM programs is to increase organizational success and also to develop the potential of all members. Human resources management also emphasizes that HRM planning needs to be closely related to the organization's strategic goals and plans. Finally, there are a series of planned HRM activities that will ultimately influence the success of an organization.
The importance of recruiting, selecting, training and developing, rewarding, and compensating employees is recognized by managers in all parts of today's organizations. Human resources management and other functions must work together to achieve organizational success and to compete locally and internationally.
Key approaches towards managing learning and development in MNC.
The concept of HRM is based on the notion that people management can be a key source of sustained competitive advantage and research evidence shows that effective management can lead to lower employee turnover and greater productivity and corporate financial performance.
We realise that there is intense completion between multi national companies, and because of that reason the approaches towards learning and development is getting lot of importance. These key approaches set a kind of environment in which an organisation flourish in much better way.
The first approach is to understand the current standing or in other words capability of the organization. Different organization has different levels. And their products are judged by their ranking. For example LVMH very high reputation is the fashion market. So for LVMH understanding the current flow of fashion is very important.
The second approach is to understand the strengths and weaknesses of the organization and then focusing the these two aspects. But this process is of continued nature . For example in LVMH the strength is their as producing fashion stuff designed by world's famous fashion icons and weakness is the non-availability of their stores in some parts of the world, less media advertisements and high prices.
The third approach if of recognising the sectors in which more learning and development is required. For example making people understand the modern technology and making them comfortable of it by providing training.
The fourth approach is to understand the environment in which the organization works , as environment is a thing which continue to change and thus the demands and duties also change, so it becomes very important to train the people working in that organization so that could better cope with this situation. We have seen that lot of organization either don't realise and thet get too late to realise about the change.
The problems faced by LVMH in recruitment and ways to improve it.
As a consultant I believe that LVMH has following deficiencies and by concentrating on these the LVMH can gain a good force on international market as well.
1- LVMH believes that by providing experience they can create managers but ­­does not believe in formal training, LVMH must need to focus on the formal training as well as providing international experience. Because of the importance of the formal training the international companies offer and provide formal training often which is paid, because the companies understand the importance of these programmes. LVMH believes more on international mobility and because of that reason it is very important to provide intercultural training to the employees as well. As their expatriates to travel to other countries , the culture, language and life style is usually different to them so in that way if they get training beforehand it gives them certain benefit as well.
2-There is no proper criteria I could find which is working for LVMH for international recruitment. In 2008 the group started self evaluation test system but it is good as individuals are different for country to country.
3- The LVMH does not care of its people's personal feelings, likes and dislikes which is very important as many of its position for expatriates are very important and requires more flexibility and attention. For example the wife of someone may be having some health problems and expatriate could have health issues, or children might be having different school system and so forth and so on. These are the issues which are attached to everyone's life, which should not be neglected, and that's the reason we observe more expatriates are single than married.
4-Long term recruitment is another problem with LVMH, as LVMH continues to change the position of its employees and policies and guidance and it creates problem with the senior. These types of policies does not give peace of mind to the employees as well it gets hard for them because they have to learn new things after some time when they start feeling in adjusting at that place.
5- LVMH provides the salary to the expatriates according their own countries, which is discouraging fact as currency and expenses differs from country to country so it needs to realise the personal needs of its employees. LVMH must provide the wages and other incentives without any discrimination as must realise the problems and facts of the countries where they send their expatriates.
6-LVMH deals its employees differently as most 3rd country expatriate are dealt differently in many matters like pension, retirement sectors.
7- Creating the categories of workers like HP1 and HP2 are discouraging as some employee feel of no progression in their career. Employee often work hard to get promoted not only for salary, but if they come to know that they wont be promoted , their progress definitely suffers badly. LVMH should have an open approach to every one to go for promotion who works hard and result oriented.
8- LVMH does not offer good compensation package to its expatriates, as contrast to many of other international companies. LVMH must need to do some work on it so gain the attraction of its expatriates.
I believe that working on these issue LVMH can overcome its problems with its international recruitment.
In the context of human resource planning , it is necessary to match up future
Workforce requirements with the supply of labour bother internal and external. Often it is done in advance so that necessary training and development can be done. Basically recruitment is initiated on the basis of the number of employees needed for the future.
While doing recruitment is beneficial to divide them up in these three categories;
1-those needed to account for labour turnover.
2-those needed for short term growth.
3-and those needed for long term growth.
Recruitment should always involve analysing the position to be filled, the person to fill it , writing a job description and person specification and analysing the organisation's medium and long term goals.
The core purpose of the recruitment is to keep the organization staffed properly all the time with the skills needed for that organization. The initialisation of recruitments starts when it is established that the organization needs the employee and there is no other alternative way of that. The recruitment process affects and depends on the size, nature and capability of the organization.
