HR Practices for Competitive Advantage
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The world nowadays is gradually moving fast bringing along several changes in our lives, culture and many others. In other part organisations do encompasses from time to time those experiences which are for some outrageous and therefore impossible to overcome new situations. According to Boddy (2005), human resource is the effective use of human resources in other to enhance organisational performance. This part in organisation is a great starting point, to easily manage the way people with react depending on coming change situation. General environment sometimes known as the macro -environment includes economic, political, social and technological factors that generally affect all organisations. The general factor can split into two aspects as the external environment which for most organisations is a constantly changing source of threats and opportunities this part consist of elements beyond the organisation such as the competitors or the wider PESTLE. Follow by the internal factors which mostly target the element within the organisation, such as its business processes. We will clearly elaborate in the rest of our work which practises are sustainable and worthy to keep up with competitive advantage and help organisations remain in the top.
PURPOSE AND IMPORTANCE OF HUMAN RESOURCE MANAGEMENT IN ORGANISATION
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). In order to assist employees in helping an organization to reach its strategic business goals, effective human resource managers often gather job related information in a job analysis and job description, which is vital to creating or re-designing jobs which provide employees with a high level of job satisfaction (Stone 2002: 123). The basic human resource activity of gathering detailed information about a particular job's duties, tasks and responsibilities, can help organizations achieve strategic goals more efficiently and effectively by avoiding both duplication and overlapping of work in jobs. According to Guest (1987) model of HRM policies goals, this stresses four key concepts- strategic integration, commitment, flexibility and quality.
An organization which consists of people with formally assigned roles that works together to achieve the organization's goals, and the manager is the one responsible for the accomplishment of the goals and the management of people's efforts. Most experts agree that managing involves five functions which represent the managing process as:
Planning: establish goals and standards, developing rules and procedures, developing plans and forecasting.
Organizing that consists to give each subordinate a specific task.
Example1: the human resource manager of Great North Easter Railway decides to elaborate a new management planning which consists to emphasize on customer service and to introduce core competencies for others line mangers. The investment taking the company's annual training budget to £1.25 million whereby twenty 'on-board coaches' will work alongside inspectors, caterers and others staff to assist them in meeting new delivery standards. Traditionally, managers have told employees what to do say the company's HR development manager, who worked with many members of the coaching staff. The idea of appointing coaches is to create a peer group on board the trains that will help to enhance customer service; also some of the money will be spent on a management new training program. (HRM guide, April 2001)
The strategic integration has two interrelated meanings. First here is an internal coherence and integration of employment management policies and practices with each others. For example, if work organization emphasizes teamwork then it would be individu to have a reward system that stressed individual contribution. The second dimension of integration is of human resourcing strategy with overall business strategy. Indeed, there cannot be a human resourcing strategy independent of business strategy, but there needs to be a close interrelationship between the two..
Example2: SAP is a company helping small and medium business to transform their inefficiencies into opportunities by creating innovative and sustainable strategy in long term. In this company HR departments are now being asked to do more with less. To meet this challenge head on, forward-thinking executives are thinking out of the box to transform their fundamental approach to operations. They are adopting progressive approaches including self-service, shared services, and business process outsourcing to gain efficiency, lower costs, and increase service quality on a global scale. Through this transformation, they are finding compelling ways to spend less time on repetitive transactional tasks and focus more on activities and programs that have a greater sustainable impact on the business.
To achieve a HR efficiency SAP combine a deep understanding of developing and implementing seamless business models with industry best practices in HR service delivery (www.SAP,2010)
Therefore they are able to:
- Provide self-service access to standard processes via kiosk, laptops, telephony, or mobile devices, so employees can complete routine tasks without the aid of HR staff
- Support a shared-services model for centralizing expertise, which improves quality and consistency while lowering costs
- Reach all employees in a cost-efficient manner via a centralized help desk.
The second concept, commitment is at the heart of HRM-style policies. The objective is to elicit from employees attitudinal and behavioural commitment that will deliver service to customers and enhance the standing and reputation of the organization and hence its profits. Thus commitment behaviours should ideally come from within the employees who should go through processes of selection; induction and leadership understand what is required of them and deliver it, all the without a constant need of checking and supervising, so that those line tasks may be removed from the organizational structures.
