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A couple years ago, it was normal to think about our employees just as a resource as an amount of material that you needed to have your product or service done. Even though, there are many companies that still think in the same way. Nowadays, the most innovative and successful companies treat their employees more as an asset than as a simple resource where employees are seen as people with their own needs that help the company accomplish their goals. That's why, Managing Human Capital has become one of the most important topic in every organisation, not only because is in charge of supplying the human capital that the organisation needs in order to achieve their objectives and goals but also because is in charge to design a strategy that allows employees to be innovative, flexible a strategy that helps them to develop themselves as professionals and people so that the organisation can survive through time. As a result, in order to understand how to achieve this is needed to do the following. Firstly, to review definitions and what comprises Human Resource Management in order to understand what this means. Secondly, understand how the strategy and goals of a organisation has to be lined-up with Human Resource Management so that everyone can be meet all of them in the best way. Thirdly, to state how the link amount Human Resource Management, strategies and goals led the building of a innovative and flexible organisational culture. Lastly, but not least to see what factors a manager has to consider from a managing human capital perspective to accomplish the goal of having an innovative and flexible organisation.
BACKGROUND AND CRITICAL ANALYSIS
Human Resource Management (HRM)
As a result of people all over the world are getting more educated every day, they expect not only to be treated fairly in the workplace but also to have some rewards such as degree of challenge, sense of career progression, and good relationships with co-workers. However, at the beginning it was not like that. Since Drucker first mention the term "Huma Resource" HRM has had many definitions. Firstly, HRM was seen more as a way to manage personnel that have to accomplish certain tasks without considering "their needs". Otherwise, on the late sixty's a new approach made by Miles introduced a model that made managers aware of the necessity of fulfilling more than the employee economics needs where managers have to show more interest about the happiness and employee welfare (Marciano, 1995). Since then, HRM has evolved adapting itself in order to fulfill today needs of our global society. As a consequence, nowadays we find two main schools of thoughts related to HRM.
On the one hand, Soft HRM gives importance to employees needs and focuses more in how to meet these needs in order to have committed employees in the company. Soft HRM was popularized by Richard Walton that argued that an effective HRM is based on strategies that look for the commitment of employees more than strategies that control them. On the other hand, the Harvard model by Michael Beer shows improved ways to manage people to general managers. This model suggest managers need to have more responsibility as for HRM. The Havard business model states that HRM are summarized in four main categories: Employee influence, human resource flow , rewards system and work system. Employee influence is related to how much managers delegated power, authority and responsibility and to whom. Besides that, shows how any the necessity of matching every influence made to employees with the management's priorities and purpose. Human resource flow is interested in people that are in, out and within of the organisation, making sure that the organisation strategic requirements have an appropriate flow of employees where managers and personnel specialists have to work together in issues such as recruitment, selection, promotion, employment termination, employee security, career development, advancement and fair treatment. Reward systems, control the way that employees are rewarded as extrinsically as intrinsically. On the one hand, pay and benefits such as profit sharing, pension, holiday entitlement are extrinsic rewards. On the other hand, motivation, job satisfaction, challenge achievement and others are intrinsic rewards. The Havard model also suggests that when the organisation designs their reward systems employees should be involved. Nonetheless, reward systems have to be done more in order to meet the organisation goals and strategic than the employees needs. Lastly, Work systems refers to how all levels of the organisation people, information, technology and activities are organized in order to the organisation can be effective and efficient. Moreover, Policies have to be design consequently in the four areas in order to encourage managers employee influence. Indeed the authors of the Harvard model show employee influence as the main feature as it is showed in the figure below.
Figure 1 Human Resource System
In addition, Havard model suggests to consider the four C's (commitment, competence, congruence, cost-effectiveness) in the making the HRM policy. Managers should improve the employee commitment to the organisation, attract, retain, develop competent people, maintaining management and employees compatibility and being cost-effective Besides that, managers have to deal with employee dissatisfaction, employee turnover and wages. Besides, Havard model authors states that HRM are linked to internal and external factors in the environment how is showed in the HRM Territory (see Figure 2.) Besides that, we also can identify the relationship among stakeholders interests, factor and policy choices that turn to HR outcomes.
