The HRM manager wants to take a strategic view of HRM. This view is especially relevant as it relates to the relationships between internal resources (HRM), strategy, and firm performance. This viewpoint has also been termed the resource-based approach. It has been stated that in order for a resource to result in sustained competitive advantage, it must meet four criteria. What are these four criteria, and how might they be applied to Fitright?
There are four criteria in order for a resource to result in sustained competitive advantage:
First, the resource must be valuable. Wright et al.(1994) and his colleagues argue that this is the case where demand for labour is heterogeneous, and where the supply of labour is also heterogeneous - in other words where different firms require different competencies from each other and for different roles in the organization, and where the supply of potential labour comprises individuals with different competencies. On this basis value is created by matching an individual's competencies with the requirements of the firm and/or the job, as individuals will make a variable contribution, and on cannot be substituted easily for another.
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The second criterion, rarity, is related to the first. An assumption is made that the most important competence for employees is cognitive ability due to future needs for adaptability and flexibility. On the basis that cognitive ability is normally distributed in the population, those with high levels of this ability will be rare. The talent pool is not unlimited and many employers are currently experiencing diffcultied in finding the talent that they require.
Third, resources need to be inimitable. Wright et al. argue that this quality applied to the human resource as competitors will find it difficult to identify the exact source of competitive advange from within the firm's human resource pool. Also competitors will not be able to duplicate exactly the resource in question, as they will be unable to copy the unique historical conditions of the first firm. This history is important and it will affect the behavior of the human resource pool via the development of unique norms and cultures. Thus even if the competing firm recruited a group of individuals from a competitor they would still not be able to produce the same outcomes in a new firm as the context would be different. Two factors make this unique history difficult to copy. The first is causal ambiguity - in other words it is impossible to separate out the exact causes of performance, as the sum is always more than the parts; and, second, social complexity - that the complex of relationships and networks developed over time which have an impact on performance is difficult to dissect.
Finally resources need to be non-substitutable. Wright and his co-authors argue that although in the short term it may be possible to substitute human resource with others, for example technological ones, in the long term the human resource is different as it does not become obsolete (like technology) and can be transferred across other products, markets and technologies.
One of the immediate needs for the Fitright CEO and HR Manager is to determine the best approach that could be used in the recruitment and selection of local managerial and operational personnel. What approaches might you recommend in referring to best practice for both recruitment and selection? The CEO and HR manager will need to consider this in light of Guanxi's influence on recruitment and selection practices.
There are many methods for the recruitment. For the selection of local manager, we can use the following methods:
In order to assist them in drafting advertisements and placing them in suitable media, many employers deal with a recruitment advertising agency. Such agencies provide expert advice on where to place advertisements and how they should be worded and will design them attractively to achieve maximum impact. Large organizations often subcontract all their advertising work to an agency with whom a mutually acceptable service-level agreement has been signed.
The decision on what to include in a recruitment advertisement is important because of the high cost of space and the need to attract attention; both factors will encourage the use of the fewest number of words. Where agencies are used they will be able to advise on this, as they will on the way the advertisement should be worded, but the following is a short checklist of items that must be include.
Always on Time
Marked to Standard
Name and brief details of employing organization;
Job role and duties;
Training to be provided;
Key points of the personnel specification or competency profile;
Instructions about how to apply.
The use of the internet for recruitment purposes is, along with the substantial recent growth in international recruitment, the most striking recent development in the field, but its practical significance remains a question of debate. When the internet first became widely used ten or fifteen years ago it was often predicted that it would find out about jobs through web searches. It now appears that these predictions greatly overstated the influence that the internet would have.
Internet recruitment takes two basic forms. The first is centred on the employer's own website, jobs being advertised alongside information about the products and services offered by the organization. The second approach makes use of the growing number of cyber-agencies which combine the roles traditionally played by both newspapers and employment agents. They advertise the job and undertake shortlisting before they send on a selection of suitable CVs to the employer.
The need to train Fitright's new employees is also seen as a critical activity. Identifying learning and training needs would be at the heart of this activity. What would be an approach or model for a people development strategy that is linked to the business strategy? This model would include four steps - what are they?
Training for the new employees is a must, because it can deliberate and systematic planning to enable people at different levels to perform their task in the most efficient manner. And their aim is to preparing people to do their job correctly, effectively and efficiently.
