Organizational objectiveThe Human Resource department needs to evaluate the resource needs for an organization. If the department fails to do this, then inappropriate people with inappropriate skills may be hired which may not contribute to the development or the success of the organization rather, it may hamper growth. Thus, in order to be effective, the HR function needs to have a plan in place.
HR dept. targets
Procurement dept. targets
Sales dept. targets
Production dept. targets
No. of employees required
Skills required from employees
The basis of this Human Resource plan should be the desired skills of the employees and the required number of people in the organization.
The number of employees required in the organization in turn is dependant on several other factors. As demand for labor is derived demand, an organization's demand for all staff depends on the demand for its finished goods or services. In addition the demand for labor is also dependent on the skills and characteristics of the existing labor. If the workforce is productive, then a lower number of workers would be required, but, if a workforce is neither efficient nor productive more workers would be required to produce the required amount of output.
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Furthermore, business objectives will also shape the organization's Human Resource plan, as, if a company is planning to expand it will need more workers, but, if it is contracting it will most probably be laying off some of the labor force.
The skills of the required labor, on the other hand depends on the pace of technological development in the industry. As more and more advances in technology take place, the skills required from the workers also changes and the organization's recruitment and training programs may have to be altered to reflect this change.
Moreover, another factor determining the Human Resource plan is the decision about the optimum mix of core workers and peripheral staff in the organization. Core workers, usually made up of permanent staff, are often more expensive and inflexible, but loyal to the organization. Peripheral staff, on the other hand, are often employed on part time and temporary contracts, and thus, are cheaper and more flexible to the staffing needs of the organization.
A Human Resource plan, therefore, needs to be established with careful consideration of all factors, both intrinsic and extrinsic that may affect business operations, to ensure that the company has sufficient resources to avail all possible opportunities and a skilled workforce who can make a positive contribution towards organizational goals and aims, whether it be growth or diversification. It ensures that these prime drivers of change are dynamic enough to help the company fulfill its objectives.
Taking the case of, for example, a school which is expanding to provide tuition services for college courses as well as diversifying into different academic subjects, the practical considerations for an HR plan can be demonstrated.
In order to follow through with this expansion and diversification, the HR department of the college will need to formulate a plan. It will need to, primarily, identify the vacancies that will soon be available, and will also have to decide the specifications and qualifications that they may require of a potential candidate and employee.
Once this has been done, the HR department will have to decide whether it will recruit internally or externally. If it believes that it can find the appropriate people with the required skill from within the organization who are mobile, then considering all other factors, the HR department may promote some employees and advertise on the in house bulletin for the vacancies that are available.
If sufficient staff cannot be recruited internally, or the original positions of the internally promoted employees have to be filled, the organization may recruit externally and inject fresh blood into the organization. This external recruitment offers the firm a possibility of selecting from a wider pool of potential applicants who may be more appropriate for the job requirements as compared to the internal candidate available to the organization. External recruitment may also enable the firm to benefit from pre trained and highly experienced workforce that is a valuable business asset.
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The college may need lecturers, a principal, vice principal, administrative and support staff. The number of people required will depend on the expected number of student enrollments to the college. Higher enrollments will call for a larger recruitment of lecturers, for instance. In addition the number of courses offered would also determine the number of lecturers required. Furthermore, the administrative and support staff needs will also have to be evaluated.
The college will now have to decide the nature of the employment that it will offer to the potential employees. Taking into consideration cost factors, the college will need to evaluate the cost that it is capable of and willing to bear. Recent trends have shown an inclination towards employing more part time and temporary workers, and to some extent, even outsourcing some operations and activities to agencies which specialize in those activities. In this case, for example, the business may outsource some or entire of its administrative functions as well as its marketing, promotion, student enrollment, I.T, cleaning and maintenance and upkeep of college premises to a specialist outsourcing agency. The specialist agency may then only be contracted when services are required, for example student enrollment may be outsourced just twice a year, whereas maintenance and cleaning, for instance, could be outsourced all year round. The college may get an even better bargain if it, for instance tendered for the services, enabling it to achieve the most convenient arrangement at a competitive price. Outsourcing allows organizations to pay for services only when needed and not hire workers for the whole year. This saves a large part of the wage bill in return for comparably lower costs of outsourcing.
