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Human Resource Management:
Business transactions, communications, customer dealing, etc. are activities performed by humans, who are the greatest assets of an organisation. According to Ian Handerson's book People Management: Personal Management and Human Resource Management; Peter Drucker says, "The people-their skills, knowledge and creativity-are the key resource for the economic and organisational success of a company". With the continuous change in the structure of an organisation, not only the business but the employees also are affected. So it becomes very essential to manage the capabilities of human talent and its effectiveness towards the organisation. To cater the needs of employees who make it possible for a company to be successful, there should be an organized approach towards the concerned issues. This management of employee's welfare for the company's advantage is termed as Human Resource Management.
HR functions create a value that makes the line managers to raises frequent questions. This could help us identify which HR practice is the best for the business and which is not. Bernasia Halikowa, Paul Osgood and Mark Hoyal believe that the value creation process of every organisation has a very critical part in common, that is "people".
This is a typical example of how Human Resource Professionals help enhance value of an organisation?
A single finest method does not exists for achieving organisational success and productivity
All HR assets have to be combined with a proper organisational strategy to create value for the business
Employees who are more committed towards the organisation contributes more to the value
Human Resource Management during Global Recession:
A recession is trade cycle shrinkage, a broad slowdown in financial motion over a specified period of time. If the GDP (Gross Domestic Product) of a country is continuously in declined phase for two or more quarters, it is called recession. It has almost become the inseparable part of a business cycle. Current recession has affected economies of the developing and developed countries as well; people are losing their jobs continuously. Thus the Human Resource professionals have to deal with emotional and tensed employees as some of them may be the only income source in their household. Human Resource managers also do need to think about the reward system in place.
Strategic management model
Figure 1: Strategy management
This could also be defined as:
Step 1: Mission and goals
Step 2: Environmental analysis (external & internal scan)
Step 3: Strategic formulation
Step 4: Strategic implementation
Step 5: strategic evaluation
(Bratton and Gold, 2007: 43)
Human Resource Tactical Design
"Human resources planning is expecting forthcoming corporate and ecological difficulties on establishments and gathering the particular necessities dictated by the circumstances" (Schuler and Jackson, 2007: 32). The main motive of Human Resource Management is to run the business efficiently and to expand it along time line. Thus the strategic planning needs to integrate the effectiveness and improvement of an organisation as the main goal. Following are some strategies which I feel should be applied by the organisations in order to achieve what has already been discussed:-
Organisations should always be careful about hiring full time employees in this market situation where everyone is in dilemma about whether they have seen the worse economy downfall or is it yet to come, so a temporary staffing policy should be implemented but the implication is, that the jobs that require skilled workers could not be filled in by temporary staff.
Create sense of belonging among employees
During this time of recession companies across the globe are making people redundant, and the people that remains with the organisations have this fears of being redundant. People are losing faith in companies, they are feeling insecure about their jobs and the recession cycle goes on, employees become less committed towards organisation and productivity is lost. Thus a proper plan is needed to ensure the employees that their jobs are secure and they will be valued for the involvement in productivity.
Rehire the redundant employees
Organisation may rehire the employees once they are over the fear of recession. They might need to provide them with bonus in order to compensate for the time they have been jobless. They could also be used as consulting as they have the required experience in the field.
Web based solutions
All the HR trainings could be recorded in a video and can be posted over the employee web portal on intranet, each employee could have a login name and could use the web to get trained, refer to his/her queries. Doing this we can save time and money (printing expenses) both, but how would we know that an employee is actually undergoing the training or not? So there should be a proper assessment process for them, so that we know that they are being trained.
Borrowing the employees
If you are in need of an employee then you could ask any competitor of yours to provide you employees when they don't need them, doing this you could save their jobs as the other company did not need them anymore. But there is an implication, the hiring company could steal your knowledge base or even hire the employee permanently.
