Management is an important component in the existence, survival and functioning of any organisation. Many organisations have been aware of the fact that their success is greatly dependent upon the quality and effectiveness of this dimension. As organisations grow in size and complexity, the requirement for an efficient and effective management multiply. Human resource (HR) managers are not an exemption. HR managers' role is increasingly becoming important in terms of taking the initiative and engaging subordinates toward the achievement of certain goals and toward higher levels of expectations and achievements vital to the organisation's subsistence (Armstrong, 2006).
Human resource management (HRM) had been a robust, ambiguous organisational concept or just had been a mere managerial ideology. HRM as a managerial theory from a strategic perspective has three central themes: the strategic business management of the human asset through an effective HR manager; b) the 'whys' and 'hows' of an effective HR manager; and c) an effective HR manager as an integrative key for a competitive advantage. To wit, HR managers themselves may either contribute and/or jeopardize the company's growth if not handled effectively.
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According to Susan Heathfield (2000), whether generalists, specialists or executives, human resource professionals have overlapping responsibilities depending on the size and the industry the business belongs that contributes to the overall success of an organisation. For instance, HR generalists could either take the responsibility as HR managers or directors or the combination of the two in small organisations whereas in larger organisational structures, HR professionals have clearly defined and separated roles which require more responsibilities and authority. The weight of responsibility though lies in the hands of HR managers.
Historically, HR managers are commonly perceived as systematizing and policy-making aspects of the executive management. HR managers functioned as personnel and administrative officers whose jobs mainly constitute as paperworks since they dealt with hiring, paying and negotiating benefits for organisational members. Nonetheless, the fast-paced organisational changes call for the reevaluation of the position of HR managers towards becoming proactive and process-oriented. The rationale behind is the growing need to split broad managerial functions into specific areas of responsibility (Heathfield, 2000).
Today, the roles of HR managers transcend beyond mere paperworks which now include recruiting, hiring, training, organisational development, communication, performance management, coaching, policy recommendation, salary and benefits, teambuilding, employee relations and leadership. As such, competent HR managers' roles are directly delineated to employee satisfaction, total quality management (TQM) and the company's performance. Such premise is central to the idea that HR strategies are employee-centered, making it possible for HR managers to impact employee behaviour (Burke and Cooper, 2006, p. 44).
HR managers have the responsibility to ensure that a formal and legal professional system is in place within the company as this affects not just the employees' productivity but also the organisation's performance as a whole. Simply, the business would likely to experience operational disorders and lack of management if the practices and implementation of HR programs such as recruitment procedures, pensions management and employment, for example, will be complicated and incompetent. In the presence of poor internal systems and workforce issues which are inevitable, HR managers and their roles must not be jeopardised and be sacrificed (Armstrong, 1999).
An HR manager also served as an instrument for achieving corporate objectives and strategic plans through comprehensive, customised policies and procedures. In lieu with this, HR managers continuously contribute in shaping corporate culture while also encouraging a company-wide integration and cooperation (Armstrong, 1999). As Cunning (2004) puts it, a corporate culture can be a tool for employee retention, and that an HR manager's role in coordinating corporate objectives in preserving the culture enables the business to meet its commitment to the staff as well as the customers (p. 41). HR managers facilitate functional flexibility, high-level participation processes and continuing open dialogue with the workforce through information sharing and defining expectations.
Apart from securing, guiding and developing employees with talents and desires aligned to the operational needs and future goals of the business, the HR managers are also responsible for employee management and building public relations (Armstrong, 1999). HR managers, along with other HR staff, develops systematic plan for creating a professional work team. Likewise, the HR force answers queries, settles employee needs and problems and also disputes and grievances in a professional manner. HRM managers also assist the business in building public trust and creating a steady referral system which harness collaboration and association with other businesses and the industry (Small Business Bible).
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The HR department, with the HR director or managers as leaders, ensures the employee engagement and maintains employees' rights. Employee participation envisions decision-making as a provider of sense of ownership and belongingness as an undertaking which could provide employees the individual professional growth (Brockbank, 2005, p. 180). HR managers, in particular, uphold the rights of every employee by making certain the protection and development of official documentation, workplace ethics/code of conduct, employee handbooks, award/reward programs and community connections. Boones and Kurtz (2006) assert that these materials serve as proof of policies and regulations compliances and as orderly statements about the company (p. 168).