Although the administration and management function may be outsourced, the college does need to consider the loss of flexibility that may inevitably occur due to this outsourcing. However, outsourcing allows firms to benefit from the best service providers in the industry which may improve efficiency.
The lecturers, teachers and department heads, on the contrary, can not be hired from an outsourcing company and will have to be offered contracts of employment. This begs the decision of whether these people will be hired on a temporary basis or a permanent one.
The college may have to offer its core staff - principal, vice principal and departmental heads, etc- permanent contracts to establish long term consistency and to breed loyalty and commitment through job security. The lecturers, on the other hand, may be hired on a part time or temporary basis. When evaluating the type of contract to offer to the lecturers, the college may keep in consideration the flexibility and cost savings that a temporary workforce may offer as they can provide good service without the corresponding cost increases. Additionally, a temporary contract may attract more part timers such as retired people, or people also working else where.
But, employing people on a temporary contract may adversely affect motivation and the loyalty of people to the organization.
Additionally, the college will also need to consider the fact that, as it is expanding into new dimensions, it needs staff skilled and capable of making it competitive. Moreover, it will have to plan for future contingencies as well in addition to succession planning. Moreover, the college will need to set up a competitive salary package in order to recruit and retain the best in the industry with due regard to the impact it will have on the wage bill. The HR plan will also need to account for any required training and development programs as well as for a regular appraisal of employee performance.
An organization's strategies may lack the specific detail that is required for operational decisions. Corporate objectives need to be quantitative and should be broken down into departmental targets so each department works towards the business' overall aim.
A human resource plan is a plan or forecast for workforce requirements. Workers are an important asset to a firm and its contributions are essential towards achieving business objectives. The human resource plan, therefore, has an important role as a forecast of workforce requirements. This forecast is essential for ensuring that the business is on track.
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HR plan assesses the staff requirements of a business. This is done through assessing the forecast demand for an organization's product. Business demand varies seasonally as well as due to external factors. The HR department needs to ensure that the workforce is sufficient for the business' current requirements and that unnecessary labor is not recruited, adding to cost structures. The HR plan can also contribute towards business objectives by promoting increases in productivity.
The HR plan also needs to account for business expansion and contraction. If the organizational objective is to grow, the HR plan needs to reflect this. HR should devise a plan to increase the labor force as well as increasing skills for new operational and production techniques. If the business plans to contract, or to adopt automation, the HR function needs to cut down on unskilled jobs, and, if required hire specialist operators.
If the organization plans to increase customer services more workers might be recruited at the expense of short term profits. Similarly, organizations aiming for sales maximization might need additional marketing and sales staff.
Firms seeking to 'survive' in economic downturns or in times of low demand could require production and cost cuts, which might be possible by retrenching staff so that costs could be pulled, but, this may have legal implications. Workforce plans thus, should be prepared in anticipation of these objectives so that business efficiency is not hindered.
A human resources management policy is a statement of the practice and procedures in an organization. It acts as a guidebook for the managerial and the supervisory staff of the organization, as well as for its lower level employees. It dictates the employee - employer relationship and also indicates how the policies are to be implemented in practice. Therefore, whenever a situation arises where there is ambiguity or question as to the practical application of organizational policy, the policy manual with its clear cut provisions can act as a guidebook for all the parties involved - the employee as well as the employer. This is a fundamental requirement - the human resource policy should be clear and unambiguous in order to promote and aid application and encourage employees and employers to resolve their issues or conflicts according to company policy.
Policies tend to promote consistency, understanding and continuity within an organization. And, if these policies are written down, then they take on a more effective role in establishing best practice and conflict resolution. This also eliminates the need for constant updates, memos and announcements. A policy statement, because of its uniform application, promotes equity and fairness within the organization, with both employee and employer practices being dictated by the policy.
