Organisation resource management is a basic activity for any organisation to operate. For achieving goal and gain competitive advantage, organisation needs to configure and utilize their resource. In the context of the increasing prominence of the 'resource based view' in Strategic Management (Barney, 1991; Peteraf, 1993), 'Human Resources' also gained attention as the workforce and its individual members became considered to be an important resource, which have important impacts on the competitive advantage of organizations (Cappelli/Singh, 1992).
The management of worker or employee has evolutes in many stages. It starts as manpower planning than boom in industrialization leads to increase in trade unions due to harshness of industrial condition in 19th century. Manpower planning was limited to planning. There was no department for taking care of the problem with workers. The conflict between worker and employer was increased. These problem forced employers to find out a better methodology to manage their worker. This emerge a Personnel management and grows during First World War because of munitions manufactured at a large scale. Personnel management perform different function such as collective bargaining role, implementation of legislation role, bureaucratic role, social conscience of the business role and growing performance improvement role.
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During 1980s, the responsibilities had increased and the organisation drew more attention to personnel management and it's became Human Resource Management. The role of HRM has gain more important in 1990,s with the success of large Japanese corporation in many sector and export market like Toyota/ Honda in automobiles and Sony/ Panasonic in electronic goods. This drew the attention of many western companies. After studies it's proved that effective management of workforce is the key of success for these Japanese firms. Studies also show that the workforce of Japanese firm is more productive and efficient than western firm.
In recent years, Human Resource Management has become an important part of corporate strategy. Organisation identified that they should need the proper well structured human resource strategy to become success in competitive environment. This is become more competitive due to globalization of the business world. So organisation is now implementing the Strategic Human Resource Management rather than traditional Human Resource Management. The term 'Strategic Human Resource Management' shows the importance and value of human resource in corporate strategy. In an organization SHRM means accepting and involving the HR function as a strategic partner in the formulation and implementation of the company's strategies through HR activities. A longer-term perspective in managing people and consideration of people as potential assets rather than merely a variable cost. Beer et al (1984). Many organisations says in their annual report that human capital and intellectual property are their most valuable and important assets. In simple words, HRM means employing people, developing their capacities, utilizing, maintaining and compensating their services in tune with the job and organizational requirement. Strategic Human Resource Management can be regarded as a general approach to the human recourses in accordance with the intentions of the future direction of an organisation and objectives which organisation wants to achieve in future. It's concerned with human issue in long-term.
This report includes effectiveness of human resource strategy and its impact on the overall corporate strategy and Human resource system and mechanisms as strategy for people recruitment, retention, training, performance review and learning and development. This report also includes the knowledge management / self-learning, need of good communication, performance appraisal and rewards.
Human Resource Strategy & Corporate Strategy
The human resource strategy implemented by an organisation affects the behaviour of individuals in their efforts to formulate and implement the strategic needs of whole business. A long-term plan of human resource and activities intended to enable the forms to achieve its goals and objectives. Human Resource Management is a key resource for any organisation, which contribute in business success. Additionally in many organizations, human resource is one of the most expenditure for an organisation, if not the most. In Organisation which is in service sector, compensation often represents 70 to 80 percent of the total cost of doing business. With recruiting cost, training costs, wages and other Human Resource Management costs added to compensation costs, the HR function often has responsibilities that affect a large portion of an organization's total expenditures. But the expenditures of human resource are not the only or even the most important consideration for any organisation. Even when the cost of human resource is very little of the total cost doing business, it can have a significant impact on the overall performance of an organisation. Human resource also affects the effectiveness of the other available resource as financial resource or physical resource. Without a proper well planed human resource, organisations are likely to have less profit or no profit at all. Even for the most automated process as automated production facilities required appropriate skill and motivated employee to operate the system effectively. More effective Human Resource Management progressively is being seen as positively affecting the organisational performance and it affects performance of all type of organisation, whether it is a small organisation or corporate giant, and either organisation operates nationally or globally. Thus, "although a company's human capital does not appear on its balance sheet, it represents an increasingly large percent of many organizations' market valuation" (Lev, 2001)
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The performance of any organisation can be assesses by how effectively the product or services delivered to the customers by the organisation. The organisational human resource is the key resource which involve in almost all phase of the product or service provided by the organisation. It's a human resource who designs, manufacture, market and delivers these services. Therefore, one objective of the Human Resource Management is to establish the human resource and activities that enhance the performance of an organisation. No organisation can become successful without the appropriate human resource and utilize them. The effectiveness of a good Human Resource Management can be assess by performance appraisal of employee or benchmarking can be used for comparing the human resource practice with the competitor, or best human resource practicing organisation. The effectiveness also can be analysis by using balance score-card. Customer survey is one of the most useful way to assessing the effectiveness of strategic fit human resource. By doing this one can justify the role of Human Resource Management in success of an organisation and contribution to the strategic success of an organisation.