The people development strategy also known as 'systematic training cycle', was developed to help organizations move away from adhoc non-evaluated training, and replace it with an orderly sequence of training activities, but this approach has been less prominent of late.
The model is set within an external environment and within an organization strategy and an HR development strategy. It include four steps, they are:
First, we have to identify development need. Learning needs may be identified by the individual, by the organization or in partnership, and this applies to each of the following step in the circle. There are various approaches to analyzing need, the two most traditional being a problem-centred approach and matching the individual's competency profile with that for the job that person is filling. The problem-centred approach focuses on any performance problems or difficulties, and explores whether these are due to a lack of skills and, if so, which. The profile comparison approach takes a much broader view and is perhaps most useful when an individual, or group of individuals, are new to a job. This latter approach is also useful because strategic priorities change and new skills are required of employees, as the nature of their job changes, even though they are still officially in the same role with the same job title.
When a gap has been identified, the second step, planning and designing the development, can be undertaken. For example, when a gap or need has been identified around team leadership, appropriate learning objectives may be that learners, by the end of the development, will be able 'to ask appropriate questions at the outset of a team activity to ascertain relevant skills and experience, and to check understanding of the task' or 'to review a team activity by involving all members in that review'. The planning and design of learning will be influenced by the learning objectives and also by the HR development strategy, which for example may contain a vision of who should be involved in training and development activities, and the emphasis on approaches such as self-development and e-learning. Once planning and design have been specified the course, or coaching or e-learning activity, can commence, and should be subject to ongoing monitoring and evaluated at an appropriate time in the future to assess how behavior and performance have changed.
And then we have to do is carry out development. There are two methods of learning and development, one is on-job training, the other is off-job training. On-job training is taken place in the normal work situation and learning on the job. The line manager's role in learning and development has increased with the devolution of HR tasks. Coaching is an informal approach to individual development based on a close relationship between the individual and one other person either internal or external to the organization. The coach if often the immediate manager, who is experienced in the task, but there is increasing use of external coaches, especially for more senior managers, or specially trained internal coaches, and 'coaching' has become very much a professional occupation with its own code of ethical practice. The advantages of on-job training is less cost. It is because the coach if often the immediate manager. And it is no negative transfer of learning problems and no need for adjustment. It is because what he learn on internal, so he can completely use his skills on the job. But the disadvantages of on-job training is lack of professional instruction, and may be learning the bad method if the coach don't know how to teach the employee. It may cost large amount of spoiled work and equipment damage because of wrongly use of equipment and the skills is not mature. And there may not a good learning environment at working place.
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And the off -job methods is educational courses undertaken during a career are frequently done on a part-time basis leading to a diploma or master's degree with a management or business label, and/or qualification for a professional body. It is considered that such courses provide value for both the employer and the participant - and MBA study is a popular route. For advantages of such a course for the employee see, for example, Baruch and Leeming (2001). An alternative approach to qualification is the NVQ route which we discussed in the previous chapter, which is more closely tied to on-job experiences and not concerned with 'education'. There are many advantages of off-job training, it may have a higher teaching quality and planned learning with different possibility scenarios faced. For long term, it will reduce the cost of training because there are higher standard of speed and quality. It will learn the correct methods because there are many professional teacher and they use the college's equipment, so there are no damage and spoiled work produce. And it is easier to calculate the cost.
The last step, one of the most nebulous and unsatisfactory aspects of the training job is evaluating its effectiveness, yet it is becoming more necessary to demonstrate value for money. Evaluation is straight forward when the output of the training is clear to see, such as reducing the number of dispatch errors in a warehouse or increasing someone's typing speed. It is more difficult to evaluate the success of a management training course or a programme of social skills development, but the fact that it is difficult if not enough to prevent it being done. Hamblin (1974), in a much-quoted work, identified five levels of evaluation: (1) evaluating the traning, as in the post-course questionnaire above; (2) evaluating the learning, in terms of how the trainee now behaves; (3) evaluating changes in job performance; (4) evaluating changes in organization performance; and (5) evaluating changes in the wider contribution that the organization now makes.
When the evaluation are make, we can know what skills of this employee is sufficient and what he need to train again. If require, it may return to first step 'identify development need' to prepare the training again till the employee is suitable for the job's need.
What knowledge and skill does the CEO need to possess in order for him to manage industrial relations effectively?