A policy is primarily an important aid to supervision, as people know what is expected of them, and therefore, are able to perform accordingly, and, moreover, their performance is monitored accordingly. A policy statement, thus, encourages people to take responsibility for their actions, rather than playing the blame game.
Additionally, a human resource management policy may support understanding and good relations because of the clear division of lines of authority and a crystal clear definition of channels of communication.
A policy statement, therefore, is very essential to the smooth operation of an organization's HR function. So, in order to keep in line with current trends and practice, a policy may be frequently amended. The basic amendments, in the case of the HR policy, come from amendments to labor laws. The government may change employment laws, altering, for example, the minimum working age or the retirement age. This would have to be reflected in company policy as child labor is illegal and compliance is mandatory. The government may also impose a minimum wage requirement, which would then have to be incorporated in the company policy. Moreover, a government may introduce more extensive health and safety legislation, which would make it essential on the company to amend its standard practices, provide training and equipment to employees for their safety, and reflect the change in policy in their policy statement.
Another factor that may be introduced because of legislation is the statement of being an equal opportunity employer, which, effectively means no discrimination on the basis of any characteristic, whether it be age, gender, race, religion, national origin, pregnancy or disability or any other classification protected by the applicable law.
Therefore, considering the importance of a human resource management policy, it is essential for an organization to have a policy statement which, thus, dictates best practice.
Human resource management is not just affected by the company's policies or changes in the legal system, although they are strong influences. A more intrinsic factor as compared to the laws of the country is the structure and culture of the organization itself.
Organizational structure is the internal, formal framework of the organization that depicts the links between management and the classification of authority. An organizational structure shows the formal relationships between different people highlighting the different channels of communication. It displays the positions which posses the power to make decisions and to delegate responsibility and authority. This clear depiction of organizational structure, thus, enunciates the identity of the supervisor and manager to whom each employee is accountable for his/her actions.
As an organizational structure affects all other aspects of the business organization, similarly, it also affects the HR function, which may also benefit from a clear structure and division of responsibilities. So, a formal structure may prevent overlapping roles and thus role conflict within the HR department, and assist the HR department in their planning for the rest of the organization. As organizational positions are well defined, it is a simple task for the HR department to identify and evaluate the resource requirements of the business. Additionally, it also makes drawing up a job specification and a job description much easier as responsibilities and authority is clearly defined. Moreover, a formal organizational structure also aids succession planning and provides an indication to employees of future promotion possibilities.
Furthermore, organizational structure is one of the determinants of organizational culture as well. Both act as an integrating mechanism, linking structure through organizational activities, and culture through the behavior and values of the employees. An effective alignment would result in people working together to achieve strategic goals and fulfill the organization's vision. This, therefore, reduces uncertainty, ambiguity and variability, thus promoting consistency.
Sparrow and Hiltrop defined the culture of an organization as the "values and beliefs that are shared by the people in a group, that tend to persist over time even when group membership changes". Thus, organizational culture is the style or behavior that the fresh blood is coerced into adopting by the senior colleagues. Therefore, when used effectively and positively, culture can encourage employees towards best practice and organizational efficiency and effectiveness as organizational culture has a positive impact on the employee's morale, job satisfaction and performance, which, in turn, leads to higher levels of productivity and profitability. Organizational culture, hence, bridges the gap between what an employee is trained to do and what they actually do.
This all affects how the HR department recruits, selects, trains and motivates employees to perform better and achieve targets. Long term success is therefore brought about by the increasing alignment in the organization's structure, strategy, people and culture.
But, the question that arises is how effectively the Hr function contributes to the bottom line of the organization. It is only through monitoring and measuring HR activities that the real benefits of the HR function can be articulated in contributing to achieving the organizational targets and enhancing the competitive edge of the organization.