The recruitment involves the consideration of the each of the following issues
1-preparing to recruit
It addresses the following issues, need of the organization, what organization is looking for, the criteria for selection, and who should be recruited.
2-Source of employee
What avenues for locating the applicants are available for recruiters.
3- use of consultants
Should the consultants be used and what organization should see in the consultants.
Recruiters should keep in mind the current laws related to employment like equal opportunities, etc.
What advertising methods should be used or no need to use them.
6- method of application
Is application necessary to be filled, or online application would be ok how application should be recieved for example by email, post etc.
7-special applicant categories
Are there any special categories organization is interested to.
These are as follows in a sequence:
Recruitment requisition> position description> position evaluation> Budget check> sourcing> pool of applicants> selection process.
Information and the communication technologies are transforming organizational structures and business processes, breaking down organizational and geographic barriers . Businesses, no matter large or small, are finding competition increasing at rapid rates as more and more competitors enter traditional markets through the use of technology that were national companies/enterprises. Businesses have realized that without attention to foreign markets and competitors their prosperity and very survival may be at huge risk. Furthermore advent of the Internet and e-commerce is further helping increasing the international flow of goods and services and therefore the pace at which internationalization will impact on the HR role is likely to accelerate.
So any business in this modern era can not compete without doing international recruitment. International recruitment is recruiting employees from the countries other than the country from which that company indigenously belongs to. Internation recruitment is important because the local people have more knowledge about their local place. People have different likes and dislikes and traditons and cultures according to their places where they belong to. So it becomes very important to get manage the business by the people who belong to those countries.
Secondly company will have to spend more less on local employees rather than a person from a different place as it involves high cost of trave , lodge and currency. Thirdly international recruitment creates diversity amongst the organization and organization feel it comfortable to cope with the customer of different sorts.
DIFFERENCES BETWEEN SELECTION AND RECRUITMENT
1-the recruitment is the process of finding the candidates for employment and inciting them to apply for the jobs whereas selection involves the series of steps with which candidate is screened for most proper person for the job.
2-the recruitment purpose is to create pool of candidates for the organization whereas selection is choosing the right person from that of the pool.
3- in recruitment there are large number of applicants but in selection there are very few people.
4- in recruitment there is no interview but in selection there is an interview.
5- recruitment is positive process , it encourages the people to apply more but selection is a negative process as it involves no to unsuitable candidates.
6. Recruitment is concerned with tapping the sources of human resources whereas selection is concerned with selecting the most right candidate through various interviews and tests available.
5. There is no contract of recruitment established in recruitment whereas selection results in a contract of service between the employer and the selected employee.
7-Recruitment starts without actual need of the candidate, where as selection starts when there is immediate need for the candidate.
The selection process is quite complicated and also critical process for any of the organization and for its managers. That is the reason organization invest lot of money , lot of time, effort in selection.
By making good selection decisions, organizations help ensure that their financial investments in employees pay off (Snow and Snell, 1993). The wrong selection cost a company ending up using more resources, money, repetitive training, documentation , frustration etc. Selection of right people is also very critical and it is picking the right candidate from the pool of recruitment.
PREPARATION/ INTERVIEW :-
The selection of the right person for the job needs careful planning. Organization may have different ways of conducting interviews. One the organization has decided which individuals they need to call on the interview they produce a list of candidates. In interview candiadate has the opportunity to express his self , and also provide the opportunity to become face of face with each other, while no interview is conducted in the recruitment process.
In the selection process different tests are taken , these tests could be different such as Psychometric tests Aptitude tests Attainment tests Occupational reference tests While is recruitment
Training and Development
Many of today's employees look at the chance to develop and move up as important in where they will seek employment. In order to facilitate employee progression, many organizations choose to spend substantial sums to train and develop their employees. Training and development (i.e., orientation, performance management skills training, and productivity enhancement) are planned learning experiences that teach employees how to perform their current and future jobs.
Training focuses on present jobs, whereas development prepares employees for possible future jobs. Procedures for determining training and development needs and then constructing, delivering, and evaluating HRM development programs.
Through the performance appraisal process, organizations measure the adequacy of their employees' job performance and communicate these evaluations to them. Performance appraisals are a critical link in the HRM process, as they assess how well employees are performing and determine appropriate rewards or remedial actions to motivate employees to continue appropriate behaviours and correct inappropriate ones. The HRM role in performance appraisal is one of working with other managers in the organization to establish the appraisal process, the performance dimensions to be measured, the procedures to ensure accuracy, and requirements for discussion of appraisal results with employees.
Management may also use performance appraisals as a tool for making HRM-related decisions, such as promotions, demotions, discharges, and pay raises. Performance appraisal continues to not be one of the pleasant activities for managers, yet it is important that it be undertaken in a timely manner and be done as accurately as possible.
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