HR managers, like any other HR professional, maintain the right to initiate and recommend policy changes whenever necessary and for the good of all the stakeholders involve. HR has the power to update and develop internal policies whenever the necessity arises. Arguably, if HR mangers fail to formalize procedures and systems as employee population increase, employee-related problems will also increase. As an integral aspect of growth, control and indeterminacy is critical for HR managers (Marlow, Patton and Ram, 2004, p. 26). This points to yet another critical role of the HR managers which is to guarantee that core business strategies are strategically aligned with HR strategies important in ensuring and quantifying productivity.
Total quality management (TQM) is a continuum that requires the application in integrating all function, processes and elements of the business despite the actual cost. The working principle is that quality suffers when dissatisfied customers grow, decline in loyal customers and increased in complaints as inputs and outputs are lessened, making quality correlational to productivity. What the HR managers are responsible of is to motivate the employees to enhance productivity ratio (Omachuno and Ross, 2004, pp. 193-194). HR managers function as developers of knowledge, entrepreneurial, intellectual and socio-emotional competencies of the employees.
For Dave Ulrich (1997), there are three additional 'value-added' roles of HR managers: employee advocates, change champion and strategic business partners (p. 47). First, HR managers' advocacy tasks purport to create and establish a work environment whereby people will choose to be motivated, contributing and happy. In fostering an effective method towards goal-setting, communication and empowerment through responsibility is to build the sense of ownership amongst the employees. Proficient and committed organizational culture and climate stems from a competent and committed workforce which is provided by equally competitive, committed and effective HR managers. Based on this, HR managers also provide for employee development opportunities and assistance apart from motivating the people (Ulrich, 1997)).
Second, the knowledge and ability to execute successful change strategies within the organisation make HR managers exceptionally valued. Though the role as change champions can be considered as irrelevant to quality efforts compared to the quality work life (QWL) movement, the constant effort to assess effectiveness of HR functions justifies the need for agents of change whom are the managers. HR managers are expected to efficiently promote and identify organizational mission, vision, goals and objective as well as applying this on everyday activities. Through the delivery of sound HR practices via the HR manager as an emblem of change, employee dissatisfaction and resistance to change will be minimised. HR managers must serve to fulfill action plans, manage transformation and ensure capacity for change as well (Armstrong, 2006).
Business partnership between the organization and the HR managers are more facilitative and aims at developing self-sufficiency. Third centers the role of HR managers as strategic business partners. There are two advantages of this role for the organisation: the close integration of HR functions with the business though role definitions and the individualistic affirmation of roles. Notable is that such role is embedded on ideologies that hinder sound collaboration within the organisation. HR managers are also expected to develop strong working relationship with employees and customers, acquire knowledge of local business issues and consultation processes, and acquire ability to access strategic issues, clear role boundaries and to pull in expertise when required (Ulrich, 1997).
Considering this, HR managers need to acquire knowledge, skills, abilities and personalities necessary to be competent in this field. Personal skills such as flexibility and adoptability as well as technical skills are much-needed which could be obtained through increasing their knowledge on HR policies and processes and ensuring legislative and company policy compliances. Influencing skills, people management skills and political skills are also important. HR managers are required to have broad knowledge of the company's business, either internal or external, and must act on achieving a knowledge-centric culture. Provided that HR managers are also subject to ethical criticisms with which reputation is always on a juggle, HR managers are anticipated to behave and discover ways to increase their abilities in recognizing moral issues and developing their moral sensitivities.
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The value of effective HR managers is now being highly-recognized as an essential component of any organization. The reason behind this is the outcomes of effective HR managers that include increased workforce diversity, adaptability to changes, attuned, sound employee-employer relationship, total quality of work life (TQWL) and increased in employee involvement. Nevertheless, it is worth noting that the degree of efficacy of HR managers differs from organisation to organisation. Evidently, for HR managers to realise their full potential must be systematic and logical as this impacts the organization as a whole and influenced employee individually. Aside from being well-experienced and highly competent, HR managers should be credible and respected with an optimistic disposition in life (Armstrong, 2006).
Effective HR managers are also regarded as an asset which provides a competitive advantage. HR managers are perceived to be an effective instrument to achieve a corporate culture at par from other organizations. Competitive advantages through people are the determinants that distinguish an organization from its direct rival and provide positive economic benefits that are not readily duplicated. The capability of the HR manager to hone a high-commitment, a high-performance and high-involvement workforce transcends towards a competitive edge to boot. HR managers are capable of an organisation-wide transformation from operational to strategic, administrative to consultative, internally-focused to externally and customer-focused, reactive to proactive and activity-focused to solutions-focused (Armstrong, 1999).