Change is a continuous phenomenon, affecting every aspect of the organization. So, the organization also needs to change and adapt to keep pace with the growth and take advantage of opportunities. In order to maintain competitiveness, the HR function also needs to be evaluated to gauge how effective they are, and if they are achieving the objectives by proper practices. An indicator of HR efficiency and effectiveness would be an improvement in employee performance, and, hence, an improvement in organizational performance.
An evaluation of the HRM function is also required to provide accountability and assess the impact on organizational strategy and success of the HR practices.
There are primarily two approaches to monitoring HR effectiveness. The audit approach, which is based on key performance indicators and consumer satisfaction measures, focusing the review of the HR functional areas, is the first method and most widely used. The second method, however, takes an analytical approach, evaluating whether HR objectives and results are clearly defined, and estimating the financial impact of HR policies in addition to the evaluation of the contribution of the HR department to employee and organizational welfare.
The HR audit may be conducted as part of a balanced scorecard approach in evaluating the effectiveness of the HR function. The balanced scorecard method assesses performance as viewed by the major organizational stakeholders, that is, the investors, customers and employees. The HR audit, therefore, assesses the department, functions, professionals and practices. The first dimension of the survey is from the customer perspective, with the employees being the users of the HR program. These people, thus, are in the prime position to evaluate the value of these services. But, one of the weaknesses of this approach may be the fact that employees may not know the benchmark or criteria against which to evaluate performance. The HR audit may aim to assess the department's recruitment and succession planning system along with its training and development program. Furthermore, it may evaluate the organization's HR policy to ensure compliance with the relevant legislation, as well as its compensation package and motivational initiatives.
An alternative approach to the HR audit approach and the analytical approach may be benchmarking. This technique helps companies compare their performance with similar companies with similar situations, and in similar industries. This provides a yardstick for the company to measure performance and effectiveness against.
Therefore, as in all other departments and functions, it is essential to monitor the effectiveness of the human resource department in order to ensure that it is fulfilling its designated purposes, adding value to the organization's operations and contributing positively to the corporation's success, aiding it in its desire to implement strategy and assist in its transition through change. Thus, measuring the efforts of the HR department has become an integral focus of the organization's audit department.
Once the performance and effectiveness of the HR department has been monitored and measured, the next step is to assimilate this information and extract from the data available the strengths and weaknesses of the organization.
Once this process is over, the organization can attempt to build upon the strengths and rectify the weaknesses of the HR department through training and development, coaching and practice, ultimately improving the effectiveness and performance of the organization, as an efficient HR department will provide the organization with a competitive advantage.
One of the basic perspectives to improving the effectiveness of the HR department may be that of change management, whereby the HR department needs to keep up with the pace of change of the organization's environment. In order to implement and adapt to change successfully, the organization's stakeholders must be receptive to the change. This requires acceptance of the new policies, strategies and practices by the employees, managers, higher level management and customers. This in turn will determine whether the organization's HR function succeeds or fails in its objectives. Therefore, in order to make the improvements more effective, the process of change should be based on the interaction of the formal and the informal organizational structure, making it easier for employees to accept and adapt to the changed practices.
But, the organization may still feel find its employees reluctant and resisting the implementation of change. Moreover, the change implementation process will require a redefinition of the tasks and roles of the employees of the organization, which may be a complex task.
An alternative practice that may be applied in order to improve the effectiveness of the HR department may be benchmarking. Benchmarking aims to set a performance standard similar to that of a competitive organization with better practices. This method attempts to find examples of best practice such as demonstrations of excellent services, systems or products, and, then sets these examples of best practice as a yard stick for the company to look to, attempt to achieve, and as a means of measuring their performance against. This approach helps corporations learn from one another and promotes competitors to achieve the best standards, eliminating unnecessary waste in the process and promoting efficient resource allocation and utilization.
Thus, the HR department as a whole is a very essential component of the organization, as it manages its biggest and most inconsistent and volatile resource - labor. So, in order to manage this resource effectively and to contribute to organizational success, it is critical that the HR department operates effectively and efficiently, leading organizational change and championing a culture of involvement and engagement of the employees and their management, with a view to employee and employer welfare.