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Human Resource (HR) function, an asset or a liability to the organisation? In early 1960s most of the organisations would have commented that HR department contributes nothing/ very little towards the growth and profitability of the organisation. However, over the years, this phenomenon is rapidly changing. The importance of human resources within an organization is becoming increasingly understood in today's rapidly changing and uncertain business environment (Davidson & Griffin 2000: 18)Rretaining the employees is one of the biggest virtues of the Human Resource Management (HRM).
The paper will outline the pros and cons of the HRM and will analyse whether HRM adds value to the organisation or not. This is carried out by evaluating various HR functions, strategic alignment of HR with business and operational strategies, synchronisation of cultures and value systems of the organisations in case of vertical and horizontal integration, role of HRM in global market place and evaluating its cultural dimension and analysing role of recruitment and selection of candidates for the job on overall growth of the organisation.
The paper will briefly explain the HRM strategy then explain integration with business and culture, finally explain the role of HRM in global marketplace and conclude with a brief note.
'HRM is the process of acquiring, training, appraising and compensating employees and attending to their labour relations, health & safety and fairness concerns' (Gary Dessler, 2005). In other words the HR function aids the top management in retaining, motivating, attracting and developing high calibre human resource for competitive edge in the industry.
Maintains record of employees in different functions, employees' demographics etc
Improves the working conditions, strives to strike a balance between work and personal life
Updates about national, economic, political, socio economic, legislative changes
Aids in corporate planning, marketing, financial decisions etc
Fig1: Role of HRM in an organisation (Based on author's analysis)
HRM strategy commences with understanding current strategies of the market & developing a mission and vision statement about the sole reason for inception of the business. HRM focuses on procuring right employees followed by conducting a SWOT analysis of the business by identifying internal strengths and weaknesses of the human asset of the business. It should involve concentrating on the organization's COPS (culture, organization, people & HR systems) keeping in mind where we are & where we want to be. HR function has to determine critical issues & address them with probable consequences & possible solutions. Employee's compensation & benefits needs to be matched & a provision for training & development of employees needs to be made.
Strategic HRM model
Strategic HRM is the proactive management of man power of any company. It requires futuristic thinking and planning ways for a company to better meet the needs of its employees, and vice versa. This starts with environment analysis followed by current trends prevailing in the industry & finally concluding with the organizational analysis .It emphasizes the role of HRM in designing strategies & effective implementation of those strategies & finally best evaluation practices followed to keep the strategies of the company effective which leads to sound top management control on functions of the co. It not only covers the HR practices but also takes care of financial & marketing aspect of a business.So we can sya that SHRM has widened the horizon of HRM in todays dynamics world
Evaluation and management control
Fig 2: HRM acts as cohesive tool between all department in an organisation( based on author's analysis).
HR is responsible for adhering to rules & Regulations of the country concerning the business & providing a safe & healthy work environment to all employees. Optimum utilization of Resources and retention of high performers needs to be well planned.
Integrating HRM policies with business strategies:
HR policies have to have a harmony in business strategy & organizational culture of the company. This is achieved by striking a balance between the goal of the organization with the working conditions & policies governing work culture of the organization. HR department designs such policies & frameworks that reflect the mission & vision of the organisation. HRM continuously revise the policies & procedures to match the changing environment & rules & regulations of the economy, aiding top management to focus on other important areas. HR no longer only looks after employees of the organization but also keep a track of all the customers & competitors of the company. As periodic review is important to match the changing trend & increasing globalization in current scenario, HR provides up to date information to line managers. Andrew Grove, led Intel to great heights, remarks that there is a clear distinction between strategic action and strategic plans
HR, role in organisational culture and integration of businesses:
HRM plays a key role in developing and branding an organisation's culture. Corporate culture is similar to a firm's personality in that it provides an organizational memory that minimizes the need to start over from scratch whenever personnel changes occur (Walsch and Ungson 1998). Organizations do not achieve a cultural change by accident. They achieve it with a defined strategy for high involvement and a measurable action plan. HRM adds value to the organisation by streamlining and implementing the strategies that accelerate the growth, profitability and success of the business.
'One culture can evolve, two, however, will not. Merging two cultures well is supreme challenge that needs to be actively shaped and carefully managed' (Eric Beaudan and Greg Smith, 2000). This is particularly true in cases of mergers and vertical and horizontal integration of different organisations. HRM can add value to the new formed entity as a result of merger, horizontal or vertical integration in the following ways:
Having a Pre-deal: HR department identifies the issues & make a note of due diligence fit for employees & organization. It also identifies cultural difference & recommends HR Policies that should be followed post integration by all the employees of the newly formed organisation.
