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Critically evaluate the role Human Resource Managers need to take into consideration when there are changes in external environmental factors? Analyse what HR practices will help organisations gain sustainable competitive advantage. Critically discuss and debate using relevant examples.
Wherever people have needed to be employed there has been some form of people management, although it has only been in recent years that a consistent view has emerged on how to develop people.
At the end of the nineteenth century many workers were employed in the manufacturing sectors, where they had to put in long hours and conditions were often harsh. The welfare state did not exist and no work could mean destitution. However, even in such unenlightened times some employers did value their workers and took on a paternalist role for their employees. Such famous names as Cadbury, Rowntree and Bournville, all chocolate manufacturers, and Lever, a soap manufacturer, all took their employees` welfare very seriously and established the provision of health and education as part of their role as a responsible employer. These enlightened employers tended to be Quakers and were some of the first employers to employ welfare officers. The welfare officers were often women and were concerned not only with visiting sick employees but also with supervising moral welfare. We will take an overview of the state of debate.
THE STATE OF DEBATE
The question of whether human resource management has the capacity to transform or replace deeply rooted models of personnel management and industrial relations, or could become fully worked-through theory of management, is one that cannot be answered in a simple manner. Human resource management has many cogent critics and many sceptical supporters. Initial criticism which claimed that it was `old wine new bottles` ,the restatement perspective outlined earlier in this chapter, still has strong adherents (Keenoy and Anthony, 1993). Others see it as a version of `the emperor`s new clothes` (Legge, 1989) or a `wolf sheep`s clothing` (Armstrong, 1987)
The 1990s have seen a growing sophistication in the nature of the debate involving HRM. One very strong characteristic is the desire on the part of a number of commentators to explore the consequences of implementing HRM techniques for organizations. Thus the nature of the argument now strongly incorporates the concept of HRM outcomes rather than relying largely on descriptions of styles or types of HRM philosophies. Part of this development has been promoted by the realisation that traditional sources of competitive advantage, such as technological supremacy, patents, capital and so forth, are very much less important than they were in a world in which many countries can display equal advantage in at least some of these critical aspects (Pfeffer, 1994). Thus the extent to which an organization can mobilise is internal human resources may hold the key to achievable advantage in the future (Prahalad and Hamel, 1990). The general managerial epithet that `people are our greatest asset` is a tried cliché; what distinguishes the most recent work is its focus on the recourse based model of HRM and the particular mix ofskills and attributes that can be developed and applied to economic performance. Thus Huselid (1995) has argued that high performance work practices have an economically and statically significant impact on such employee outcomes as turnover and productivity and both short- and long-term measures of corporate financial performance.
In my opinion is, the importance of HRM as rhetoric that speaks to the concerns of a wide range of stakeholder groups-personnel and line managers, government and academics-should not be underestimated. We will take an overview of the chances in external environmental factors and HR practices and strategies.
These are required if organizations are to be effective in developing an innovative and fast moving organisation that keep up with the fast pace of development in a modern society. Organizations need to be adaptable and flexible, which means that policies and objectives need to be place to manage change. Many of the IT industry's need to be adaptable and fast changing to keep up with changes in modern technology. For example, Apple Computers` market share was in decline due to monopoly of the Microsoft windows operating system, but it has reinvented itself with the iPod, and is now leading the way in music technology. Without change management objectives Apple would have found it much harder to respond to rapid changes. For this reason the recruitment, selection and development strategies all need to feed into the change management objectives.
Policy formulation and management of change
This means using HR policy to identify and manage change in a business environment. This extends from Harward model, which has not identified change effectively to ensure competitiveness. Apple Computers managed to develop the iPod and gain competitive advantage by having policies for managing innovation and change.
Nevertheless, these assumptions inform the practices and policies of management, and hence define the organizational and conceptual space that HRM fills and generate the multiple meanings of which HRM is constructed. We shall examine some of them in greater detail shortly.
Competing interpretations of organisations and management
When we stand back from the concrete world of managing to that of theories about organizations and management, we find that not only have very different interpretations been made overtime, but there exist simultaneously several strongly competing interpretations. Again, we can only skim over this material, but u can pursue the issues by reading, for example, Child (1969), who traces the development of management trough in Britain or Morgan (1986), who examines in a very accessible way eight different metaphors or ways that theorists as well as others have construed organisations.
Brunsson (1989) throws a different light on the nature and goals of organising, based on his research in Scandinavian municipal administrations. He suggest that the outputs of these kinds of organizations are `talk, decision and physical products`. He proposes two ideal types of organization that depends on action for its legitimacy. Talk and decisions in the action organization lead to actions, whereas the outputs of the political organization are talk and decisions that may not lead to action.
Having now examined some of the choices managers make to deal with the tensions within organizations and some of the competing interpretations offered by theorist of those tensions and choices, we need to step back even further to become aware of the ways of thinking and of seeing that inform their assumptions. First, however, we shall examine the next layer of the context of HRM.