Mergers and acquisitions have become the fast method of growth for an organisation. In the recent times many organisation involve in merger, acquisitions, strategic alliance and joint ventures. A merger of the size like HP-Compaq has implications for the workforce of these companies across the globe. Although the merger or acquisition entities a great deal in terms of finance, marketing and other outcome. HR issue are the most neglected ones. In the past, criteria of decision about mergers and acquisitions for an organisation were typically based on considerations such as the financial criteria and operational criteria. Mergers and acquisitions were often done without much considering the human resource issue that would be faced when after merger and acquisition when organisation have two or more different of human resource. Studies shows that most of the organisation fails to take advantage from synergy after merger and acquisition and fail to bring out the outcome what they trying to obtain due to human related issue. The major reasons of these failures have been poorly managed human resource issue during the merger and acquisition. Human Resource Management play a major role to completion these processes and take advantage of the acquisition/merger of the two or more companies. Organisation should have a proper human resource strategy to take advantage of merger or acquisition. Human Resource Management is an ongoing process. When a merger or acquisition done, there are many things which changes. Although most of the integration plan has been implemented, the human side of the integration continues to evolve. The work of Human Resource Management is still going on to long-term.
Establishing a strategic fit human resource policies and practices is the first hurdle in the process of developing a Human resource strategy. Commitment-based Human Resource Management has low employee turnover which outcome as higher productivity and reducing the cost of recruitment. Study shows that strategic fit Human Resource Management practices have a significant impact on employee performance outcomes. Short and long-term measures of performance outcome have been increased in organisation where Human Resource Management is more aligned with corporate strategy. It means organisation which align their human resource strategy with their corporate strategy and business strategy tend to be more efficient and profitable than those which don't align. Employee stability is also help to an organisation focused on their core business process and provides opportunity to make tong-term plan. Every organisation has different human resource practices. But when they merger together it is the responsibility of Human Resource Management to ensure that they have a human resource strategy for the organisation which can fit with their corporate strategy.
Human strategy in Details: Planning and Strategic Decisions
In order to making or implementing a strategy for human resource, four key dimensions of an organization must be addressed. These are:
Culture - beliefs, value, norms and organisation's management style.
Organisation - the structure, job roles and power structure.
People - the skill, potential of worker and management capability.
Human resource system - mechanisms which deliver the human resource strategy as planning, recruiting, communication, training, rewards, knowledge management, career development etc.
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A good Human resource strategy should include strategy for people recruitment, employee retention, training, performance appraisal and learning and development. This report is focused on human resource system and mechanisms while covering the three other dimensions also.
Recruitment is the process starts with the identifying that the organisation needs to employ someone than process of attracting, screening, and selecting or hiring the appropriate qualified and best suited candidate for a job at an organization or firm up to the point at which post have arrived at the organisation. Retention of best employee is also important and it is starts with recruiting, staffing and hiring strategies, policies and mechanisms.
The planning and strategic decisions that are made about recruiting help dictate not only the kinds and numbers of applicants, but also how difficult or successful recruiting efforts may be. Recruiting strategy entails identifying right place to recruit, right person to recruit, and the requirement of the job will be. There are an important decision about recruitment approach must be made. Recruitment of a employee to fill a particular post within an organisation can be done by either internally, or externally. In internal recruitment approach, organisation recruits a suitable candidate within the organisation, where existing employee are selected for a job vacancies rather than employing some from outside. While in external approach, organisation recruits people from outside of the organisation.