Placing HRM at the core of every management function will be the most plausible avenue towards succeeding to the new and highly competitive business environment. Armstrong (2006) defined HRM as the strategic and coherent approach to the management of an organization's most valued assets - the people. The most celebrated discussion on how HRM could add value to the organisation in terms of acquiring the competitive edge. By means of effectively managing HRM, organizations can gain a competitive advantage over their competitors, and may even be the single most important determinant of an organization's performance over the long term. Competitive advantage, in brief, is the superior marketplace position relative to its competition through cost leadership and product differentiation (Porter, 1985). The sustained competitive advantage model of HRM will be the basis of this document.
Sims (2002) contends that HRM efforts are planned, systematic approaches to increasing organisational success given that HRM programs aimed at developing HRM strategies for the total organization with an eye toward clarifying an organization's current and potential problems and developing solutions for them (p. 3). HRM highlights that HRM planning needs to be closely related to the organisation's strategic goals and objectives. Organisational success could only be achieved through HRM and other functions that shall work together to facilitate local and international competition abilities. Organisational success embraces criteria and components as legal compliance, performance, employee satisfaction, turnover, absenteeism, grievance rates, and accident rates (Ibid).
As such, HRM practices and strategies can be an important source of competitive advantage by means of the creation of both cost leadership and product differentiation in organisational, national and international contexts since HRM generates employee- and organization-centered outcomes. HRM practices are centered on achieving high levels of competence, motivation and work-related attitudes resulting to output, employee retention, legal compliance and company reputation or image. The premise is that HRM practices are less susceptible to imitation and thus the competitive advantage gained through this is more sustainable (Bratton, 2001).
From a resource-based perspective, there are several categories of resources that HRM can build upon to gain the so-called advantage consisting of physical, organisational, financial, technological and, most significantly, human resources. Though the mere existence of human within the organisation is not sufficient, the relationship among them that must be controlled for the purpose of long-term commercial success. As assets that provide knowledge, intellect, expertise and competencies, the sustainable competitive edge potential of human resources is vested on the notion that human resources are valuable, rare, inimitable and non-substitutable (Bratton, 2001).
Human as well provides varying contributions to the organisation; hence, providing value at diverse degrees. The heterogeneous nature of human resources offers different skills and differences in types and levels of idiosyncratic skills. Further, advantages that HRM endow the organisation with is not only limited to HRM nor achieved through HRM. Examples of these are employment security, recruitment selectivity, high wages, incentive pay, employee ownership, information sharing, participation and empowerment, self-managed teams, training and skills development, cross-utilization and cross-training symbolic egalitarianism, wage compression and promotion from within.
HRM that hones performance, commitment and quality transforms all of these into corporate strategy and integrate them into the existing culture. These could materialise through the consistent identification of key drivers that will contribute to corporate performance and the initiative to leverage from intellectual capital, securing a talented workforce and creating win-win solutions for both people and organisation. HR management issues are promptly dealt with through aligning practices with industrial relations and personnel management. This is an offshoot from the principle of human resources as an asset and as opposed to variable cost (Bratton, 2001).
Bach suggests that HRM is central to business strategy (2000); HRM serves as the facilitating bodies of lifelong learning. Separately, HRM considers social and economic objectives and emphasises the importance of innovation, competitiveness, productivity and growth of the organization. The deliberate connection with strategic planning ensures that performance and delivery are integrated into management and secured compliance to winning commitment (de Silva, 1998), a process that allow the performance of integral and formative functions with respect to the environment and the organisation. As such, the sum of people's knowledge and expertise and social relationships has the potential to provide non-substitutable capabilities that serve as yet another source of competitive advantage.
Based on the model, to contribute to corporate strategy of which is capable of being translated across culture, value could be created through significant changes restructuring and continuous HR system integration, especially when these have profound impact on financial, managerial, planning, decision-making, organizational structure and industrial relations. Underpinning a culture of continuous improvement and corporate social responsibility, efficiency and productivity are only supplied by the people of highest possible skills, flexibility effectiveness and willingness. HRM assists in looking at the framework of principles, policies and practices which can be utilized to manage the people and help to clarify his or her responsibilities in an integrated manner. What makes HRM more flexible is the emphasis on demand of labour and on planning and monitoring. HRM focuses mainly on the output which means higher interplay of HRM practices and strategies to organisational and management objectives (Bratton, 2001).
