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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. It focuses on the promotion of sustained competitive advantage through the development of human capital rather than merely aligning human resources to current strategic goals. Human resources can provide competitive advantage for the business, as long as they are unique and cannot be copies or substituted for by competing organizations. The focus is not just on the behaviour of the human resources, but on the skills, knowledge, attitudes and competencies which underpin this, and which have a more sustained impact on long-term survival than current behaviour .
Barney states that in order for a resource to result in sustained competitive advantage it must meet the following four criteria.
The first criteria
The resource must be valuable. Wright 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 the job, as individuals will make a variable contribution, and one cannot be substituted easily for another.
The second criteria
The resources need to be rarity that is related to the first criteria. 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 difficulties in finding the talent that they require.
The third criteria
The resources need to be inimitable. Wright et al. argue that this quality applies to the human resource as competitors will find it difficult to identify the exact source of competitive advantage 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 as it will affect the behaviour of the human resource pool via the development of unique norms and cultures. Thus even if a competing firm recruited a group of individuals from a competitor they would still not be able to produce the same outcomes in the 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.
The fourth criteria
The 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 resources with others, for example technological ones, in the long term the human resource is different as it does not become obsolete and can transferred across other products, markets and technologies.
Recruitment can be a costly and difficult process when skills are in short supply and labour markets are tight. In such circumstances the employer needs to sell it's jobs to potential employees so as to ensure that it can generate an adequate pool of applicants, but even then for some groups of staff it is getting harder to find people who are both willing and able to fill the vacancies that are available.
Barber (1998) points out, it is important that employers do not consider the recruitment process to be finished at the point at which a pool of applications has been received. It continues during the shortlisting and interviewing stages and is only complete when an offer is made and accepted. Until that time there is an ongoing need to ensure that a favourable impression of secure the services of talented applicants. Making out that the experience of working in a role is going to be more interesting or exciting than it really will be is an easy trap to fall into, but ultimately it is counterproductive because it raises unrealistic expectations. These then get quickly dashed, leading to unnecessary demotivation and, quite possibly, an early resignation.
Methods of Recruitment and Selection
External recruitment of Local Managerial:
Advertising - 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.
In choosing where to place a recruitment advertisement the aim is to attract as many people as possible with the required skills and qualifications and to reach people who are either actively looking for a new job or thinking about doing so. The need is therefore to place the advertisement where job seekers who are qualified to take on the role are most likely to look.
Where the recruitment advertisement is important in attract people's attention and must be included name and brief details of employing organization; job role and duties; training to be provided; key points of the personnel specification or competency profile; salary and instructions about how to apply.
E-Recruitment - 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. Huge savings can also be made by dispensing with the need to print glossy recruitment brochures and other documents to send to potential candidates. The other big advantage is speed. People can respond within seconds of reading about an opportunity by emailing their CV-matching software or online application forms.
External recruitment of Operational Personnel:
As this group of people are comparatively lower education, so that the above methods cannot apply on them. To arouse their attention on the recruitment vacancy, it is better to post the recruitment notice outside the factory or nearby places.
Internal recruitment of Local Managerial and Operational Personnel:
There are considerable advantages from the employer's perspective. First it is a great deal less expensive to recruit internally, there being no need to spend money on job advertisements or recruitment agencies. Instead a message can simply be placed in a company newsletter or posted on its intranet or staff notice boards. Further cost savings and efficiency gains can be made because internal recruits are typically able to take up new posts much more quickly than people being brought in from outside. Even if they have to work some notice in their current positions, they are often able to take on some of their new responsibilities or undergo relevant training at the same time. The other advantage stems from the fact that internal candidates, as a rule, are more knowledgeable than new starters coming in from other organizations about what exactly the job involves. They are also more familiar with the organizations culture, rules and geography, and so take less time to settle into their new jobs and to begin working at full capacity.
Giving preference to internal recruits, particularly as far as promotions are concerned, has the great advantage of providing existing employees with an incentive to work hard, demonstrate their commitment and stay with the organization when they might otherwise consider looking for alternative employment. The practice provides a powerful signal from management to show that existing employees are valued and that attractive career development opportunities are available to them.
Selection Method for Local Managerial:
Application - application forms were considered to act as a useful preliminary to employment interviews and decisions, either to present more information that was relevant to such deliberations, or to arrange such information in a standard way. This made sorting of applications and shortlisting easier and enabled interviewers to use the form as the basis for the interview itself, with each piece of information on the form being taken and developed in the interview. There is heavy use of CVs for managerial and professional posts. Generally, application forms are used as a straightforward way of giving a standardized synopsis of the applicant's history. This helps applicants present their case by providing them with a predetermined structure, it speeds the sorting and shortlisting or sifting of applications either by hand or electronically and it guides the interviewers as well as providing the starting point for personnel records.
Interviews - it can also be divided in the following types.
Planned Interview - this is under good preparation with some induced questions.
Patterned Interview - this is under carefully pre-planned to high degree of accuracy and precision.
Depth Interview - intensively examine the candidate's background and thinking, go further to special subject.
Stress Interview - put candidates under stressful conditions, which mean put one person who is not related in this interview to test how steady you are while unpredictable condition occured.