Figure 2 HRM Territory
Another Soft HRM model is the Guest (UK) model by David Guest, this model says that HRM has to consider four main out-comes when policies and practices are designed. The four main out-comes are: strategic integration (planning/implementation), high employee commitment to the organisation, high workforce flexibility and adaptability, and high quality workforce. Thereby, the company have the strategic integration that implies that HRM and the company strategy have to be combined. In order to do this, HR policies and practices has to be used right. Nonetheless, Guest states that to meet desirable outcomes such as stronger problem solving, high job performance, improved cost-effectiveness and others. HRM and business strategy have to be combined and leaded by the four HRM outcomes.
Figure 3 Guest's Model of HRM
On the other hand, Hard HRM focuses in meeting the strategic organisational goals as well as controlling and managing employees, considering them as a resource. One example of Hard HRM is the The Michigan model from Fombrun et al. that sees employees more as a means or resource to accomplish the organisation goals and objectives so as to achieve the competitive success of the company. The Michigan model is based on the best rational reaction that the organisation has to its external environment. Besides, this model assumes that managers have more power to change individuals and their external environment by means of formal strategy, preferred culture and structure. Moreover, the model states that the main motivation to managers to improve HRM is to increase the productivity and that the conditions of the external environment to allow them to design a HRM strategy to meet the goals of the company: "strategic" HRM, a strategic oriented to the needs of the company. Because of this, a manager needs first to consider the mission and strategic of the organisation. Secondly, the structure personnel requirements, tasks, etc. Lastly, the manager has to maintain HR, monitoring the performance andmaking sure that the reward systems are defined in order to continue improving the productivity. The Michigan model considers internal and external factors that affect the organisation structure, human resource, mission and strategy as is showed in the Figure 4. Besides that, they define the human resource cycle that affects individual and organisational performance Figure 5.
Figure 4 Strategic management and environmental pressures
Figure 5 The human resource cycle
Strategic Human Resource Management (SHRM)
SHRM is the way that the strategy of the organisation is related to HRM (Strategic Human Resource Management (SHRM) Dictionary of Human Resource Management, 2001). On the other had, SHRM has been treated for various researches since 1970. Since that, SHRM has developed four main perspectives: the universalistic perspective, the contingent perspective, the configurational approach and the contextual. The universalistic perspective analyzes how specific HR policies can improve the company performance and how these policies are linked to the performance as well from what we can called a sub-functional point of view. On the other hand, the Universalistic approach take in account some best practices in order to reinforce employees' abilities. Some of the best practices that the approach considers are: variable compensation, recruitment and selection methods, comprehensive training or performance appraisal. On the other hand, this model has treated aspects such as commitment and participation of the workforce, consensus in problem solving, teamwork and work incentives, job redesign and the establishment of new compensation mechanisms.The contingent approach bring the HRM context to the picture proposing a model based in interactivity. Even though, this approach doesn't consider best practices, there are factors that regulate the link between HRM and performance showing not a stable relationship between independent and dependent variable where these two will depend on a third variable called contingency variable. These variables, can be corporate strategy or internal and external variables from the environment, these variables are divided in 3 categories: strategic variables, which has to fit to the business strategy to performance, organisational variables such as internal political relationship, technology, structure or size and environmental factors such as macro-economical, technological and competitive context. The configurational approach define the possibility of a multidimensional combination set of elements to get infinite configurations to build the HRM system and it focuses on how the whole organisation performance are affected by these patterns. Lastly, the contextual perspective SHRM consider a bigger social macro system that take in count more than managerial decisions that influences and is influence by the HRM strategy. This perspective is more based in evidence than on test and predictions.
Figure 6 The Universalistic perspective
Figure 7 The Contingent perspective
Figure 8 The Configurational perspective
Figure 9 The Contextual perspective
Human Resource Management Culture, Innovation and effectiveness
Nowadays, a company survival in the dynamic globalized business environment depends on product innovation and gaining a competitive advantage. To sustain this competitive advantage Human resource philosophies are paramount. As important as that it is the company intangible resources, it is proved that things such as technology resources, marketing position among others are more easily copied by competitors while intangible resources such as employee competencies, attitudes and values are more difficult to be copied. That's why is believed that intangible resources are more probably give a competitive advantage than tangible ones. On the other hand, a human resource philosophy with higher levels of employee involvement and empowerment are required to have more innovativeness in the company and this philosophy needs to fit the business strategy to achieve a superior performance. However, companies that are in an uncertainly environment are more needed to empower their employees than companies that are in an environment that changes slowly. Besides, in conditions of more uncertain environments companies tend to have a more stronger the relationship between human capital philosophy and company strategy. Moreover, you can see that companies that are pursuing a differentiation strategy tends to have a stronger link between business strategy, innovation, performance allowing employees to develop and improve new products, services as well as trying out new ideas where rapid changes in technology and services lead to the necessity of having a high standard of empowerment in employees to meet the customers needs. Besides, an important topic to consider is the company entrepreneurship orientation since a company that has a entrepreneurship orientation leads employees to risk taking and innovative behavior. On the other hand, a innovative culture tends to have employees with more empowerment. As a result, we can see that HRM influences the entrepreneurship orientation of the company. The following Figure shows relationship between the HR Policy, the industry, firm strategy and innovativeness and how all of this influences the firm performance.
