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Use examples and case studies. Discuss this question in the view of significance of HRM's historical development and how it is regarded today?
Every organization has their own aims and objectives and to achieve this every organization has one important function which plays a vital role in the success of any individual firm, which is known as Human Resource Management or Personnel Management. This is accurate, irrespective of the type of organizations, government, business, education, health, recreatio n and social actions.(K Aswathappa).In the up coming years of rapid change the organizations have to struggle real hard to survive. The organizations face econonmic pressure such as rise in internatuional competiveness, decline in the markets poor growth which forces the companies to reduce the cists, lower the prices to achieve improved productivity. (Sparow and Hiltrop, 1997). Many of the organisations focuss on the values of people, structures and procedures. Due to these competitive challenges the world of human resource management has under gone great changes as could be imagined in the 21st century. As the functions of the HR is not bound to traditional hire and fire but it serves as the strategic partner at the table with finance, operations and other business centers. The HR department ensures the best output out of their employees. The HRM provides a high return on the business's investment in terms of its people which makes it a highly complex phenomenon as it is not concerned with management issues only but humans as well.
Impact of HRM on Business:
With the unprecedent and competitive changes incorporated by the organizations and evolutionary changes in HRM from personnel management to strategic management has brought human resource managers make decisions with the other leaders at the table. A study was conducted by Sibson Consulting to understand how HR managers should adopt policies and practices of HR to support the strategic needs of the business. Interviews and questionnaire data was collected from HR leaders from 35 organizations of America and British till present date. The findings of the study were as follows:
A seat is available for HR manager at the table
To Improve the Talent group HR should take the charge.
HR should control Total Rewards for Competitive gain.
New Technology Outsourcing and should not eradicate HR
The HR Function should change Itself
Some of the other findings of the study are as follows:
Strategic players should understand the organization's business issues and human capital implications.
The HR leaders can change the functions of the organization according to prevailing business needs.
HR leaders are capable of giving the senior leaders an insight and fact based information of the business so that they can make informed decisions regarding human capital investment.
Recruiting and hiring an HR staff on the basis of their business insight, analytical skills.
A key finding of this study is that to develop, attract and hold the right number, type and quality of work force is the influential and critical role of an efficient HR leader.
Study clearly indicates that for Strategic HR organizations total rewards directly impact business results. It enables the company to focus, develop, encourage and retain the right person and link performance measurement and rewards to improve organization return (Jim Kochanski).
In the figure above it is clear that in the past HRM was involved strategically up to 20% only and the mainly involved in personnel and administrative tasks, now the figures are reverse and the HRM involvement in strategic matters is increasing.
Innovative HRM practices adopted by India to brace competition
In 11 large Indian organization and in 9 Industries Ashok Som accompanied a research for a period of years 5 from 1998 to 2003. According to the study the firms deliberate the role of HRM as strategic partner, employee champion or an administrative expert then the HR players should be fully aware of their job responsibilities in carrying out the important decision regarding business issues and company's strategies. They should have an insight of the business plans. The importance of HRM incorporating innovative strategies can be well explained by two examples of service industry and manufacturing industry.
Service industry (Maruti Udyog Ltd)
Maruti Udyog is a leading company of Indian automobile industry, had a joint venture with Suzuki of Japan. It transfigured the automobile industry by its quality services and set high standards.Maruti was controlling 84% of the market being the leaders of the market till 1984 faced drastic reduction in its market share due to deregulation in automobile industry in India. There were many competitors in the market both local and foreign like Telco; Hindustan motors where as foreign players like Daewoo, PAL, and Toyota etc. there were drastic changes in the company's structure, to face this intense condition the company adopted new policies and launched new model to different segments of the market. It changed it's focused from production company to customer care, focusing largely on services. Prior to this change when Maruti was leading the market and enjoying large market shares HRM was considered as a "paper pusher" and a "time keeper". HRM department mainly performed the remote tasks and was not involved in any of the strategic decision. Due to change in the leadership a new Managing director was appointed who not only professionalized the HRM department but also hired new professional HR mangers. New creativities in performance appraisals, competency mapping and job rotations were undertaken. HRM is liable for the clarity and transparency in announcement within the organization and for negotiations with the Union. Hence the role of the HR Department was restarted and they were held responsible for essential job profiles, simplifying procedures. As a result the significant improvements implemented by the HRM department, led Maruti to develop excellent teamwork and its benefit system were documented as the best in the industry. There was a rise in turnover, employee morale, commitment, job satisfaction etc. new HRM strategies helped the company to create its unique competencies that differentiated its products and services and, in turn, drive competitiveness.