THE CONTEXT OF HUMAN RECOURCE MANAGEMENT
Human resource management cannot take place in isolation from the internal organization or the external environment where the political, economic, societal, technological and international context can have an impact on how the organization operates and how HRM is managed within that context. The context (the external and internal environment within which HR operates) within which HR takes place will impact on organizational polices and have implications for the functions of HR. this has been highlighted earlier in the example of the Beardmore conference Hotel, whose flexible benefits reflected the local society and culture as well as the economic environment, where managers recognised the need to attract and retain staff at that time.
Context has many layers, which build up to impact on how the organization does business.
THE ORGANIZATIONAL CONTEXT
To operate successfully the organization needs to ask itself the following questions. What business are we in? How can we carry out our business to be as effective as possible and to meet out stakeholders`(identifiable clusters of people who have an economic and/or social interest in the performance of an organization) needs? The organizational context is also influenced by external context; it interacts with its environment and this in turn impacts on HR. for this reason, HR practices need to be designed to reflect the organizational context. However, in a fast-changing working environment this is often difficult to achieve: new technologies are developed; governments and attitudes change policy will, in turn, inform practice but needs to be flexible enough to respond to the influences of the external environment. For example, changes in practise, which in theory has meant a reduction in working hours for some workers.
The approaches adopted by managers to resolve the tensions in organizations;
-The existence of several stakeholders in the employment relationship;
-Their differing perspectives upon events, experiences and relationships;
-Their differing aims, interest and needs;
-The interplay between formal organization and individual potential.
These tensions have to be resolved through the process of management, or rather, continuously resolved, for these tensions are inherent in organizations.
THE EXTERNAL CONTEXT
The external environment influences the external context of the organization. An organization would not be effective if it ignored the external context of politics, economics, society and technology. In London and the south-east of England, there is a shortage of key workers, such as nurses and teachers, and many workers have been employed from abroad to fill the vacancies. For organizations, this means a review of policies to ensure that new workers` needs are considered. On a practical side, new aspect of training may have to be delivered to meet language needs. To do this an organization needs to operate as an open system (system influenced by the external environment and inputs, making it complex and difficult to control), which can change to meet the needs of its external environment.
HR goes in to decline-outsourcing and downsizing has removed the HR specialist from organisations and placed the HR role with the overworked line manager. The HR function will be closely integrated in to the vision and strategy of the organization and it will continue as it has done in the past, due to the limitations of labour markets, unions, legislation, etc. this implies that it stands still and does not develop.
Whatever the view of HR and how it develops in the future, it is important to understand where it has come from and what has influenced it.
Do you think compensation packages negotiated through collective bargaining agreements are a major cause of our inability to compete in many sectors of the international market? Do you agree or disagree with this statement? Explain using relevant organisational examples.
All factors, which affect business objectives, are able to change day by day. In this changeable environment using the factors effectively is the most important thing in order to reach the targets and also organizations should consider none of factors can cover human being power. Therefore attracting qualified human power and expecting high performance from them depend on firm's behaviours. Also employees are becoming aware about their value. As a result of giving fair rights to employees and providing the rights with agreements is a trend which started after industrial revolution and trade unions took a stage. Looking this situation from employee's point of view is excellent. Nevertheless, it will be disadvantages for organizations in order to compete with their rivals in the multinational market. The aim of this part is, looking this situation from both sides and showing the result with the relevant examples.
The compensation package for each entity such as city, district, county, private, state, or federal agency have an identity of its own. The amount of salary and benefits given each group is largely dependent upon local factors such as amount of revenue available to the jurisdiction; nature of the organization's mission; related risk factors within the community political climate economic climate; and quality and philosophy of local leadership.
Some components of compensation packages apply to both career and volunteer personnel. Each is compensated in part by non-monetary benefits, such as recognition awards or dinners, free parking, use of tools or equipment, laundry service, etc. Studies in motivation show that monetary reward is not sufficient to keep paid members satisfied with their jobs, so career personnel need forms of recognition beyond the pay check.
Likewise, with the need to attract and retain volunteers, agency leadership is turning to innovative methods of developing interest in the agency with programs such as a broadened mission to include more opportunity to serve the community; innovative and challenging training programs; constant encouragement and leadership support to take challenging ideas and turn them into realities; and aggressive fundraisers to purchase state-of-the-art equipment that will allow for more effective accomplishment of the mission.
First we will focus our attention on collective bargaining and agreement for the next step.
COLLECTIVE BARGAINING AGREEMENT
Collective bargaining is a joint process of job regulation undertaken by management and trade unions that negotiate to establish pay and conditions of employment. Until recently there was little debate that the collective bargaining process was key area in the study of the employment relationship, given that a majority of labour in most industrialist nations were covered by collective agreements. However, a relatively recent survey of British industrial relations has indicated that this is no longer the case in the UK.
The aim of collective bargaining is to reach negotiated agreements upon a range issues pertaining to the employment relationship. From this range of issues, some will hold the potential for a conflict situation where the distribution and division of scare resources are under negotiation for example; division of profit as dividends of wage increase. Others, however, will have mutual benefit for employees and management with the major debate focusing upon the most beneficial manner in which to implement change for instance; introduction of health and safety procedures.
Having outline critical approaches to collective barging, we now turn to the collective agreements and the bargaining functions.
