HRM

CHAPTER 2

Literature review

2. Meaning of HRM:-

HRM has two main forms of existence One in the form of academic discourse and activity. This finds expression in conferences, journals, books, courses in business school and soon. The other is in the form of practice in organizations that employ people and thus have employment relationships. These two modes of existence at times intersect and trade of one another. At other times they exist relatively in dependently each fuelled by their own interests, priorities, prejudices and logics.

HRM is the effective management of people at work. HRM examines what can or should be done to make working people more on for individuals interested in learning about people working within organisations. Its goal is to help develop more effective managers and staff specialists who work directly with the human resources of organizations.

HRM is specifically charged with programs concerned with people. The employees HRM is the function performed in organisations that facilitates the most effective use of people to achieve organizational and individual goals. Whether an HRM function or department exists in a firm every manager must be concerned with people.

HRM involves all management decisions and actions that affect the nature of the relationship between the organisation and employees- its human resources. A General Manager makes important decisions daily that affect this relationship, but that is not immediately thought of as HRM decisions: – introducing new technology into the office place in a particular way or approving a new plant with a certain arrangement of production operation, each involves important HRM decisions.

Our approach emphasizes two features which are appropriate to HRM. First the general manager accepts more responsibilities for ensuring the alignment of competitive strategy, personnel policies and other policies impacting on people. Second the personnel staffs has the mission of setting policies which govern how personnel activities are developed and implemented in ways that make them more mutually reinforcing.

HRM is a strategic approach to managing employment relations which emphasizes that levering people’s capabilities is critical to achieving competitive advantage this being achieved through a distinctive set of integrated through a distinctive set of integrated employment policies, programmes and practices. (Ref: john brat ton and Jeff gold, in 2007, pg no-7)

2.1 Strategic HRM:-

This section examines the link between organization business strategy and HR strategy.’ “HR strategies” are here taken to mean the patterns of decision regarding HR policies and practices that are used by management to design work and select, train, develop, appraise, motivate and control workers. Studying HR strategies in terms of typologies is the ability to academics because conceptual frameworks or models give HR researchers the ability to compare and contrast the different configurations or clusters of HR practices and test theory (Bamberger and Meshoulam, 2000). STRATEGY IMPLEMENTATION is an area of activity that focuses on the techniques used by managers to implement their strategies. STRATEGY EVALUATION is an activity that determines to what extent the actual change and performance match the desired change and performance. (Brad ton and gold, published by- Palgrave Macmillan, published in 2007)

Since the early 1980s when human resource management arrived on the managerial agenda, there has been considerable debate concerning its nature and its value to organisations. From the seminal works emerging from the Chicago school and the matching model of HRM (Fombrun et al., 1984), the emphasis has very much concerned its strategic role in the organisation. Indeed, the now large literature rarely differentiates between human resources management and strategic human resource management. Some writers have associated HRM with the strategic aspects and concerns of ‘best-fit, in vertically aligning an organisation as expressed in the organisational strategy (Fombrun et al., 1984) or by creating ‘congruence’ or ‘horizontal alignment’ between various managerial things. (Ian beard well at all demon fort university Leicester, in 2004)

The application of the adjective strategic implies a concern with the ways in which HRM is critical to the firm’s survival and its relative success. There are always strategic choices associated with labour processes in the firm-whether highly planned or largely emergent in management behaviour and these choices are inevitably connected to the firm’s performance (Dyer 1984, Purcell and Ahlstrand 1994: 37-42). These choices are made over time by the whole management behaviour- and these choices are made over time by the whole management structure, including line managers and HR specialists (where they exist).

Human resource management is defined as a strategic and coherent approach to the management of an organization’s most valued assets – the people working there who individually and collectively contribute to the achievement of its objectives.

John Storey (1989) believes that HRM can be regarded as a ‘set of interrelated policies with an ideological and philosophical underpinning’. He suggests four aspects that constitute the meaningful version of HRM:

* A particular constellation of beliefs and assumptions.

* A strategic thrust informing decisions about people management;

* The central involvement of line managers;

* Reliance upon a set of ‘levers’ to shape the employment relationship.

