The phenomenom of human resource management

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In the early 90's Human Resource Management (HRM) was described as a newly emerging phenomenon that added 'a powerful and influential perspective' to debates about the nature of the contemporary employment relationship (Beardwell and Holden, 1994: 5). A number of substantial changes in the context of employment were also noted, including a decline in trade union membership and collective bargaining, significant levels of organizational restructuring and the rise of atypical forms of employment, e.g. temporary work and contracted-out employment.

Despite the popularity of the term HRM, there is still no universally agreed definition of its meaning. Watson (2002) suggested that 'rather messy situation currently exists whereby the term HRM is used in a confusing ways'. In its broadest sense HRM can be used as a generic term to describe any approach to managing people; for example Boxall and Purcell (2003) used the term to refer to 'all those activities associated with the management of employment relationships in the firm'.

Historically Human Resource planning was effective since the times of Max Weber (1864 -1920). Max Weber, a German Lawyer, conceived of sociology as a comprehensive science of social action. He said that there were 4 four types

Zweckrational- Goal oriented rational behavior. It is an action in which both the goal and the means are rationally chosen. You have a goal; you take rational steps to achieve it. Another name for this is "Technocratic Thinking"

Wetrational- It is the value-oriented rationality characterized by striving for a goal, which is itself may not be rational, but which is nonetheless pursued through rational means.

Affective- Action that is anchored in the emotional state of the actor rather than in the rational weighing of means and ends.

Traditional- Action guided by customary habits of thought, by reliance on the "external yesterday"

According to Weber Bureaucratic coordination of human actions is the distinctive mark of modern social culture.

A bureaucratic administration means fundamentally the exercise of control on the basis of knowledge. For the sociologist, power is principally exemplified within organizations by the process of control. Max Weber distinguished between authority and power by defining the latter as any relationship within which one person could impose his will, regardless of any resistance from the other, whereas authority existed when there was a belief in the legitimacy of that power. Weber classified organizations according to the nature of that legitimacy:

Charismatic authority- based on the sacred or outstanding characteristic of an individual.

Traditional authority- essentially a respect for custom

Rational legal authority- which was based on the code or the set of rules.

(Source: http://www.hrmguide.co.uk/history/classical_organization_theory.htm)

INTRODUCTION TO TAYLORISM

There is a long history of attempts to achieve an understanding of human behavior in the work place. It was imagined that one day, there might be a science of management in which these problems and their solutions might be catalogued, classified, standardized and made predictable.

Many of the concepts have been integrated to broader approaches which have contributed to management thinking in various periods and so ultimately in the development of HRM.

Scientific Management

A hard nosed and an authoritarian approach to management were developed by F.W.Taylor at the beginning of the 20th century. Taylor believed in a combination of detailed task specifications and selection of the 'best man' for the job. It was the function of the managers to think that the workers were expected to do exactly as they were told. This according to him would result in the most efficient method of performing physical work. Additionally, he advocated premium payment as a means of rewarding the most efficient workers. Taylor's ideas lead to

Fordism- A philosophy of production based on the continuous assembly line techniques devise by Henry Ford. This methodology dominated worldwide manufacturing until the 1980s.

Time and Motion- It is a stopwatch method of measuring work, used to increase efficiency and minimize the wastage of time and effort.

Continuous Improvement (Kaizen) - It is a fundamental Japanese production method : using employee knowledge and ingenuity to continually refine product manufacturing and development.

(Source: http://www.hrmguide.net/hrm/chap1/ch1-1.html)

The human relation approaches were brought into a broad behavioral science movement in the 1950's and 1960's. This period produced some influential theories on the motivation of human performance. For example Maslow's hierarchy of needs provided an individual focus on the reasons about why do people work. According to him people satisfied an ascending series of needs from survival through security to 'self-actualization.

During the same period, concepts of job design such as job enrichment and job enlargement came into existence.

Source: (http://www.hrmguide.co.uk/introduction_to_hrm/management-theory.htm)

Alignment of Human Resource to Business Strategy

The formulation of HR strategies is conceived as a process that is closely aligned to the formulation of business strategies. Schuler (1992) stated that 'It is the linking of HR policies and practices to the firm's business objectives and plans that defines strategic human resource management and differentiates it from the older practice of personal management'.

People management strategy will influence as well as be influenced by business strategy. This does not mean that product, market and financial considerations are not important, but rather that decisions in these areas will be informed by the detailed knowledge of the capability of the organization in terms of its intellectual capital.

This contribution may be more significant if strategy formulation is an emergent or evolutionary process such that the organization builds upon its knowledge of the capability of its people or capitalizes on improvements in skills and abilities.

A forward-thinking people management strategy may cause the organization to pursue more ambitious business aims that require a greater level of knowledge, ability or innovative capacity from the people of organization.

A distinction is made by Purcell (1989) and Purcell and Ahlstrand (1994) between:

'Upstream' first order decisions- These are the decisions which are concerned with the long-term direction of the enterprise or the scope of its activities.