Another dimension of the Guest model is quality. Here there is meant to be an interrelationship between high quality employees in whom employers are prepared to invest and develop in the belief that such employees will in turn deliver high quality goods and services that will help distinguish organization from competitors. (Leopold, 2001)
Example3: in May 2010 Pepsico the fizzy drink company launched a revolutionary idea involving at the same time high commitment and high quality within the organisation. the company idea's generation by 2020 will be to send nothing to landfill across its supply chain and make all its product packaging from renewable sources. At the same time its agriculture operations call Pepsico plans to use its long term farming contracts to halve the water and carbon impacts of its key crops, such as potatoes and oats. According to the vice president company's the environmental programme is setting of ambitious goals that are beyond the company's current knowledge and how to achieve them. (The guardian, May 2010)
Flexibility is also a key in the HRM world, but here the emphasis is more functional rather than rhetorical. The main purpose for that will be to develop workers to be able to operate over a number of key tasks and to end previous demarcation line between particular skills and functions.
Example4: During the 1980s the subject of flexibility became a topic of considerable debate partly shaped by the influential Institute of Manpower Studies now (Employment Studies). based on the fact that is possible to identify various types of flexibility which it was suggested , could be combined to form part of a coherent strategy- what now became a flexible firm. Four main types of flexibility are usually identified.
The flexibility of work time and particular use of a stock of part-time workers, here the theory of the American engineer Frederick Taylor who focused his idea on, the relationship between the worker and the machine-based production system. Taylor believed the way to achieve the maximum prosperity for the employer, coupled with the maximum prosperity for each employee was to ensure that each worker reached their state of maximum efficiency.(Taylor, 1917) also contract flexibility regularly use in work agency as REED, Blue Harrow and many others were by workers can join and leave anytime they are willing to because the contract are mostly in short term, although some companies may start by a temporary contract and lastly permanent one. Flexibility reward and functional flexibly are also part of the components (Towers, 1998)
IMPACT OF ENVIRONMENTAL CHANGES FACTORS IN ORGANISATION.
The external factors are generally considered to be beyond the direct influence of an individual company. Although many organizations recognize the importance of the environment, all often this analysis ends up making a small or minimal contribution to strategy analysis and formulation in this particular case in relation with human resource importance within the company while undergoing those change.(Bensoussan, Fleisher, 2008)
Political/legal influences include governmental regulations, employment and company law, privatisation/ deregulation policies ,government stability, European Union directives and define both formal and informal rules under which a firm must operate.
Example5: European governments are gradually liberalising postal services. In 2000 the German government sold a 25 per cent interest in Deutsche Post, German 's post operator. Some years before, a US parcels and logistics group, UPS, had complained to the European Commission (EC) in Brussels that Deutsche Post was using its monopoly profit on domestic letters to unfairly subsidise acquisitions and expansion into the international logistic market. In March 2001, following a long inquiry, the EC found Deutsche Post guilty of predatory pricing and anti-competitive practices. The company was fined 24 million Euros and required to split its operations, creating a separate entity to run its business parcel services. The postal operator faces a second EC investigation into whether its use of cash from state-owned property sales effectively constitutes illegal state aid. A finding against the operator in this case could mean receipts having to repay with serious financial consequences for the company. (The economist, 24 march 2001)
Economic factors affect the purchasing power of potential customers and the firm's cost of capital. For instance interest and inflations rates, exchange and unemployment rates, economic growth, labour costs, energy availability and cost, disposable incomes and the business cycle. Globalisation of some market is being driven by increasing competition and the search for cost advantages.
Example6: electronics companies such as National Semiconductor or Seagate have switched many production facilities to low wage economies in Asia to cut costs. Similarly, Marks and Spencer chose to use outsourcing by serve long standing relationships with British clothing manufacturers in order to source clothing supplies from lower cost countries such as Turkey and India. (Boddy, 2002)
Social-cultural factors include the demographic and cultural aspects of the external microenvironment. These factors affect the customer's needs, changing lifestyle, demographics, values in society, change in consumer tastes and preferences and also level of education.
The last factor is the technological one. technology is an increasingly important environment influence and is leading many management to considers fundamentally the way they would have to operate the business, consequently an HR department may carefully target on managing skills when technology go along in term of dealing with the high level of competition. This can influence the business from its overall strategic position through how to manage marketing, design, production and distribution.
For example7: The technological innovation brings up an online shopping at Tesco. The leading British supermarket, has become the world's biggest online retailer. Started in 2000, the business covers 90 per cent of the UK population. By mid-2001 it was taking 70,000 weekly orders, worth 6 million and already turning in a profit. Tesco's success is based on its store- picking system, under which orders made up by specially employed pickers selecting items from the shelves of existing stores, using a computer- based system. This contrasts with the system of dedicated warehouses used by other e-tailers that demand a high throughput to be viable and have so far struggled to cover costs. The success of Tesco's model attracted the attention of Californian's biggest food retailer as well, Safeway. The two have struck a deal under which Tesco is to export its technology in return for a 35 per cent stake in Safeway's online business, Groceworks.