“Strategic HRM is an approach to making decisions on the intentions and plans of the organization concerning the employment relationship and its recruitment, training, development, performance management, reward, and the employee relations policies and practices. It is an essential component of the organization’s corporate or business strategy

Strategic HRM addresses broad organizational concerns relating to changes in structure and culture, organizational effectiveness and performance, matching resources to future requirements, the development of distinctive capabilities, and the management of change. It is concerned with both human capital requirements and the development of process capabilities, is the ability to get things done effectively. Overall, it will consider any major people issues that affect or are affected by the strategic plan of the organizations.” [Armstrong, 2]

However, it is difficult to identify the relationship between human resource management and strategy and it appears to be easier in theory than in practice. Margin son et al. (1998) found that 80 percent of senior managers in HRM claimed that they have overall HRM strategies but few can describe what the strategies are! In effect, both academics and practitioners have found it hard to appreciate the meaning of strategic human resource management in practice. Hendry (1994b) concedes that strategy is the dominant theme in HRM but also a misunderstood concept and the perspective writers on HRM offer on strategy is often glib and lacking in sophistication (1994b: 2) Perhaps the problem is compounded by lack of case studies, which enable us have a insight look into the strategy in practice. For practitioner part, the stress of SHRM in theory has led to great interest from senior management team but fail to fit the lower-level managers.

Strategic human resource management has been defined as ‘The linking of human resources with strategic goals and objectives in order to improve business performance and develop organisational culture that foster innovation and flexibility’ (Siddhartha Chaturvedi, 1996). Strategic HR means accepting the HR function as a strategic partner in the formulation of the company’s strategies as well as in the implementation of those strategies through HR activities such as recruiting, selecting, training and rewarding personnel. Whereas strategic HR recognizes HR’s partnership role in the strategizing process, the term HR Strategies refers to specific HR courses of action the company plans to pursue to achieve its aims.

2.2 GOAL OF HRM:-

Lazear and Oyer (2004), use measures of promotion, hiring, and wage setting to capture key aspects of HR practices of supermarkets. For promotion practices, they measure the proportion of workers hired into the second quintile that move to a higher quintile in five years and the wage growth of workers starting in the second quintile over the five-year time span. Hiring patterns are captured by the churning rates of all full-quarter workers in the establishment as well as by the proportion of accessions (new hires plus recalls) in the fourth and fifth earnings quintiles within the firm. Wage policies are measured by the mean and standard deviation of log real earnings for full quarter workers in the firm.

The main aim of human resource management is to develop and improvement of understanding of how management functions can affect the performance of a business. Human resources are one of the most significant characters of many businesses – especially in an economy where there is a growing shift towards service-based industries. Human resources account for a large proportion of many businesses’ costs and it is the people that invariably drive a business. Management of these resources therefore is an integral part of business success.

The responses to the more use of technology and to economic and competitive pressures have changed the nature of people management in a number of ways. These include slimmer and flatter organization structures in which cross-functional operations and team working have become more important, more flexible working patterns, total quality and lean production initiatives, and decentralization and devolution of decision making.

The findings of the employment in Britain survey as described by Gallia et al (1998) were as follows:

* A rising demand for skills and qualifications which was particularly marked for managerial and professional workers, technical and office staff and skilled manual workers;

* A growth in job insecurity, more so for men than for women;

* An increase in the number of part-time and female workers-the expansion of women’s work has been almost entirely an expansion of part-time work;

* the emergence of human resource management as a philosophy of managing people which emphasizes investment in training, the development of commitment, communications and paying for performance;

* A greater emphasis on flexible working to provide for rapid response;

* an associated increase in the number of workers on non-standard contracts (part time, short term, and the use of self-employed subcontract workers);

* A reduction in career prospects through promotion as a result of the flatter organization;

* A reduction in the power of the trade unions, partly because of legislation, but more significantly in numerical terms for structural reasons, particularly the decline of large scale manufacturing and the rise of the service industries;

* Associated with the decline in the significance of the trade unions, a move towards individualizing the employment relationship, with less reliance on collective bargaining;

* little evidence that participation in industry had increased with the restructuring of employment in the previous decade;

* A widely prevalent view that the level of strain (tension and fatigue) had increased as a result of the greater intensity of work and long working hours.

Ø The goals of HRM:

The specific goals traditionally associated with human resource management are attracting applicants, retaining desirable employees and motivating employees

The quality of work from motivated people is light-years ahead of what you get from people not well motivated increasingly another goal is being added-that of retaining employees.

How a firm manages its human resources related to organisations survival, growth, profitability, competitiveness and flexibility in adapting to changing conditions.

Focusing on the bottom line is a key way in which hr departments can gain recognition and respect in organisations. The feature on General

Electric describes specific ways in which the HR department can influence the bottom line improving productivity, improving the quality of working life, increasing the firm’s legal compliance, gaining competitive advantage and assuring workforce adaptability. These are the overall goals of Managing are illustrated in back up.