This resource-based HRM model gives way on the possibility of work-related learning and the mobilisation of employee through learning strategies. Suggestively, the model presents that organisations each possess distinctive competences that enables them to outperform their competitors, making organisations as a breeding ground of more productive resources when combined. The flexibility to exploit these distinct competences such as resources either tangible or intangible and capabilities is another critical factor. The capability to coordinate the resources effectively lies on the hand of the HRM actors. Apparently, though organisations are subjected to pressures of natural, economic, political and cultural environment, HRM is flexible enough to move along with these pressures (Bratton, 2001).
HRM also addresses individual issues but not jeopardising the entirety of the organisation. Guest (1987) stresses that the incremental function of HRM is central on the emergence of better educated workforces and higher individual expectations. The ever-changing technology and the necessity for more flexible jobs create an opportunity for HRM to incorporate the internal processes and systems into central management policy. The underpinning of this is the ideology that commitment and motivation are an outgrowth from organisational behaviour that put emphasis on management strategy that connects HRM with organisational behaviour and management strategy itself.
With the presence of HRM functions, the organisation is pushed to continuously invest on its reputation or image, highlighting the need for sound human resource policies and practices and aligning such with the business strategies and its external context. The organisations seeks the betterment of internal and definite processes, procedures and systems which aimed at consolidating competencies, continuous education, proficient performance at individual and collegial levels and balance monetary and non-monetary reward systems. Investing on diversity is also priority besides addressing issues such as retention/turnover and motivation, morale and productivity, innovation, creativity and problem-solving, teamworking, ensuring synergy at all levels and avoidance of legal suits (Bratton, 2001).
One such important venture for HRM is the possibility to identify multidivisional business organisation concerning the level to which strategic issues apply. For instance, dealing with compensation issues will be unique on the basis of structural consideration (i.e. corporate, business-level and functional). Likewise, responding to compensation issues will follow a hierarchy of strategy without the need to blur demarcation lines through a competent HRM. Strategies are also applicable to many specific functions of HR consisting of retaining quality workforce, funding, globalisation, change management and the legal environment which considers health and safety, conditions, equal opportunities and various legislations (Bratton, 2001).
HRM puts perspectives on strategic and operational plans also. HR players contribute in setting the overall aims and objectives and secure specific targets and actions by organisational units or by activity and also plans individually. Conspicuously, HR strategies will aim to create and maintain a workforce that is well motivated, appropriately trained and equitably rewarded and which performs effectively in pursuing organisational objectives. Through HR, the whole organisation would be able to understand the external environment and their place in that environment as well as smoothening the progress of reviewing the changing demands and nature of the workforce, the people and the things that surrounds them (Taylor, n.d.).
HRM also provides for diagnostic, aspirational and developmental strategies. No other functions in the organisation which is able to provide a comprehensive and systematic evaluation of current practice and performance for the purpose of identifying where the improvement is required and where policies and institutions are performing at its best. The visions of effective HR practices produce specific outcomes that contribute to the organisation's strategy with clear values and principles as its foundation. A plan for achieving progress and building greater capacity to bring about change in the future is also possible with HRM around. What is more, these activities are implemented with relatively adequate levels of involvement, feedback on performance, focus on what is achievable, clear allocation of responsibilities and effective training and support (Taylor, n.d.).
As the world becomes more interdependent, there is the growing need to invest in diversity to which HRM would be the function that could make this happen. In developing the intelligence and the competence, HR managers and leaders must acquire KSAs in order to fulfill the role of cultural agents. For HR professionals in particular, these are very important initiatives to strategically structure the business culture with emphasis on relationships, communication, management styles, HRM, labor relations, quality control, training, negotiations and effects of national laws. The importance of this diversity is on understanding the cultural differences in organisational contexts which is also important in further shaping the workforce (Blyton and Turnbull, 1992).
With proficient HRM in place, there is also the high probability of benchmarking efficient practices within the organisation. Benchmarking and outsourcing are two very distinct functions though both can be applied to HRM. Benchmarking refers to a process mostly utilised in strategic management by which the organisations evaluate practices in comparison with the 'best practice(s)' unique to the industry o sector they belong whereas outsourcing is defined as the process of delegating one or more business processes to an external provider. What makes benchmarking a plausible initiative is that it encompasses the process of continuous learning and the eventual management of change while for outsourcing is on improving quality, cost restructuring and capacity management (Burke and Cooper, 2006, p. 24).
Several factors -- internal and external -- affect the organisation and its expected growth. Human resource management is considered as strategic and coherent approach in managing the organisations' most valued asset which is the people. Arguably, the management of people, who come from various backgrounds and with different intents, is not without difficulties and human resource management can only relate to how these people perceive the things around them, how they can be motivated to work harder and what behaviours can be modified while in the workplace. However, there are organisations which prefer to outsource specific or all HRM functions to third party providers. We shall see in the progress of this report the nature and dynamics of people management, HRM outsourcing and in-house HRM. Whether the writer agrees on whether there is a need for an HRM department or not will be decided in the end.