It is possible to view management styles in terms of the extent and nature of collective employee participation in decision making:
Normative - the involvement of individuals was attributable to a strong sense of moral obligation; any challenge to authority would imply refutation of the shared norms.
Disorganized - disorganized consent is where there may be discontent but consent is maintained through lack of employee organization to articulate and endorse the dissatisfaction
Organized - it is unlikely that there will be any degree of incolvement in the management decision-making processes; employees simply consent to obey instructions
Consultative - employees are asked for an opinion about management proposals before decisions are made, even though the right to decide remains with the management
Negotiated - no longer is the management retaining all decision making for itself; it is seeking some sort of bargain with employee representatives, recognizing that only such reciprocity can produce what is needed
Participative - employee representatives take part in making decisions on major strategic issues; there is a balance between the decision makers representing the interests of capital and those representing the interests of labor, though the balance is not necessarily even
Controlling - employee acquire control of organization
Performance is a key issue for Fitright. Managers need to consider aspects of effective performance given the recent decline in this area. With reference to the performance cycle, what are the three key aspects of managing individual performance? Please provide examples associated with each aspect.
The three key aspects of managing individual performance:
Planning performance: a shared view of expected performance
Individual objectives derived from team objectives and an agreed job description can be jointly devised by manager and employee. These objectives are outcome/results oriented rather than task oriented, are tightly defined and include measures to be assessed. The objectives are designed to stretch the individual, and offer potential development as well as meeting business needs. It is helpful to both the organization and the individual if objectives are prioritized. Many organizations use the 'smart' acronym for describing individual objectives or targets:
Delivering and monitoring performance
While the employee is working to achieve the performance agreed, the manager retains a key enabling role. Organising the resources and off-job training is clearly essential. So too is being accessible. There may will be unforeseen barriers to the agreed performance which the manager needs to deal with, and sometimes the situation will demand that the expected performance needs to manager before proceeding, or may require further information. Sharing 'inside' information that will affect the employee's performance is often a key need, although it is also something that managers find difficult, especially with sensitive information. Managers can identify information sources and other people who may be helpful.
Formal performance review/assessment
Regular formal reviews are needed to concentrate on developmental issues and to motivate the employee. Also, an annual review and assessment is needed, of the extent to which objectives have been met - and this may well affect pay received. In many organizations, for example Microsoft and AstraZeneca, employees are now invited to prepare an initial draft of achievement against objectives.
The CEO and HR manager have concerns about what would be an appropriate pay and reward strategy for their employees - Provide at least three considerations or actions in coming up with an appropriate pay and reward strategy?
A major current feature of the literature and rhetoric about remuneration systems has been a concern with defining and refining reward strategies. While different writers have different ideas about what exactly constitutes a strategic approach to the management of reward, most agree that it is primarily about aligning an organization's payment arrangements and wider reward systems with its business objectives. This means developing systems which enhance the chances that an organization's employees will seek actively to contribute to the achievement of its goals. So if improved quality of service is the major business objective, this should be reflected in a payment system which rewards front-line staff who provide the best standards of service to customers. Alternatively, if increased productivity is sought, then an approach which rewards efficiency would be more appropriate.
There are some considerations in coming up with an appropriate pay and reward strategy. We will consider by broadbanding, job evaluation and fair.
Broadbanding essentially involves retaining some form of grading system while greatly reducing the numbers of grades or salary bands. The process typically results in the replacement of a structure consisting of ten or a dozen distinct grades with one consisting of only three or four. Pay variation within grades is then based on individual performance, skill or external market value rather than on the nature and size of the job. The great advantage of such approaches is their ability to reduce hierarchical thinking. Differences in pay levels still exist between colleagues but they are no longer seen as being due solely to the fact that one employee is graded more highly than another. This can reduce feelings of inequity provided the new criteria are reasonably open and objective. As a result, teamwork is encouraged as a focus on improving individual performance in order to secure higher pay.
In theory, therefore, broadbanded structures increase the extent to which managers have discretion over the setting of internal differentials, introduce more flexibility and permit organizations to reward performance or skills acquisition as well as job size. Their attraction is that achieve this while retaining a skeleton grading system which gives order to the structure and helps justify differentials. Time will tell how acceptable such approaches are to the courts when it comes to judging equal value claims.