Group Interview - all candidates are called together and a group discussion is started.
Panel Interview - held by more than one interviewer to test candidates' immediate response.
Successive Interview - candidate is seen by one interviewer, then by a second and then by a third.
Test - the use of tests in employment procedures is surrounded by strong feelings for and against. Those in favour of testing in general point to the unreliability of the interview as a predictor of performance and the greater potential accuracy and objectivity of test data. Tests can be seen as giving credibility to selection decisions. Those against them either dislike the objectivity that testing implies or have difficulty in incorporating test evidence into the rest of the evidence that is collected. Questions have been raised as to the relevance of the tests to the job applied for and the possibility of unfair discrimination and bias. Also, some candidates feel that they can improve their prospects by a good interview performance and that the degree to which they are in control of their own destiny is being reduced by a dispassionate routine.
Types of Test:
Aptitude Tests - it measure an individual's potential to develop in either specific of general terms. This is in contrast to attainment tests, which measure the skills an individual has already acquired. When considering the results from aptitude tests it is important to remember that a simple relationship does not exist between a high level of aptitude and a high level of job performance, as other factors, such as motivation, also contribute to job performance. Aptitude tests can be grouped into two categories: those measuring general mental ability or general intelligence, and those measuring specific abilities or aptitudes.
General Intelligence Tests - it sometimes called mental ability tests, are designed to give an indication of overall mental capacity. A variety of questions are included in such tests, including vocabulary, analogies, similarities, opposites, arithmetic, number extension and general information.
Personality Tests - the debate still rages as to the importance of personality for success in some jobs and organizations. The need for personality assessment may be high but there is even more resistance to tests of personality than to tests of aptitude, partly because of the reluctance to see personality as in any way measurable. Personality tests are mainly used for management, professional and graduate jobs, although there is evidence of their use when high-performance teams are developed.
Job Offering - assuming a suitable candidate has been arranged in suitable post, he or she must receive an offer.
Selection Method for Operational personnel:
Interview - this is an informal interview, no need for well planning.
Trainability Tests - this used to measure a potential employee's ability to be trained, usually for craft-type work.
Job Offering - same as local managerial positions, it also need to provide an offer to suitable candidate.
The need to train Fitright's new employees is also seen as a critical activity. A systematic model of learning and training would be at the heart of this activity. This model should include four steps, it will specify by the following.
Step 1: Identifying learning and training needs
The 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. Even if some of these elements are not made explicit, they will exist implicitly. Note that the boundary lines are dotted, not continuous. This indicates that the boundaries are permeable and overlapping. The internal part of the model reflects a systematic approach to learning and to training. Learning needs may be identified by the individual, by the organization or in partnership, and this applies to each of the following steps in the circle.
Step 2: Design training and development activity
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 activity, can commence, and should be subject to ongoing monitoring and evaluated at an appropriate time in the future to assess how behaviour and performance have changed.
Step 3: Carry out training and development
Off-job training - education 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 qualification for a professional body. One of the major concerns with these different types of off-job courses and activities is the difficulty of ensuring transfer of learning back to the workplace.
Manager coaching - the manager as coach helps trainees to develop by giving them the opportunity to perform an increasing range of tasks, and by helping them to learn from their experiences. Managers work to improve the trainee's performance by asking searching questions, actively listening, discussion, exhortation, encouragement, understanding, counseling and providing information and honest feedback. The manager coach is usually in a position to create development opportunities for the trainee when this is appropriate. Alternatively a line manager can create the opportunity for a trainee to join a working party or can arrange a brief secondment to another department. Coaches can share inside information with the individual they are coaching to help them understand the political context in which they are working.
Mentoring - in offers a wide range of advantages for the development of the mentee or protégé, coaching as described above being just one of the possible benefits of the relationship. The mentor may occasionally be the individual's immediate manager, but usually it is a more senior manager in the same or a different function. Mentoring can carry out the following two functions.
Career function - those aspects of the relationship that primarily enhance career advancement, such as exposure and visibility and sponsorship.
Psychosocial function - those aspects of relationship that primarily enhance a sense of competence, clarity of identity and effectiveness in managerial role.
Peer relationships - supportive peer relationships at work are potentially more widely available to the individual and offer a number of benefits for the development of both parties. Most of us benefit from one or a number of peer relationships at work but often we do not readily appreciate their contribution towards our development. Peer relationships most often develop on an informal basis and provide mutual support.
Self-development - conscious effort to gain the most from natural learning in a job and to use the learning cycle as framework. It focus on specific skills development, often extends to attitude development and personal growth. It based on observation, collecting further feedback, experimenting with different approaches and reviewing what has happened.
Step 4: Evaluation of training and development
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. A familiar method of evaluation is the post-course questionnaire, which course members complete on the final day by answering vague questions that require them to assess aspects of the course using only such general terms as 'good', 'very good' or 'outstanding'. The drawbacks with such questionnaires are, first, that there is a powerful halo effect, as the course will have been, at the very least, a welcome break from routine and there will probably have been some attractive fringe benefits such as staying in a comfortable hotel and enjoying rich food. Second, the questionnaire tends to evaluate the course and not the learning, so that the person attending the course is assessing the quality of the tutors and the visual aids, instead of being directed to examine what has been learned.