Incorporating and aligning HR procedures with corporate tactic:
The effect of corporate tactics on human resource assets should be evaluated to check its impact on value that it creates according to the changing trends in human behaviour towards organisational commitment. Remember, that a corporate strategy changes according to circumstances and type of assets the company possesses. Michael Porter categorised all possible strategies into three or four classes into his book, "Competitive Strategy". There are three ways in which companies could contest:
Cost leadership - providing the cheapest better services
Differentiation - having something exclusive to sell
Focus - exploiting the market segments with those exclusive products.
An organisational specific strategy could be derived from formulating activities in such a way that it creates value for that organisation. This permits the corporate entity to break the entity barriers. Fred Wiersema and Michael Reacy concluded the same in their book, "The discipline of market leaders". The customer only recognises three operational tactics from a company:
operational excellence - cheapest dependable products
product leadership - Dominate market with exclusive products
customer intimacy - Consumer oriented variant of the product or services
Engage employees to create value
It is always a challenging task to find out the relationship between the corporate excellence and behaviour of the employees. The old-fashioned strategies to please the employees and to make them committed towards the organisation do not seem to fit along with the latest matrices that are there to evaluate the performance of a corporate entity. Employee behaviour could be measured with a metric named 'Employee Engagement metric'. These kinds of detailed tools could prove helpful in order to measure the impact of employee behaviour on the value that a company creates.
Is different with each company.
Not every strategy is applicable on all assets.
Affects financial performance of a company.
Could be assessed and coped efficiently.
The above figure depicts the engagement model of an employee; it includes six areas which would encourage engagement. To express the importance of the value generated through engagement. A US research shows that the employees that are committed:
Generates £2300 more revenue per year
Contributes £12000 towards market value;
Helps boost sales by £17500 per year.
Measuring this will enable us to take an action which could lead to a better business performance. The measurement can then be useful to identify which elements helps to motivate the employees to stay in the same company, and which of them help the employees work beyond their capabilities. It can help us to determine the dissimilarity between good and bad performing units and thus it helps in improving the overall value to the business. By measuring these characteristic the managers can know which area to focus for better corporate performance. The committed employees stay longer with company thus helps in boosting its sales which ultimately creates a better value for the company.
Measuring value using HR metrics:
If a company lacks on considering HR metrics to measure commitment, it denies its right to gain a competitive advantage and thud impacting the overall value. An organisation needs to define its HR practices which make the most impact on value at an earliest stage possible. After the IT revolution companies are using better performance measures so that they could lead the market. 80% of the companies today are using such measures, however balanced score cards are also being used with 44% of the companies.
David Norton and Robert Kaplan suggested in their book, 'The Balanced Scorecard' that some measures are such that they impact the overall value for a short span of time. So they need to use a balanced portfolio of strategies to measure the performance. An ideal balance score card might look like the figure below:
The above figure answers how HR is adding value to business from 4 different point of views:
The return on capital invested in HR assets
Are we serving effectively
Are we fore planning to train our assets for future endeavours?
If the customer needs are being served or not?
For most companies the prime objective to use these HR practices is to:
Create a common platform for managers to communicate effectively
Fore seeing an opportunity and bend our work force for the same
Become more co-operative with business units
The companies without these measures found themselves in an uneasy situation to communicate with the HR management.
HR performance measures:
HR Delivery Measures:
The number of calls, the time need to respond, and the response accuracy, solution provided at first call, disconnection rate and satisfaction of customers are the factors that could be measured in an HR service centre.
The cost needed to run HR and the productivity it helps to increase could measure the HR effectiveness.
Instead of concentrating on activities related to HR function we should measure the process to assess the delivery efficiency.
HR talent measures:
Several Companies are using innovative strategies to measure the effectiveness of their talent pool. Surveys are being conducted to measure the same.
Measuring the shortage of talented staff, the difference between expected and achieved turn over & Internal and external staffing difference.
The time, Money and type of firing can also be measured.
Employees that are voluntarily willing to contribute towards the global leadership can also be evaluated as talented assets.
Use all these results and compare it with rivals.