ROLE OF HR DURING CHANGE
While organizations face such a change HR department has to put into place several strategies to overcome the situation. Several strategies can be state as:
High performance management or high performance working aims to make an impact on the performance of the organization in such areas as productivity, quality, and levels of customer service, growth and profits. high performance management practices includes a very strict recruitment and selection procedures, extensive and relevant training and management development activities, incentive pay systems and performance processes. These practices are often called high performance works systems which, as defined by (Appelbaum et al, 2000), comprise practices that can facilitate employee involvement, skill enhancement and motivation.
Moreover another strategy that can be use by an HR is a high commitment described by (Wood, 1996) as a form of management which is aimed at eliciting a commitment so that behaviour is primarily self-regulated rather than controlled by sanctions and pressures external to the individual, and relations within the organization are based on the high level of trust.
Lastly high involvement works practices that are a specific set of human resource practices that focus on employee decision making power, access to information, training and incentives.
Example8: The York plant management met with workers' representatives for months in 1981 to achieve a consensus on what was sought and also to ease scepticism. The increases in productivity stemming from these measures were deemed to be the effects of effective communication, shop floor enthusiasm, and increased recognition. Harley Davidson choose to target employee involvement and participation because is one of the most complex, dynamic and controversial aspects of organisational structure and employment relationships in advanced industries counties. The timing is particularly appropriate as significant shifts have taken place in the environment of organizational decision making in recent years.(Harvard Business School, April 2007)
For a manager to greatly achieve these strategies he has to well formulate them. As the strategy formation process is complex, and excessively rationalistic models that advocate formalistic linkages between strategic planning and HR planning are not particularly helpful to the understanding of it. Also the business may be an important influence on HR strategy but it is only one of several factors.(Boxall, 1993)
After elaborating a plan to be achieved and put into actions some practices the HR strategy will be able to suit the business need at any condition (depending on external changes). The strategy will be able to be turn into actionable programmes that anticipate implementation requirements and problems. It will take into account of the needs of line managers and employees generally as well as those of the organization and its others stakeholders. (Amstrong, 2009)
HOW TO GAIN COMPETITIVE ADVANTAGE THROUGH HR PRACTICES DURING CHANGE
Human Resources Management mainly need to be forecast of the future needs in the light of an organization's environment, mission and objectives, strategies. These presents' special challenges for the Human Resources leader in organizations while undergoing new influences. Effective Human Resources Management requires special HR tools, special approaches to management to tackle the raise of change and seek competitive advantage. There are several useful practices that organisation can implement from human resources.
Obtaining people with the appropriate skills, abilities knowledge and experience to fill jobs is one of the core achievements in organization with recruitment, selection and job analysis as key practises. Recruitment and selection have always been critical process for organizations. With recent interest on how organizations can achieve high performance associated with engaged and motivated staff who takes a pride in their work, there is a growing attention in the form of bundle of HR practices that lead to a positive psychological contract with employees. Recruitment and subs equal selection is vital stages in formation of the expectations that such a contract, on the basic of which, with an emphasis on a two- way flow communication. Employees are attracted to and select an organization and the work on offer as employers select their employees. (Bratton, Gold, 2007) the purpose of this practice will be to attract, develop and retain high quality people. The direct impact for the welfare of the organization will be to match those people to his strategic and operational needs. Provide for the acquisition, development and retention of talented employees, who can deliver superior performance, productivity, flexibility, innovation and high level of personal customer service and who fit the culture and the strategic requirements of the organisation.
Example9: Specialist Cabinets Company had rapidly expanded from a two person operation to a small business of 28 employees. This thriving business catered to those who needed high end cabinet work in custom built homes or office buildings. the recruitment of new manager task have been given to George Zoran a senior supervisor with strong interpersonal skills.(Dickens, 2008)
Another one we can give is Example10: the shortage of skilled labor is global issue. According to Scott Gibson's case CEO of the Britehouse, a software company in south Africa with 400 employees. Gibson states that the company could use another 50 workers immediately and could employ an additional 75 people per year for the next few years. Since taking on his role, he has not been able to make sales or market strategy his main focus. Instead his primary focus has been on attracting the talent the needs if it is going to be able to pursue and complete its staffing projects. (source: courtesy of Britehouse)
TRAINING AND DEVELOPMENT
In general, education is a mind preparation and is carried out to remove from the actual area, training is the systematic development of the attitude, knowledge, skill pattern required by a person to perform a given task or job adequately and development is growth of the individual. It also provides to employees with stimulating and interesting work and gives the autonomy and flexibility to perform these jobs well. Moreover enhance job satisfaction and flexibility which encourages greater performance and productivity (Amstrong, 2009). Within the organization educate, train and develop the existent skills of employees will be necessaries in order to:
- develop workers to undertake higher tasks.