This report will discuss the criticality of good people management within organizations, the advantages and disadvantages of HRM outsourcing, the advantages and disadvantages of in-house HRM, utilizing real companies in the discussion. A portion of the discussion will be devoted on how HRM can actually make the business worst.
Good people management
Pros and cons of HRM outsourcing
American Airlines (AA) is the world's largest commercial passenger airline that provides scheduled jet service to destinations throughout North America, the Caribbean, Latin America, Europe, Pacific and Asia. In spring 1996, the business opened the Dublin European Reservations Office. The office deals with all aspects of customer service and reservation sales from several European countries.
Careers and hiring requirements within the airline passed through networking wherein the company had outsourced their key HR functions to IBM. In March 2007, the company had turned-over most of its HRM operation in IBM under an outsourcing agreement (McDougall, 2007). IBM has now the power to hire and employ recruitment strategies and selection systems. They are also responsible for applicant short-listing and for the final stages of the selection process such as drug screening and reference checks as well as testing and assessment (Rioux and Bernthal, no date, p. 2).
Job requirements are now being posted on employment portals and kiosks through IBM monitoring which includes basic qualifications; educational, language and training requirements; nature of the work, job description, duties and responsibilities; remuneration and other benefits as well as other qualifications which include communication and typing/keyboarding skills and abilities to work in a team and to work efficiently under time constraints. It was then followed by curriculum vitae (CV) submission. And aside from medical (urine for drug, blood, etc.) examinations, the company also employs personality, integrity and ability and aptitude tests of general knowledge as a measure of intellectual development (Brenner, 2004, p. 77). Psychometric charts are also in used to determine the readiness of the employees with regards to terrorism attacks and other severe conditions.
Depending on the job requirement, AA had different interviewing authorities. The interview process is lengthy and must meet with a number of people. Often than not, it will be a panel interview and based on the answers of the interviewee, the process will move into the second stage. Interviews also incorporate strategic case studies. In addition, the company is also hiring through on-campus and job fair events. After the initial interview in these places, successful applicants must proceed to the headquarters.
Pros and cons of in-house HRM
HRM is a valuable element of organizational success since it aids in achieving the competitive edge in terms of quality, cost and flexibility. There is the need therefore for HRM to embrace the people whom the organization does business with. It is through this people that sustainability can be achieved whereby the values are created that direct and indirect rivals could not implement (Smale, 2008).
From a resource-based perspective, the various categories that HRM can build upon include physical, organizational, financial and technological as well as human resources. As assets, the mere existence of human within the organization is inadequate. However, the relationship among them should be controlled towards achieving long-term organizational success. Sustainable competitive advantage potential of the human resources is central to the idea that human resources are valuable, rare, inimitable and non-substitutable (Thite, 2004).
Nevertheless, such a valuable resource, human resources are heterogeneous because of the fact that organizations require different jobs that require different skills and capabilities. The value of the differences among the people could be realized on the contribution of individuals to the organization which means to provide value at diverse degrees. The rarity of high quality and ability workers is because of their skills and competency levels. Included in here is the supposedly normal distribution of skills, competencies, expertise and capabilities (Maxwell and Farquharson, 2008).
For the human asset to imitated, further, there is the need for competitors to identify the exact source of such and duplicate exactly the elements of the human capital. Suffice to say, this is a difficult endeavour since the dynamics of human capital is also considered as organizational intelligences. On the other hand, human resources should not be imperfectly mobile so that they cannot be traded. Human resources should not be also substitutable (Pritchard, 2007).
Organizational success is also based on the collective practices internal to the organization but is intended for the outside environment. Some of these areas are employment security, recruitment selectivity, employee ownership, information sharing, participation and empowerment, self-managed teams, training and skills development and succession provision. There should be an emphasis on envisioning individual workers as sources of organizational success (Sims, 2002).
Organizational success could be also realized when the organization through HRM is continuously invest on its reputation or image, stressing the need for sound human resource policies and practices and aligning such with the business strategies and its external context. Cost and quality is the focus whereby there are definite processes, systems and procedures that consolidates competencies, continuous education, proficient performance at individual and departmental levels and balanced monetary and non-monetary reward systems (Morris, 2004).
While HRM outsourcing has advantages, this report claims that the business would be more successful with an in-house HRM since this will not jeopardize effective people management.