In order to manage industrial relations effectively, the CEO should have the following knowledge and skills.
Management control - the central choice is between the two fundamentally different control strategies identified by Friedman (1977); 'direct control' and 'responsible autonomy'. The former involves close supervision by managers who determine what work is done, when and by whom. Employees are required to do what they are told and are not given any meaningful day-to-day influence over the way their work is organized or performed. Hard work is rewarded, while disciplinary sanctions are conspicuously used to deter recalcitrant behaviour. Responsible autonomy, by contrast, is both subtler and a great deal more pleasant from the employees' point of view. It is also believed by many managers to be more desirable because it leads to less conflict with staff, and more cost effective because less management time needs to be spent supervising the activities of others. Here the organization sets the objectives, communication clearly to its staff what it wants them to achieve, but it allows employees as much autonomy as is practicable to decide how and when they meet these objectives.
Labour-market orientation - one strategic choice that many employers have taken in response to tightening labour market conditions has been to seek status as an 'employer of choice' or even as the employer of choice in their industry. This involves making themselves more attractive to prospective employees than competitor organizations, the aim being to - secure and then to hold on to the services of high performers. Positioning as organization as an employer of choice can be expensive in the short term, but over time dividends are reaped because fewer people are required, and those that are employed help ensure that the organization meets its objectives more effectively and efficiently than its rivals. Sustained competitive advantage thus results. It follows that employers seeking to achieve employer of employee relations strategies that increase the chances that employees are satisfied and decrease the likelihood of dissatisfaction.
Management style - one of the best-known typologies of management style is developed by Purcell and Sisson (1983). They summarized into five categories, they are, traditional; paternalist; consultative; constitutional and opportunistic. It is also possible to view management styles in terms of the extent and nature of collective employee participation in decision making. It synthesized into seven categories, i.e. normative; disorganized; consultative; negotiated; participative and controlling.
Employee involvement - effective two-way communication between management and workers is essential to reduce misunderstanding and minimize industrial conflicts. In order to improve the current systems, staffs are encouraged to suggest new approach by team briefing, suggestion schemes attitude surveys and quality circle……etc.
Union recognition - the single most important strategic decisions that managers may have to take in the employee relations sphere concern trade union recognition. A feature of some collective agreements is an acceptance that certain matters are potentially subject to negotiation with the recognized union, while in other areas the union has the right only to be consulted or informed.
How performance cycle can manage individual performance?
Business mission, values, objectives and competencies - there is an assumption that before it is able to plan and manage individual performance the organization will have made significant steps in identifying the performance required of the organization as a whole. In most cases this will involve a mission statement so that performance is seen within the context of an overriding theme. In addition man organizations will identify the strategic business objectives that are required within the current business context to be competitive and that align with the organization's mission statement.
Planning performance - individual objectives derived from team objectives and an agreed job description can be jointly devised by manager and employee. These objectives are outcome 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.
Delivering and monitoring performance - organizing the resources and off-job training is clearly essential. Employees carry out ongoing reviews to plan their work and priorities and also to advise the manager well in advance if the agreed performance will not be delivered by the agreed dates. Both employee and manager review ensures that information is shared. For example, a manager needs to be kept up to date on employee progress, while the employee needs to be kept up to date on organizational changes that have an impact on the agreed objectives. Both need to share perceptions of how the other is doing in their role, and what they could do that would be more 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. Some organizations encourage employees to give upward feedback to their managers at this point in the cycle.
Reward - some public and private organizations found that the merit element of pay was too small to motivate staff, and sometimes seen as insulting. Although performance management organizations were more likely than others to have merit or performance-related pay (Bevan and Thompson 1992), some organizations have regretted its inclusion.
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 provided the best standards of service to customers.
While the CEO and HR manager coming up with an appropriate pay and reward strategy, they should consider the following points.
Job evaluation - one of the main tasks associated with the administration of weekly or monthly salary payments is setting the differential gaps. 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.
Attracting staff - the more attractive the package, the more applications will be received from potential employees and the more choice the organization will have when filling its vacancies.
Retaining staff - this requires a package which is attractive enough to prevent people from becoming dissatisfied and looking elsewhere for career development opportunities.
Motivating staff - the question of the extent to which money ever can positively motivate has long been debated by occupational psychologists, many of whom accept that the power of monetary reward to motivate is very limited, at least over the longer term.
The importance of equity - whatever methods are used to determine pay levels and to decide what elements make up the individual pay package, employers must ensure that they are perceived by employees to operate equitably. A standard approach for the determination of pay across the organization; as little subjective or arbitrary decision making as is feasible; maximum communication and employee involvement in establishing pay determination mechanisms; clarity in pay determination matters so that everyone knows what the rules are and how they will be applied.
Broadbanding - attention has increasingly been given in recent years to the introduction of 'broadbanding' as a way of retaining the positive features of traditional pay scales while reducing some of the less desirable effects. Broadbanding essentially involves retaining some form of grading system while greatly reducing the numbers of grades or salary bands.