* Productivity: –

without a doubt, productivity is a goal of every organisation. Human resources management can do many things to improve productivity. The most productive organisations in us know this and treat their hr departments in ways that are different from less productive organisations.-they focus on important current problems before they assess new programs.-they ensure that the department participates in strategic decisions affecting the successful implementation of business strategies.

* Quality of working life:-

providing a high quality working life means among other things, responding to employees and involving them in the decisions of the organisation.

* Legal compliance:-

“professor Lawler is one of the leading authorities in human resource Management”. Because legal compliance is so important, it is discussed in all chapters of this text.

* Gaining competitive advantage:-

gaining competitive advantage means using hr practices to gain lasting advantage over the competition.

* work force ability:-“in business, there is only one true long-term competitive advantage and key to stake holder satisfaction: people Our one going challenge at Harley Davison is to ensure that we have the most talented employees in our industries addressing the many issues of our markets and keeping us ahead of our competitors.” (By Randall and s.s Chuler, New York)

1. To provide students with an understanding of the purposes and knowledge necessary to develop and implement a full range of human resource practices within areas of specific interest.

2. To provide needed understanding of underlying theory and relevant government regulations necessary to develop and implement a full range of human resource practices consistent with the highest levels of ethics and professional standards.

3. To provide an understanding of the role of HRM in the development and achievement of strategic goals in an organization.

4. To develop student’s self-awareness, improve their communication and computer data analysis skills, and increase their sensitivity to workplace diversity and social responsibility issues.

5. To provide students with information on the professional field of HRM and to provide an avenue for students to interact with HR professionals in the region through internships and projects

HRM HRM HRM Behaviour performance financial

Security labour turnover

Human resources deals with the well being of the labour force, the areas, which have to be highly considered, are:

* Human resource planning

* Recruitment

* Training and development

* Performance management

A business, which performs well to these four points, will help the labour force contribute to the business capably.

2.3 Human resource planning

This section of human resource management is part of the overall planning of the business. Planning how best human resource can be used will help the business meet its objectives. To increase the potential of human resource management within a business employees need to be used efficiently, to do this they need to be managed efficiently using the following ways:

* Planning how to inspire and make happy labour

* Planning how to expand an organisational culture

* Planning how to maintain or build up employees

* Analysing current employment needs

* Forecasting the current likely future of employees

* Forecasting the likely future supply of employees that will be available

* Predicting labour income

2.4 Recruitment

Recruitment is needed within a business to exert a pull on the right type of potential employees. The human resource management team when promoting a job needs to make clear about:

* What the job entails

* What qualities are required?

* What rewards are needed to retain and motivate workers?

2.5 Training and Development

Training is very important to a business because if the employees are not correctly trained then they will be inefficient and cause the business not to run easily and lose profit. If employees lack in training customers will recognise this and will feel that the business is not sufficient for their needs. Not only will customers recognise the employee’s lack of training but the employees themselves too, they may feel that their business has no time to train them, which will discourage them within their work and they will not work to their best ability. Also less training will prevent the business from us its employees to the best of their skill to increase work efficiency. The aims of training are:

Well skilled workers will be more productive. Training will overall improve the abilities of the employees, which will increase the effectiveness of the business by better quality work being produced therefore keeping the customers happy, which will increase sales.

2.6 Performance Management

Within a business if employees are unhappy then they will not work to the best of their ability therefore in order to gain effectiveness from the employees they have to be familiar for their work. There are many ways in which appraisal can improve a business:

Improve performance

Provide feedback

Make better motivation

Recognize training needs

Identify potential for promotion

Award salary increases

Set out job objectives

Provide information for human resource planning

The performance of an employee will improve through many different motivation methods, below are a few examples:

Appraisal – this can be done through many different people, for example:

Superiors

Self appraisal

Peer appraisal

Subordinates

As per me the goal of Tesco is to satisfy customer needs and wants. And try to satisfy the customer requirement and make a profit and also to face the competitor and stand in the market for doing a good business. Tesco always tries to satisfy all type of customer as per their requirement. And also try to satisfy the employee for give them a good pay also give them a discount for their purchase.

At the speculation grew that Tesco direct would be floated as a separate company, taking advantage of the buoyant valuation still accorded to new economy business. In April 2000, several newspapers carried rumours that a valuation of up to £4 billion was expected extraordinarily a quarter of the value of the parent company, such was the economic insanity of the time. A leading HSBC analyst poured cold water on the excitement. ‘It would be completely illogical to float Tesco Direct,’ ‘In fact it would be physically impossible to do so.’