Advantages and disadvantages are associated with the both approaches.
A business might analysis and decides that they already have the right people with the right skills to do fulfil the job specification, particularly if organisation has effective training and development programme. An organisation can use the different types of media to advertise the vacancies within the organisation. This is depends on the channels used by organisation structure. Like: staff notice boards, staff meeting, Intranets and In-house magazines or newsletters. Some big organisation has dedicated weekly newsletters for job vacancies. By internal recruitment gives an opportunity to an existing employees advance their careers in the business. It can be also help to retain the employee who might otherwise leave the organisation. Existing employee require short induction period, because he/she already aware the strategy of organisation and potentially customer of the organisation. Risk of selecting a wrong candidate is also reduced because employer already knows the abilities the candidate. The process of recruiting a internal person is less expensive and usually a quicker process or decision. Some disadvantage of internal recruitment is limited number of application. New talent will be not attracted. It might to cause an another recruitment. Culture may become more resistant to change by recruiting an insider.
External recruitment can be benefiting the organisation with new ideas comes with new talent from outside of the organisation. Organisation can choose the better employee or best suited candidate by external recruitment because they have many choices to choose. It may be cheaper to recruit a professional like IT expert rather than develop an existing employee. If organisation needs the plenty of worker to a new project or new place, it is the only approach the organisation can use. Some drawback also associated with external recruitment approach. More focuses on external recruitment approach may leads to de-motivate the existing employee and they may leave the organisation. Risk of selecting a wrong candidate is more. It takes more money and more time to manager to recruit an external candidate.
Most organisation use both internal and external recruitment approach and use a combination of both. While some organisation prefers internal recruitment, they only use external recruitment approach if they cannot find-out the best suited person by internal recruitment. Organisations that operate in rapidly changing environment like technology industry- prefer external recruitment to attract best talent in market. However those organisations which operate in slowly changing environment may prefer internal recruitment. In the global world organisation also look globally for best external candidates. However such cross-country recruitment requires permission from government of both country and visa-process for a foreign employee.
While organisation can use either internal or external approach, there are a number of stages involved in a recruitment process which can be used to define and set-out the nature of particular job. The first process of recruitment is to perform a job analysis. Job analysis is the process of examining jobs including the title of the job, responsibility of the job and power structure of a job. This information is captured in job description and help to find out the best suited candidate. Job analysis and job description help candidate to approaching for the job while from a employer view it help to rank the candidate, help to estimate the wages for the post, set out equipment and tools need to that job, and help to plan training for that particular job. Sourcing is the second stages after job analysis. It refers adverting. Advertising often encompassing several media channels such as newspaper, internet, window advertisement, campus, job centre, and job search engine or recruitment agencies. Screening and selection refers to assessing the skills, qualification, ability, and experience according to the job description. Onboarding is a term which describes the process of helping new employees become productive members of an organization. It is a continue process to retention of the talented employee.
Performance Review and Reward
After a candidate has been selected for a job, he has been trained to do its job. After some period of time, his performance should be evaluated. Performance appraisal is the process of assessing the performance of an employee and employer. In this process employee performance compared with set of standards, goals, or compared with performance with other employee. It's also called employee rating, performance review, employee evaluation or results appraisal.
The main objectives of performance appraisal are to improve the overall effectiveness of employee and organisation as an entity. According to D. McGregor (1960), author of The Human Side of Enterprise, the three main functional areas of performance appraisal systems are: administrative, informative, and motivational. Administrative role of performance appraisal tend to facilitate an orderly means of determining wages increases and set out the other rewards. It also help to find out the most capable individuals for delegating authority. It serves the informative role by supplies performance data to manager about individual with strength and weakness. Finally the motivational role is to motivate employee to improve their performance and changing poor performance to good performance. Performance appraisal is a primary source of information and feedback for employee's performance, which can be used to their future development. Strength or weakness and potentials of an individual can be identified. The performance review also indicates the area where the employee might wish to improve or grow, which help to organise training for these area.