So we can say that HR contribution towards value of the company in terms of profit is no longer a soft concept. The recent cutbacks in HR activities led to a fact that the companies were not using modern assessment metrics and are showing the incapability to realize the relationship between the value added and the cost endured. The recent HR strategies are helping narrowing down the gap between the same, and are contributing well towards success and a greater profit margin. It enables the companies to translate the strategies in terms of human behaviour to create a motivating culture which automatically encourages the new workforce to be committed. Thus we can say the companies adapting these strategies do not have a risk if their competitors are using the same strategies.
If we categorize companies in two groups,
The best companies to work for, and
FTSE all-index companies.
We would find the following results:
"Resourcing is the process for ensuring that the human resource requirements of an organisation are identified and the plans are made for satisfying those requirements". (Bulla & Scott: 1994)
One of the most important practices of Human Resource Management is resourcing and there are two major important aspects of resourcing:
1 Number of people needed
2 Knowledge & capability of the person
Now that the world is allegedly coming out of recession it is high time that organisations start recruiting skilled labour as a part of the strategy to achieve an edge over its competitors. There is definitely a component of threat for the organisations on doing so, because the prediction that economy would stabilize might prove false, still the misfortune of an organisation can open up opportunities to others, so there should be a more pessimistic approach towards enhancement of quality & innovation.
HR practices of careful hiring/firing are basic steps to achieve an advantage over competitors. Thus hiring people with the right resource and making them work in the right department with apt motivation would result in high performance and thus faster development of the organisation. (Bridle 2010)
Till recently, organisations were striving hard to develop strategies for retaining people and achieve commitment from them. A recent study, though, found that an average person (graduate) changes 19 jobs (on an average) throughout his job life (Standard retirement age applies). This brings us to an understanding that an employee is not ready to be committed towards an organisation for more than 3 years and thus will start searching a new job after his three year tenure (Bridle 2010).
Keeping the recent economic downfall in mind we can say that the companies must not think much about commitment and retention and should start implementing its existing workforce for the better efficient production.
Training and Development:
"Training and development is an essential HR practice to gain competitive advantage". (Pleffer: 1994, Trgaskias, Olga: 1997)
Training and development is always linked with the final profitable outcome of the company as well trained staffs will work efficiently and produce more. If a company thinks about being innovative and being a company with enhanced quality products it should train its employees so they could contribute towards the same cause, which will eventually help create more value. If these activities are introduced at the recruitment stage it could help gain quality work force.
Since this practice costs a lot of money it is always important to deploy the training and development phase in a cost effective way. A feedback from the employees is also needed in order to find out the kind of training they require and the improvement the current training needs.
"A well trained Staff will always produce well than the less trained one", means greater value.
"Motivation is a process to intentionally or unintentionally grow the potential of the people rather than controlling them or forcing them to do things"(Whitaker, 1995 cited in Hood:2001)
Present market situation is not helping in the cause of retaining good employees thus we need a good motivation approach to fulfil their needs as individuals. This would result in a proper co-ordination between the willingness and achievement for the organisation. We should keep these points in mind:
The companies should reward the employees for their good deeds and the contribution they make towards the final value of the company.
There should be a clear distinction between the most motivating and least motivating factors. Motivation activities should be performed according to their priority.
A proper planning for the kinds of reward should be done as if they want to reward someone with money, promotion, more responsibilities, vouchers or employee of the month award.
Employees should be categorised so that a non-performing employee could not be in the list for the rewards to be given because it could demotivate the ones who are more deserving.
Companies should always keep in mind the profit margins so that it could distribute the allocated share to the deserving employees, as the reward scheme always costs a lot and it should not affect the overall profit of the company or value as we say it.
After critically assessing some of the HR practices like planning, training development, motivation, rewards and resourcing one could conclude that in order to be a successful corporate entity we should focus more on these practices. It helps the employees to consider themselves as a part of the company, this sense of belonging leads to a well-motivated staff and helps the company to produce effectively, motivated employees than will work hard to attain better profit margins and this would eventually add up to the overall value of a company. Thus, the most important asset that a company could possess would be the employees that need to be managed well by a corporate HR strategy.
These HR strategies must be implemented in such a way that it does not affect the overall profit, every possible solution has been discussed within the paper but it is how I perceive the things to be.