With sales of £125 million in the year, Tesco.com had made its planned operating loss of £11.2 million, and was predicted to break even in two years. Tesco marketing director Tim Mason, the original sponsor of club card and home shopping also took on the job of chairman of Tesco.com, while Tesco strategy director John Browett became chief executive, and Carolyn Bradley became chief operating officer. Tesco chief executive Terry Leahy promised £35 million investment to accelerate expansion of the service in the 2000 financial year.

Tesco.com goal was to become the UK’s number on internet shopping destination. Its breakthrough year was going to be 2001. And one of the key differentiations was going to be club card.

2.7 IMPLEMENTING HR POLICY:-

The aim will be to implement policies fairly and consistently. Line managers have a key role in doing this. As pointed out by Purcell et al (2003), there is a need for HR policies to be designed for and focused on front line managers. It is they who will be largely responsible for policy implementation members of the HR can give guidance, but it is line managers who are on the spot and have to make decision about people. The role of HR is to communicate and interpret the policies, convince line managers that they are necessary and provide training and support that will equip managers to implement them. As Purcell ET at (2003) It is line managers who bring HR policies to life.

* develop an integrated compensation plan

* The board has approved the plan and monitoring and evaluation mechanisms are in place.

* The plan has been communicated to employees.

Source-adapted from a form first in non profit compensation and benefits practices, by carol l. Barbeito and jack.p.bowman (New York: john Wiley and sons, inc 1998)

In some instance, it may be advisable to appoint someone internally who will help facilitate the efforts of the interim executive. This person will be responsible for evaluating the performance of the executive and conducting periodic reviews at identified project milestones. This person can be the sponsor or another senior staff member. Often, this person will be someone who has a vested interest in the positive outcome of the project or assignment. In certain circumstances the senior human resource practitioner may be appropriate for the role. For instance, when there is a planned or unplanned departure of a senior manager, the human resources executive may want to collaborate with the interim executive in the hiring of a permanent replacement.

The criteria for hiring an interim executive should be no less rigorous than those used when hiring a permanent employee. Specifying used when hiring a permanent employee. Specifying what experience and qualifications are needed for the job is merely a minimum. To be successful, expected behaviours should also be defined.

Conditions of increasing competition have focused attention on the role of company human resource policies within the wider business strategy. Changes in policies towards employees are frequently claimed to be integral to company success in the face of intensified market pressures. However, despite the importance of these issues, relatively little attention, to date, has been paid to the possible links between innovations in the management control systems (MCS) responsible for implementing the desired strategic changes and the management of human resources.

In particular, this examines the opportunities for HRM to contribute to the successful implementation of new financial and production-control systems. One of the principal aims of these new MCS is to widen the responsibilities of managers and supervisors and to increase their accountability to senior managers. A distinctive feature claimed for HRM is that line managers and supervisors become more involved in implementing an overall policy on human resources. Clearly, there exists an opportunity for these two sets of changes to support one another. The intended widening of line managers’ duties might potentially include additional human resources responsibilities. The desired increase in managerial accountability creates the opportunity for them to become more involved in promoting a distinct HRM philosophy and approach

2.8 HR POLICY AND PROCEDURE:-

“Introductory period” refers to a period of up to three months of employment for a newly hired employee. At the end of the introductory period, an employee who has demonstrated satisfactory competence in fulfilling the functions in the position and integration into the organization may be come regular full-time or part-time employee. Other factors in the organization such as availability of funds, the continued need for the position, and expectations for continuing satisfactory work performance in the position may influence the appointment as a regular employee. Termination can occur at any time during and after the introductory period if the employee’s performance consistently fails to meet minimum performance standards.

After completing the introductory period, the prospective full-time staff member is eligible for selected, no mandatory benefits available to regular employee of the organization.

A no compensation-related performance evaluation by the staff person’s supervisor will determine whether the introductory period has been completed satisfactorily. Current employees who are promoted or placed in a new job are subject to these policies regarding introductory period expect that they will retain their regular employee benefits.

A Policy is a general guide that expresses limits within which action should occur. Policies are developed from past problem areas that management considers important enough to warrant policy development. Policies free manager from having to make decisions in areas in which they have the most experience and knowledge. After the broadest policies are developed, some organisation develops procedure and rules. These are more specific plans that limit the choices of managers and employees.