While performance appraisal, used to find out the individual performance it also assess the effectiveness of the environment and tool provided by the organisation. That help to organisation to develop their infrastructure. The purpose of performance appraisal is to change or reinforce behaviour of individual, rather than just comparing them. Positive reinforcement for the behaviours is an important part of Human capital development. There are different type of appraisal method can be used by an organisation.
Performance ranking method
Ranking is a performance appraisal method which is used to evaluate employee performance from best to worst. Manager will compare an employee to another employee and rank them, rather than comparing each one to a standard measurement. The better employee got higher rank and worst employee got lower rank.
360 degree performance appraisal
360 Degree Feedback is a system or process in which employees receive confidential, anonymous feedback from the people who work around them. Feedback can be collected by customer, suppliers or manager.
Paired comparison analysis
Paired comparison analysis is a good way of weighing up the relative importance of options.
Once employee performance has been measured, it must be linked to an appropriate reward system. Unlike traditional financial rewards system by pay increase, Human Resource Management has to develop and implement more performance-oriented reward programs. The reward system used by an organisation must be aligned with the strategic goals for the organization. In the world of Duncan Brown (2001): "Reward strategy in ultimately a way of thinking that you can apply to any reward issue arising in your organisation, to see how you can create value from it."
Organisation should motivate the employee to improve their own performance and work in the best interest for the organisation. In order to rewards organisation can use financial and non-financial rewards to improve their employee's performance. It is area of debate that which rewards system is better effect on performance of an employee. It depends on culture of an employee or organisation and the work nature of an employee or organisation. It's also depending on the needs of the individual, the situation the individual is in, and the rewards the individual expects for the work done. For example financial rewards may be affect an employee who work in automobile industry, while may not affect an employee who work in Information Technology industry. Theorists who hold to this view do not attempt to fit people into a single category, but rather accept human differences.
Good employee orientation also helps reduce turnover, because employees who are properly inducted into the company and are well-trained tend to be less likely to leave. Compensation also is important. A fair and equitable pay system can help prevent turnover. Inadequate rewards may lead to voluntary turnover, especially with employees such as salespeople, whose compensation is tied directly to their performance. Career planning and internal promotion can help an organization keep employees, because if individuals believe they have no opportunities for career advancement, they may leave the organization.
Motivation is a complex concept. Remuneration is also complex. Individuals react in different ways to pay schemes. Positive effects come from good financial and non-financial rewards. It is very important to have a well managed remuneration system in place. Fair and reasonable reward is essential and very important for good morale. Management should ensure that their organizations and businesses are using the full range of financial and non-financial rewards available to them. An over-reliance on financial compensation may lead to ongoing problems The reward structure is tuned to the needs of employees. Every attempt is made to use their talents fully in the service of organisational goals. Rewards and remuneration must be scrutinised. Employee motivation and performance are critical. Non-monetary rewards can be as important as monetary rewards
Employee motivation and performance management depend on good systems that offer both financial and non-financial rewards (non-monetary rewards). This performance management article applies to all organisations. There are several advantage and disadvantage associated with both type of reward system.
Simple and easy to use for businesses
Increases speed of work and therefore productivity
Often workers not entitled to sick pay or holiday pay which reduces cost
Helps meet a workers human and social needs
Encourages loyalty to a company so employees may stay for longer
Employee does not concentrate on quality of work as emphasis on speed of work
Employee may ignore company rules, such as Health and safety issues; in they try to speed up output
It does not promote teamwork and can lead to workers feeling they are treated unfairly if colleagues are awarded more.
Employee can start cheat for financial rewards.
Human needed a certain level of income. But once they achieved that, the pressure to work hard was reduced.
Whereas financial reward clearly influences extrinsic motivation, it has little impact on intrinsic motivation.
Training is offered to sharpen and improve their skills.
Employees are rotated on various jobs so that they gain experience and exposure.
Non financial rewards increase a person's satisfaction or sense of achievement.