Figure 10 Industry characteristics, human capital philosophy, innovativeness and firm performance: the hypothesized model
Human Resource Factors to be consider for a manager
As we have seen before HRM is one of the most important issues in a organisation. Thus, managers knows that one of the most important assets of the organisation are people who make part of it. Due to that managers have given top priority to human factors. Some of the factors that a manager has to consider to HR concerns are the following. Employee morale at all levels of the organisation is very important manager needs to be able to measure the employee moral state in order to invest and improve this one for the company benefit. Managers have to consider that employee moral can make a negative impact on the company performance as people are affected for many factors as internal as external such as stress due to high-tension environments, increased workloads, dwindling resources among others. As a result a manager can have dealt with low morale, high absenteeism, low performance, poor customer relationship, etc so as to the company performance is not being affected as short as long term. Another important topic that managers have to be aware is ethics standards, ethics standards have to be integrated to business plans and well-documented to avoid corporate scandals. Managers have to spread them to the company and they make people follow them including them in the performance plans in order to be measure. On the other hand, Managers need to be concern that Recruitment and Hiring the right people can prevent many organisational problems what can be costly and affect the organisation success. In order to hire the right people a company need to have a job description well-defined. As a result the company is going to need people that take time to think the skills, knowledge as well as the experiences that are required for the job. Besides that a manager need to have defined the goals and performance that he is expecting from this person as well as needs to do a interview process that be action-based that make candidates shows their qualifications and readiness for the job. Performance Management, handbooks have to have all that conducts of misbehaviour that an employee shouldn't do. Besides that, employees should be informed of the rules that they have to follow before something happens. To have cleared that helps the employer to follow the due process in order to fire an employee if it is necessary. On the other hand, it is fundamental to train managers on how to disciple employees. Management practices, organisations should provide the proper training when the hire a new manager, that the employee perform well in the area the he is at the moment doesn't mean that he is ready to take the job of manager. The company should have a process that allows it to identify if the person that they are considering is ready to do the job, this can be done using techniques such as psychological assessments, behavioural interviewing process and others. Training and development, one of the main points in training and development is to train the new employee in the culture, objectives and strategy of the company to do this a company need to have a plan well defined in order to the assimilation will be smooth. Besides, it is necessary to make a plan of the new skills that the new employee has to have and follow the progress constantly. Diversity and multicultural immersion, managers need to be aware if the company is ready or not to have a multicultural environment. Furthermore, managers should design plans in order to help to learn and be aware about the differences related to a culture dimension. Employee retention, Manager needs to identify the key employee in the organisation and makes a plan in order to keep these people in the company so that the company would not be affected. Organisational effectiveness, HRM has to be effective in order to meet the requirements that customer and organisation require. On the other hand, the company have to assess continually the meeting of their performance and goals as well as the employee performance and potential to entirely use all the capabilities that the organisation has. Managing change, in this global world managers have to be ready to confront a change as external as internal because it is essential that each day managers be prepared to change in order to the survival of the company. Moreover, managers should implement processes that allow change and have to be ready to inform about the changes at the beginning, through and after it.
To sum up, since its firm mention Human Resource Manager has gained many followers in the last years. This has been because according to the literature a company that learns how to manage well their human capital has a competitive advantage that is difficult or impossible to imitate. This competitive advantage helps the company to be successful. That's why, Managers that want to have a successful company need to have the right people working with them in order to meet the company goals and strategies. Human resource policies oriented to meet the strategy of the company and give employees the empowerment that they need to have a better performance make companies more innovative than those firm that don't give employee these chances. Because of this, we can conclude and affirm that as a result of the design of HRM policies that link the company strategies, a manager are going to be able to improve the performance and build an organisational culture that helps foments innovation in the company.
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