‘THE FIRST STEP TO FINDING SOMETHING IS KNOWING WHERE TO LOOK’

-john Lubbock, quoted by peter porter

The first task of the process is to identify what policies and procedures your organisation requires. This means considering the subjects from all three categories:

* mandated policies and procedures

* recognized as needing policies and procedures

* changes requiring policies and procedures

It also means contacting appropriate people within your organisation to obtain the necessary information. Usually, to identify requisite policies and procedures, you need input from a verity of sources, and that type of information gathering works best when you have a stating list of subjects to be considered. Even if the subjects on the list are not those in the final completed list, they serve as anchor points to begin the review process.

There are two basic approaches to developing a starting list. Which approach to use depends on whether your organisation has an existing set of HR policies and procedures. If it does, they provide a starting point. If not, you have to create a starting point. You could begin by just asking managers what they feel should be covered, but generally, it is easier for them to provide information when you can give them an initial list.

In any event, once you have a list, you may need to add to it. If you are in human resources, you may have knowledge of additional subjects and other existing policies and procedures requiring revisions. You may know of new laws that mandate policies and procedures. You may have records of internal problems that can be corrected by having a policy and procedure. You may know of policies and procedures that are no longer applicable. Whatever the case, if you have such knowledge, you need to add those subjects to your list.

The global advantage project’s purpose is threefold: (1) to provide a systematic descriptive analysis of key HRM policies and practices at a macro, contextual level in APEC economics; (2) using the data presented in (1), to undertake a preliminary comparative analysis identifying key similarities and cooperation in the employment relations domain; (3) to provide the basis for a series of micro-level studies on HRM policies and practice that focus on key areas of organization and industry performance in the APEC region.

The organisations core rewards values are what the organisation stands for, which informs the principles on which the reward strategy in founded. Structural issues include the strategy features (e.g. Performance-related or profit-related pay) and the administrative policies surrounding these features. Process features include principally how the strategy is communicated and implemented and the extent to which employees are involved in the design and implementation of the strategy (Redman T., 2001).

According to Lawler (1995).The reward strategy consists of three components:

The organisations core reward value, Structural issues and Process features.

Interestingly, no changes have occurred in the reward system by replacing Alistair with Catherine Forrester. This was opposite to the expectation taking into account the background and type of policy that Catherine has adopted as a person who is in charge of the Human resource Management. The remuneration system has been a tripartite system; private health care, permanent health insurance, and pension based on final salary. Catherine found that her task is to amend the appraisal system especially after the systems problem has been re-emphasised by the employee survey as not applicable for shop floor staff as they would have little chance to identify the type and extent of influences on the achievement of objectives. The introduction of the competency-based appraisal approach as recommended by outside consultants had inflamed the situation without reaching to any decisive conclusion on this issue. The custom that adopted was a mix of the old and partially of the new system.

If we look at the appendix 2, the reward style in FTL has lots of discrepancies. The reward were not equally divided and organized for e.g. the senior managers earned 20% extra on their salary whilst up to 5% for a semi-skilled shop floor and administration staff and 16% for professional engineering and middle management.

Clearly, the problem is not only in the appraisal system it is also embedded in the inconsistencies of implementation of the bonus system. The bonus applies on certain branches differently from the one that is applied on the FTL. The other branches have already been enjoying company cars whilst this has not the case with FTL.

When it comes to pay salary, it is also evident that there have not been any plans that fit the environment. It looks as if the senior management has been cut off from the changes of the environment. No sooner that the engineers have started to ask for salary rise in correspondence with the competitive labour market, both Steve and Catherine have been forced to create a distortion in the pay structure. The solution made has been short termite by offering them premiums for taking works in overseas units. Apparently, the solution has only postponed the problem rather than solving it.

Individual performance related pay (PRP) is defined by ACAS as: a method of payment where an individual employee receives increases in pay based wholly or partly on the regular and systematic assessment of job performance (ACAS, 1990).

Profit related pay has grown considerably in recent years and concept of the profit-sharing scheme is quite simple: the company pays a bonus to eligible employees, based on company profits, which the employee must use to buy shares in the company. Unlike profit-related pay, this is not a part of the employee’s salary- it is discretionary bonus. However, like profit-related pay, it gives tax advantages to the employee because the share bonus is tax-free provided that the scheme is approved by the Inland Revenue. (Tom & Adrin, 2001)

This section will report on the organisations HR policies, the information is taken from current articles which are outlined in the appendices.

Tesco’s profits have soare