Integration planning: HRM develops strategies for employees' communications beforehand & designs various programs to retain key talent from both the organizations. It also develops better paying rewards strategy for new entity. A rigorous staff planning with selection & deselection process, which is must before integration is also carried out by HRM.
Implementation & Evaluation: HRM aligns all HR policies, programs, and practices of the combined organization and provide ground rules for the employees, which is evaluated through yearly appraisal system.
Therefore, HRM plays a crucial role in successful integration of organisations, cultures and value systems. Hence, the only way to change corporate culture is to alter the way we treat employees, not to hire a culture consultant (Steven J. Mayer, 2008)
The changing nature of work and the employment relationship:
The early part of the century was more focussed and concerned for improved efficiency of work through carefully designing the work. Later, during the middle part of the century, emphasis was shifted to employee's productivity and reward was given on the basis of productivity. However, in recent era, the parameters have changes and now the focus is on bridging the gap between work and personal life. There are both winners and losers in the era of economic integration and economic reforms. Working culture & relationship of employer & employee has changed a lot due to changing economic processes. Accordingly, HR has focussed on following three main aspects of the changing nature of work and on the consequences of these changes on working life balance. These are:
Office: to design the effectivity of work flow & ensuring smooth flow of work from one process to another.
Designation: designing the reporting structure such as to maintain the team harmony & promoting open door policy from the top management to reduce the gaps in hierarchy
Technology: HR has to keep pace with the innovations of the market & keep the company updated with the possible inventions suiting the requirement & budget of the organization.
The change in HRM strategy can be well understood with the help of below diagram on HR transformation model.
Fig 3.: HR transformation model
The Bath Consultancy group has developed HR Transformation model to evaluate the contribution HRM is making in the business. For being the strategic partners HRM needs to engage everyone in the issues and opportunities of the business and facilitate the process of dealing with these issues.
Historically, the responsibility of HRM was narrowed down to recruiting, payroll etc, however with the changing era the role of HRM is also changing. HRM has to consider the requirements of business in the global world and identify the implications for resourcing, development, talent development etc.
Also another critical aspect includes that HRM pin points to the leadership the flaws in their management and making the goals challenging for them.
Organization design and HRM:
Organisation design aims at implementing strategies and determining success. For long term success organisational design demands a clear idea of organisational strategy. Following are the key factors designed by HRM for achieving the organisational goal by effective crafting of organisation design:
Employees should concentrate on different learning modules quickly & HRM provides the ways to simplify learning measurement technique. These rules are ideally universal and applicable to almost all types of organizations. This can lead to better ways to beat targets with better technology & thus contribute more towards constant improvement of the productivity.
Successful team building has far reaching ramifications in an organization. Improve the way team members interact and it can improve their ability to solve problems. Better problem-solving means better efficiency. Increased efficiency tends to boost morale and productivity. It also helps to decrease stress, turnover and operating costs. And all of these improvements improve the organization's global image.
Motivation makes the human to perform in their extreme, it will encourage employes to deliver the best performance and realization of their own strength. The psychological approach taken by organization to make out best motivation on their employees is critical.
Evaluation of Employee performance
The constant analysis of employees are monitors on the three basis :
â€¢ To improve organizational performance
â€¢ To identify potential,
â€¢ To provide an equitable method of linking payment to performance
Reduction on workload
Enhancing the through put of individual employees by reducing the workload and changing the environment of work will add the value to HRM. Building great workplaces for employees along with recognizing leadership skills will make contribution to individuals and organization as well. The managerial objectives are attained through designing and developing a framework to satisfy organization needs and objectives as well.
Making a good market relation with a ultimate objective of organization is difficult to establish, so the system to make industrial relation is too hard to maintain relations ships between workers from different groups and employees in top level management. The relation with legislation and judiciary is also critical in this context.
However, with a good HRM, the organizations find it easy to manage these delicate relations and run the business successfully.
HRM in a global marketplace and cultural issues:
In the fast changing global environment HRM has developed several new techniques & approaches to improve processes like recruitment & selection, Induction & appraisal which plays a significant role in global presence of the company. HR regularly upgrades the policies to meet the international standards and to adapt to changing environment. The fundamental aim of HRM is to create strategic capability by adding value to the organizational practices as employees across the globe are working together in one organization under one roof. However, issues like cultural difference, individualism/ feminism, avoiding uncertainties & power distance always keep HRM on high alert.