At the end of the negotiating and bargaining process, collective agreements are reached. Traditionally, British collective bargaining has been notable for the informality with which agreements are recorded and as has been noted above, in the UK. Collective agreements are voluntary, as they are not legally enforceable on a collective basis. From the early 1970s, however, there has been a growing trend establish formal written contracts to avoid any potential problems given the possibility of differing interpretations of negotiation outcome. The written agreement also contributes to a rationalisation and codification of industrial relations procedures. Clearly the existence of formal written agreements will not prevent informal bargaining at local level. The extent to which this occurs will depend upon the nature of the exiting power relationship between management and trend unions.
Depending on the monopoly-freenopoly situation, suppliers and customers have varying degrees of bargaining power.
In general, a supplier wants to supply the minimum acceptable quality at the highest possible price, whilst the customer wants the highest possible quality at the lowest possible price. There will be a point where, however attractive the product/service is, there is a price beyond which a customer will not go. It is also often the case that there is lower limit that the customer will not drop below, for fear that there is a catch. If somebody offers something that they perceive as being worth £300 for £50, they may well suspect a catch or even that the product may be stolen!
If the supplier has a monopoly, it can demand a higher price from the customer up to the point where the ultimate choice-to do without- is made. In a free market economy there is a point of quality below which a customer will not drop, regardless of the price. Indeed, because customers often equate price with quality, as mentioned earlier, too low a price may send the wrong messages.
In recent years, organizations have sought ever closer relationships with their suppliers, offering them training, making them a full part of the manufacturing/service process and including them as a strategic partners. This has advantages for both sides in that the supplier has a greater degree of guarantee of work, but conversely the supplier becomes tied to the fortunes of the contracting organization.
Aeker (1984) makes the very valid point that whatever analysis an organisation carries out on itself, it needs also to carry out a similar analysis on its competitors. An organization will wish to know the position of competitor in relation to:
Strengths and weakness.
By carrying out such an analysis, the organization can begin to determine either its own or its competitors` best and worst features and can thus plan accordingly.
Given that lost customer do not just disappear but often go to a competitor, a single lost customer may mean a net difference of two, as shown by the customer accumulator. Market share is one of aspects of an organization`s performance given considerable weight by investors. This is obviously only a factor with private, for profit organizations, but it is an important one as the of a drop in market share on investor confidence can be quite dramatic.
COMPENSATION PACKAGES NEGOTIATED THROUGH COLLECTIVE BARGAING
Example, 1- NHS Trust
The advent of NHS trust has caused problems in respect of the appropriate machinery to be adopted for local pay purpose, recognition of union bargaining, form of negotiation or consultation adopted and the remuneration system to be instituted. In 'Establishing a pay regime in an NHS trust: prescribing the treatment', Susan Corby evaluates such a situation, which necessarily raises questions regarding the advantages and drawbacks of job evaluation and performance-related pay.(Corby, 2001)
In NHS terms, perhaps, the most serious charge is that individual performance-related pay (IPRP) can have a negative effect on co-operation and teamwork. One way round this is to limit IPRP to discrete groups of staff who do not work in teams-for instance, managers. Alternatively, a team-based approach to performance pay could be adopted or even the linking of part of the reward package to the overall performance of the trust, either on the basis of a flat rate or on a percentage of salary.
Example, 2- BWS
The BWS wishes to continue implementing national conditions of service, certain local conditions will have to be amended. Similarly it is deemed necessary to make certain amendments in pay. It is felt these modifications will serve to greatly enhance efficiency and worker productivity. The following improvements are proposed:
-terminating pay for the first three days' sick
-increasing hours by 10 per cent
-reducing holidays by one week
-reducing pay for holidays to basic rate
-terminating overtime bonuses
-Restraining basic pay at its 1995-6 level.
In response of these human resources proposals, a meeting has been convened among the union representatives and officials to discuss the management team's human resources strategy and to consider their implications for staff. The union representatives, having strong reservations themselves, are aware the proposals in their present form are unlikely to win the support of the workforce and need to be renegotiated. With the tender deadline approaching, they appreciate the need to act quickly and work hard if they are to save jobs, resist what they see as moves to work intensification and negotiate a more acceptable packages for their members. (Farnham & Giles, 1997)
As evaluating above the human resources issues and their likely implications, the case considers the roles of key individuals in the people management process, such as line managers, personnel managers and trade union officials.
Supporting in the case, which is above, compensation packages, which has comprehensive meaning than weekly or monthly payment, are able to affect organizations business objectives in multinational level. As happened NHS examples, unions, which based on to prevent labours right and future, can have huge influence changing processes in business in order to provide better conditions for workforce.
Also the case of BWS provides an insight into how authorities are responding to the challenges of increasing competition and how they aim to secure contracts and achieve tendering success. The case focuses on the major human resources issues that authorities need to consider when preparing a tender. It explores the implications that a highly competitive tender can have upon the employment of local authority staff, their unions, jobs and terms and conditions.
With supporting with literature review of compensation packages and bargaining and also with the relevant examples, it is clear to be agreeing with statement of inability reason in order to compete in the international market.