Can be very important for their long-term effect
By giving workers more interesting, challenging and complex tasks employee has chance to test themselves and use their full range of ability
Workers are less likely to leave the firm
Complex to implement rather than financial rewards
Lack of statistical reliability
evaluation system with too many non-financial reward can lead to "measurement disintegration"
Business Communication & Learning and Development
Communication is a process of transferring information and expressing the feeling by one entity to another entity. Importance of good communication skill can never be ignored by an organisation because it is a key to executing good management skills and practices. Communication plays a very important role in almost every aspect of a business. No process can be successful implement without the effective communication. Whether it is a performance appraisal, reward system, feedback or recruitment process, lack of good communication can be very harmful to an organisation in many aspects. So where good communication can help to improve the organisation performance, lack of good communication may be lead to poor performance. Good communication is also essential to building a good team.
Good Communication between two department help to achieving the goal or objective for an organisation. A good communication is a very essential to build an effective relationship with suppliers and client. Marketing is also depends on effective communication and how an organisation communicating with their potential customers. Good communication with supplier or customer helps to build a good relationship with them. Communication skills can be particularly important during times of higher workplace stress, for example during downsizing, where good communication is an essential part of change management. There is several communication channels can be used to implement to a good communication.
Two-way, face-to-face channels: here communication is oral and non-verbal, immediate feedback is possible and the communication is of a highly personalized nature. i.e. Meeting, interview, etc. When trying to solve problems or improve relationship, oral face to face communication is generally the most effective form of communication. These channels also can be used for explanation of an idea or highlighting the unique feature of a product by actual product demonstration. It also give the better attention of the listener than a letter or report, which may not be read at all.
Two-way but not face-to-face channels: By using technology communication can be two-way without being face to face. i.e. teleconferencing, telephone communication, email, etc. When the face to face communication cannot be possible than technology can be used to two-way communication. It is also a quicker method to communicate with others and can be used when immediate feedback is required.
One-way not face-to-face: Its mostly used by top management to communication with large number of people. i.e. letters, reports, notices, etc. When organisation or manager conveys a large amount of information, this is the most suitable way of communication. The written channel is also more appropriate when organisation wish to keep a record of happenings.
Communication channels should be selected with care, keeping in mind the requirement of the situation at hand, as well the inherent advantages and disadvantage of each channel. The mixture of channels can be used to better communication.
Good communication can be also helpful to gaining knowledge and learning in regards to improve the human capital. From birth, learning and development is a part of life. Learning and development is natural process and we all engaged with this. Human continue learning and develop throughout life. So people can bring the learning and development as a continuous process into their place of work. This learning process, knowledge, skills, learning attitudes and new or creative thinking can be used by organisation to survival, flexibility and development. So learning and development can be benefit the both employee and employer.
Organisation has realised that it is important "know what they know" and enable to utilized it by maximum use of the knowledge. Organisation should know their knowledge assets and methodology to make use of this knowledge to get maximum return. The benefit to organisation is depending on their employee's naturally occurring learning.
A learning organisation is an organisation which facilitates the learning of its employee and continuously transforms itself. Self Managed Learning is a process where individuals managing their own learning and knowledge. Knowledge management is the planning, organizing, motivating, and controlling of people, processes and systems in the organization to ensure that its knowledge-related assets are improved and effectively employed. An organisation can have different type of knowledge. For example company can have a tacit and explicit knowledge. Tacit knowledge is a kind of knowledge which is difficult to transfer to another person by means of simply writing it down or verbalising it. While explicit knowledge is the kind of knowledge which stored in certain media, like book, CD. It is in form of words, document or computer program so it can be readily transmitted to another person. Organisations have to properly managed all knowledge and use it to improve process of an organisation and human capital. Identify the knowledge within organisation and convert knowledge into success is very important process.
Reference / Bibliography
Michael Armstrong, 2006.
Strategic Human Resource Management: A guide to action. 3rd Ed. Kogan page Publishing.
Robert L. Mathis & John H. Jackson. 2007.
Human Resource Management, 12th ed. South-Western College Publishing.
Natalie Turner & Laura Williams. 2008
Corporate Partners Research Programme, The Work Foundation (U.K.)
http://www.thetimes100.co.uk/theory/ - The Times Newspapers Ltd and MBA Publishing Ltd 1995-2010
McGregor, D., 1960
The Human Side of Enterprise, New York: McGraw-Hill
Human Resource Management