Cultural difference explains the mean difference in the HR policies & procedures across globe. HRM ensures uniformity in policies across globe of a multinational company, however maintaining a local touch of culture at its different locations. HR plays a strong role in bridging the gap of multinational cross cultural environment within the organization. HR ensures that the core company policies are consistent across globe even if they are given a touch of customization at local level.
Individualism/Feminism evolves around the theory of giving equal work & pay to woman/different nationalities in corporate. HRM ensures that equal work opportunity is given to all the nationalities and specially women. It keeps a check on racism, abuse within the organisation and at the same time give equal treatment & preference to women at work place.
Uncertanity is a phase of anxiety for unknown. Employees feel anxious in the changing envioronment of the organisation due to change in location or management. HRM acts proactively to minimise this anxiety by aligning the gap between two locations of the company and its policies. It also ensures that the changed management's new policies are in line with the prevailing policies of the company
Power distance is a scenario where employees are convinced they have lesser power than their bosses, & feel hesitant to share their views in the working of business. HRM plays an important role here by having an open door policy where top management is accessible by employees & suggestions are welcomed from all the levels.
HR plays a strong role of bridging the gap of multinational cross cultural environment within the organization.HR needs to ensure core company policies are consistent across globe even if they are given a touch of customization at local level.
HR planning and demographics:
HRM planning focuses on the staff requirement for short term & long term, along with the skill sets required from time to time with developing organization structure. Demographics include gender, age, occupation, ethnicity, seniority, Remuneration levels, family & marital status. HR plans the entire man power related current & future requirement to serve the customers and stakeholders of the company. This helps in designing the reporting structure and it also guides in job rotations within the organization.
Further, employee welfare is facilitated through HRM planning. Company's succession planning is achieved by HR in line with the top management and thus requirement of skilled as well unskilled work force can be identified.
Furthermore, HR plans the man power requirement based on race & religion, age & gender, work profile, experience in relevant field in line with the top management & line managers.
HR practice areas
How it impacts
What impact it can make
By providing individuals with stimulating & interesting work & giving them the autonomy & flexibility to perform these jobs well.
Enhancing job satisfaction and flexibility which encourages greater performance and productivity
Training and development
It encourages managers to use more people management practices to encourage commitment & job satisfaction & encourage communication
Providing organizations with the skilled & committed people they need to achieve business objectives both in the present and the future
Development of shared values and gaining commitment are concerned with the sort of behaviour the management believes is appropriate in the interests of the organization
Encouraging attitudes and behaviour that are orientated towards performance improvement, customer service, quality, continuous improvement & effective cost management
Attracting, developing and retaining high quality people
It is concerned not only with obtaining & keeping the number & quality of staff required but also with selecting and promoting people who 'fit' the culture & strategic requirements of the organization
Ensuring the acquisition, development & retention of uniquely talented employees who can deliver superior performance, productivity, flexibility, innovations & high levels of personal customer service
Recruitment and selection:
As the penalties for not being properly staffed are costly, an invaluable function of HRM is to plan the manpower properly and adequately. Similarly, selection of improper employee for the job can be equally devastating. Therefore, value added by HRM in these two critical aspects is immense. Let's consider each aspect separately:
Understaffing can lead to losses in the business, economies of scale and specialization, orders, customers and profits
Overstaffing is wasteful and expensive. Planning staff levels requires that an assessment of present and future needs of the organization be compared with present resources and future predicted resources
Therefore, it is the responsibility of HRM to save business profits by avoiding over staffing while at the same time meeting the requisite needs of the manpower for sustaining the operations of the business.
An analysis of the job is done by HRM (i.e. an analytical study of the job to be performed for determining its essential skill sets). A written job description is provided for each and every job, which facilitates the interviewers to understand the requisite physical and mental characteristics the applicant. This also helps the candidate to be acquainted with the role, responsibility and expectations of the organisation.
To conclude HRM no doubt adds value to the business by linking the strategic goals and objectives of the organisations with the operations of the business in order to improve business performance and develop organizational cultures that foster innovation and flexibility. HRM is a source of expertise on resolving employee issues in any organisation; it is there to formulate and implement policy and practice on employee issues and disputes, it is there to advise on the employee aspects of organisational change and lastly it is there to take a 'people perspective' in identifying solutions to address the challenges the business faces. HRM functions enable organisations to maximise the contribution and efficiency of employees to deliver the organisational goals.Â HRM builds the strategy for employees. It provides the framework of policies and procedures related to the employment of staff. Further, it provides tools to do this effectively. And it provides guidance, support and advice on the effective implementation of the strategy, policies, procedures and tools.