Manufacturing industry (Mahindra and Mahindra Ltd.)
The role of HRM at the top table can also be explained with the help of another example in the manufacturing industry. As the role of HRM is just not confined to making and implementing new strategic policies, but motivating the employees to adapt to those changes and changing their mindset is also a critical role of HRM. One such example is the Mahindra Ltd., the flagship company of the Mahindra Group. The company was facing different problems such as manufacturing inefficiencies, low productivity, over stretched production cycle and poor output. The main reason of this low productivity and inefficiency was under productive and excessively unionized labor force. On this changing business environment and government policies made the situation even worse. In 1995 the company incorporated new strategy Business Process Reengineering (BPR), in order to survive), focusing on a total overhaul of the style in which the company was organized. The scheme focused on reformulating the way the company carried out its business, instead of improving or changing procedures. This brought many changes in organizations structure in order to fit the BPR mechanism. The labor union opposed the BPR. Prior to BPR, HRM department was not part of the strategy making process at M&M Ltd. BPR adopted innovative HRM practices, such as group work, that used the "churning effect" to change the traditional mindset of the employees and enforced concrete HRM policies and practices. Furthermore, the company repositioned existing people in key ranks and placed emphasis on training programs. The company also began contract out non-core engineering activities. After eight years, in 2003 the results of realizing BPR in synergy with new, innovative HRM practices within the organization were remarkable as it allowed the company to maintain stable profits, reduce working capital levels, and justify the manufacturing process.
Implications for HR Manager:
The role of mangers in the execution of strategic responses has a major contribution to the success rate. It is essential for the managers to have an eye on HR issues involved before executing any strategic responses. The question arises: How can HR managers adopt HRM practices to efficiently maximize the firm's outcome. HRM personnel can achieve this if they get the sufficient human capital or if they suggest the correct competencies to increase the likelihood of effective execution of HRM practices.
The HR managers will need four competencies in future to become a part of the strategic management process. These include professional knowledge, business know how, the ability to integrate and ability to manage change.
HR professional skill describes the knowledge, capabilities and skills required to perform within a traditional HR function department such as training, compensation, recruitment and selection etc. This competency indemnifies that technical HR knowledge is present and is being used within a firm
Business-related skill deals with the amount of business experience HR manager have had outside the functional HR field. Such capabilities should facilitate the manager to implement HRM policies and practices that align with the unique characteristics of the firm .In other words it can be said that these competencies will allow the HR staff to understand the core values of the business and device such strategies which will be in the best interest of the company. possible.
Suggestion to Human Resource Management in future:
The following suggestions will be of great help to HRM:
The organizations should develop a properly defined recruitment policy that emphasis on professional attitude and selection on merit.
While making decisions HR managers should give proper weight age to the employees. This will lead to team spirit and such environment to work together in forms of teams.
Employees should be given the Opportunity to fully express their talents and manifest their potentials.
Job rotation widens the vision and knowledge of the employees and broadens their potentials for the prospects of future job.
The employees should be assessed through potential appraisal by giving them the opportunity to perform new jobs and responsibilities.
It can be concluded that many companies are grappling effectively with the challenges, and that much innovation is going unobserved. For this, HR needs to play its role as the function of business; it should focus on human capital implications of the business should develop understanding of the importance and impact of talent management, and should utilize employee's information in the best way. Further HRM should be aligned with strategic goals of the organization to enhance its performance keeping the organization innovative and flexible. Transformation does not require new HR managers but it requires such managers who understands the business changes and can enhance the HR's abilities according to the changes in the organization to enhance its performance. It is evident from the above examples that whether it is services Industry or manufacturing industry HR M and HR manager have a key role in the entire business and organizations structure. The evolution from personnel and simple administration task t o strategic management and involvement in important policies implementations does make HRM to hold a role at the top board.