We can use job evaluation to appropriate pay and reward strategy. It is necessary always to juggle the three factors of performance, market rate and equity. It is rarely possible or wise to pay people only according to their performance or contribution, and linking payment only to developments in the labour market can make working relationships very difficult. Job evaluation is the most common method used to compare the relative values of different jobs in order to provide the basis for a rational pay structure. Despite its popularity it is often misunderstood, so the following points have to be made:
Job evaluation is concerned with the job and not the performance of the individual job-holder. Individual merit is not assessed.
The technique is systematic rather than scientific. It depends on the judgement of people with experience, requiring them to decide in a planned and systematic way, but it does not produce results that are infallible.
Job evaluation does not eliminate collective bargaining where trade unions are recognized. It determines the differential gaps between incomes; it does not determine pay levels or annual pay rises.
Only a structure of pay rates is produced. Other elements of earnings, such as premia and incentives, are not determined by the method.
Job evaluation also use the following methods:
Job ranking: each job is valued as a whole and placed in order of its worth, and the jobs already have wage rates attached to them and such a ranking process is used to judge whether these are equitable and some modifications may be made to correct any apparent discrepancies. It is the simplest method and hence most suitable for small enterprises.
The advantages of using job ranking is quick, inexpensive and requires no complicated administration. It is easily understood and suitable for fairly homogeneous jobs, such as all clerical posts.
But the disadvantages of job rating is difficult to defend the results. The judgments are influenced by present wage rates and impracticable in large companies with numerous jobs. It does not indicate the spaces between positions in the rank order - the magnitude. It may provoke industrial conflict because some employees may claim they are unfairly paid as there are allegedly no strong, logical reasons behind the rank order.
Job grading: Job grading is decided in advance how many grades or classes of pay shall be created, and the jobs which should fall into each grade are defined. The lowest grade, for example, will be defined as containing those jobs which require least skill, knowledge or responsibility and are closely supervised, with each successive grade as skills, knowledge and responsibilities increase. The evaluation committee then reads the job specification of each job, matching it against the various grade definitions until an appropriate grade is identified. Suitable for jobs with similar overall responsibilities, but, with some jobs requiring higher levels of skill or qualifications to handle extra responsibility.
The advantages of job grading is it relatively simple, quick and inexpensive. The decisions of committee can be supported by the definitions of the job grades.
The disadvantages of job grading is complex jobs are often difficult to fit into the system. It is still a semi-analytical method and employees may still feel the scheme is unfair as the value of work done has not been compared with some objective, compensable factors. It is difficulties arise when technological or organizational changes occur, leading to tremendous changes in job duties and grade boundaries.
Factor comparison: It includes decisions about which jobs have more of the chosen compensable factors, such as skills, mental abilities, the importance of responsibility and working conditions. For each of the compensable factors for all key jobs, the committee then writes the job next to the appropriate wage rate. After repeating the same for all factors for all key jobs, a factor-comparison chart can be constructed.
The advantages of factor comparison is it does not require conversion because it is expressed in monetary units. It is logical and easy to accomplish and it less subjective than non-quantitative techniques.
The disadvantages of factor comparison is it complicated and time-consuming. It impractical for a large number of jobs. It is not always appropriate to use the same compensable factors for all jobs and when a change in the duties assigned to the key jobs will threaten the validity.
Points rating: It requires identifying several compensable factors against which jobs can be analyzed. Each factor carries a range of points. The total of points when set against other totals indicates the position of the job in the hierarchy. The factors chosen for job evaluation may not all have equal importance. Weighting is the name given to the process by emphasis than others. Different jobs require different factors; it is very unusual for a company to be able to evaluate all its jobs by the use of one scheme only. After evaluation has been completed, the jobs appear in an order of value . they are then divided into group or grades, the object being to allot to each grade a particular basic rate or pay-range. In many cases most jobs in the same grade pay about the same rate.
One of the major reasons for the growth in job evaluation in recent years has been the development of equal pay law. When assessing the validity of equal pay claims, tribunals employ the principles of job evaluation as a starting point, appointing a job analyst to undertake a comparison of the content of different jobs if necessary. Importantly, from the employer perspective, this means that the use by an organization of an analytical job evaluation scheme can be a very effective defence when an equal pay claim is brought. The employer can simply claim that the jobs in question have both been evaluated and been found to be of different value for specific reasons. Provided the scheme itself is free of sex bias, this should serve to deter aggrieved employees from bringing cases in the first place.