- provide the conventional training of new and young workers (for example: clerks, apprentices)
- paise efficiency and standards of performance
Example11: Dayton Hudson Corporation is using training and development skills to create future customers. B Dalton bookseller division has earmarked $3 million over four years for a literacy training program- Their, goals are to recruit volunteer tutors and to tell people without basic skills about the free teaching program available in their communities. As part of Dalton, gives grants to local school districts to hire speakers who will persuade teachers to put more emphasis on teaching reading skills. the same process have been used by Texas Instruments, while the result of both the B Dalton and T.I programs gave an immediate benefit to the individuals gaining literacy, the companies broaden their base potential customers over the long run.
- meet legislative requirements.
- The practice can be done by induction training, pre-retirement courses, etc..(Schuler and Macmillan, 1984)
Example12: When Delco-Remy trained its employees in participative management, it succeeded in differentiating itself from all competitors in the eyes of Honda and others. The successes of this training and resultant competitive advantage are described by Delco's Keith W. Wander: Honda of America was seeking an American battery manufacturer as a supplier to its auto plant in Marysville, Ohio. Honda wanted a plant which had a participative system of management and a reputation for producing a quality product at a competitive price.
Performance appraisal is viewed as one of the most important tools in the management arsenal. Because it is most usually carried out by line managers rather than HR professionals it is important that they understand their role in performance management and how performance appraisal contributes to the overall aims of performance management. Appraisal system complements the emergent strategic planning emphasis in all areas of the corporation. The appraisal reviews will clarify and articulate objectives and expectations for the organization and their employees. It also gives to the company a realistic assessment of its strengths, weaknesses and futures requirements. Another critical aspect of appraising is correcting poor performance.
Example13: at Emery Air Freight, the company was losing $1 million annually because employees on the airport loading docks were shipping small packages separately rather than placing those with the same destination in one container that would be carried at lower rates by air carriers. Management also found that the containers were being used 45 percent of the time when they should have been used 90 percent of the time. By establishing a program of a positive consequences and feedback, the nearly $1 million annual loss was eliminated. (Fall, 1984)
Example14: GTE performance appraisals are viewed as one of the most 4 important tools in the management arsenal. According to GTE Chairman Theodore F. Brophy, the appraisal system complements the emergent strategic planning emphasis in all areas of the corporation. The appraisal reviews assist executives in clarifying and articulating objectives and expectations for themselves and their employees. They give GTE a realistic assessment of its strengths, weaknesses, and future requirements:'. As such,. The company is now able to better utilize its human resources :than at any time, in the past
COMPENSATION AND REWARDS
In the context of managing people, the reward system emphases a core facet of the employment relationship: that constitutes an economic exchange or relationship. That is an employee undertakes a certain amount of physical/metal effort and accepts instructions of others, in return receiving a level of payment or reward. The motivational power of money often wears off as employees simply get used to their current level of compensation. Many studies have confirmed that as long as employees are paid competitively, money is not the main factor that leads to job selection or performance. Most people are motivated by the job their do and the environment in which they work than the by the money they earn. Therefore the compensation and rewards system organization offer to employees should include both non-monetary and monetary ideas. This system is very praise mostly to develop motivation and job engagement by valuing people in accordance with their contribution.
Example15: at Hewlett-Packard, entrepreneurial behaviour is stimulated in project leaders by tying more rewards to their success. Successful project leaders are being given banquets, stocks options and personal computers. At TRW, units or teams are given credit for sales generated in another department in return for helping that department. Also TRW fosters innovation by stimulating interdependence through its compensation practices. And these companies do get what they pay for steady stream of product and service improvements and enhancements that help them stand alone among their competitors.
UNION MANAGEMENT RELATIONS
Union management relation addresses the collective dimension of the employment relationship. The management of work and people includes both individual and collective relations (Kelly, 2005). As a field study however academics differ over the use of the terms industrial relations labour relations, employment relation (wajcman, 2000). In many companies today, companies face the possible bankruptcy due to the high labour costs. Helping to lower costs are wage reductions reached between unions and management.
Example16: recently American Airlines has renegotiated two-tiered wage systems to help reduce total costs by reducing labour costs. Without these jointly negotiated systems, the company would not have survived. Thus a company relationship with its union can be critical to its survival, and the better its relationship with its union are, the more likely it is to ever gain a competitive advantage.
The difficulties of developing an HR system of fitting HRM strategy to business strategy are partly a reflection of the dynamic and uncertain environment within which organizations are operating. Organizations continuously need to adapt and reinvent their human resource management practices if they are to adapt and exploit such change. (Newell, Scarbrough, 2002) this has led to successive waves of new management techniques being adopted by organizations.
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