'Downstream' second order decisions- These are the decisions which are concerned with internal operating procedures and how the firm is organized to achieve its goals.

'Downstream' third -order decisions- These are the decisions with are concerned with choices on human resource structures and approaches and are strategic in the sense that they establish the basic parameters of employee relations management in the firm.

According to Ulrich (1998), because of the various competitive challenges to an organization, the Human resource management needs to develop strategies to overcome issues like:

Globalization - This issue requires organizations to move people, ideas, products and information around the world to meet local needs. New and important ingredients must be added to the mix when making a strategy: volatile political situations, contentious global trade issues, fluctuating exchange rates and unfamiliar cultures.

Profitability through growth- The drive for revenue growth means a company must be creative and innovative, and this in turn means encouraging the free flow of information and shared learning among employees.

Technology - The challenge for Human Resource is to make technology a viable, productive part of the work environment.

Intellectual Capital - The challenge to organizations is to ensure that they have the capability to find, assimilate, compensate and retain the talented individuals that they need who can drive a global organization that is responsive to its customers

Change- The greatest challenge in front of the HRM strategy is adjusting to an embracing, non-stop change. They must be able to learn rapidly and continuously and make on new strategies faster and more comfortably.

(Source: Strategic HRM: The key to improved business performance. By Michael Armstrong and Angela Baron 2002)

Strategic Human Resource Planning Model

There is no single approach to developing a Human resource strategy. The specific approach will vary from on organization to another. Even so, an excellent approach towards an HR strategic management system is evident in the model presented below. This approach identifies six specific steps in developind an HR strategy:

Setting the strategic Direction

Designing the Human Resource Management System

Planning the total workforce

Generating the required human resource

Investing in human resource development and performance

Assessing and sustaining organizational competence and performance

(Source: A strategic Human Resource Management System for 21st century. Naval Personnel Task force. Sept. 2000; http://www.workinfo.com/free/Downloads/176.htm)

Corning Glass Company-

At Corning Glass Company an extensive effort is underway to assess the company's top 100 executives for such qualities as entrepreneurial flair. The goal is to have a clearer profile of the organization's pool of executive talent specified in terms of capabilities for managing different parts of the BCG matrix. An example of this in practice occurred in December 1979 when:

Corning reshaped its electronic strategy, deciding that the market was starting to expand again, and that it needed a growth oriented managerial approach. It placed a manufacturing specialist who had shown a great deal of flair in working with customers in the top marketing slot of electronics, and says Shafer, " It looks like he's turning it around."

(Business Week February 25, 1980)

Chase Manhattan Bank-

During the period between 1975 and 1980 the bank underwent major managerial changes. A key to managerial turnaround from a troubled bank in the mid-70's was careful a strategic level selection and placement of executives. Historically, in banking in general and specifically at Chase, senior level positions were decided based on historical precedent with old-boy networks playing a major role. Also, the tradition in banking was to reward those with good banking skills, not those with managerial skills which were implicitly considered to be of less importance. Under the stress of senior performance problems, Chase Manhattan Bank had to reexamine these practices. As a result, a very systemic effort was launched to strategically manage senior selection and placement decisions. Thus,

When the trust manager retired, corporate management decided that the department, whose operation had been essentially stable, should focus on a more aggressive growth strategy. Instead of seeking a veteran banker, Chase hired a man whose experience had been with IBM.

(Business Week, February 25, 1980)

As a result the manager brought a new and strong marketing orientation to the trust department which was exactly what was required by the new strategy of the bank.

Similarly, when Chase bank reorganized its retail banking business from a long margin operation in which the stress was on keeping down the costs for a more expansionary business offering broader consumer financial services, the bank hired, an executive who had been a division chief for a small industrial firm who had a track record of entrepreneurial management experience.

(Business Week, February 25, 1980)

Strategic Appraisal Approach by General Electric

The diversification of GE makes the appraisal of the managers more complex than most of the other companies. Unlike GM or Exxon which have one major line of business, GE has more than 200 businesses. As a result, GE has developed elaborated approaches to handle the appraisal of the key managers.

Mergers and Acquisitions

Most mergers and acquisitions activity involves relatively small companies that don't show up on the mainstream business radar. Mega-mergers, by contrast, are widely reported, so that they provide excellent object lessons for smaller deals.

Hewlett-Packard and Compaq Merger.

One of the very important strategic activities is 'Slate System'. The top 300 positions at GE are carefully managed and monitored by the chairman of GE. A special staff group under the direction of a senior vice president reviews these key activities. This staff works with the line managers to develop slates of acceptable candidates for key personnel positions at GE. The positions can only be filled from among those on the approved slate. Thus, a business head cannot select a vice president of marketing unless the individual is among those on the official slate list for the position. The slate is approved by the Human Resource staff. If a manager wants to push strongly for an individual not on the slate, the decision must ultimately be kicked up the hierarchy at GE to the chairman.

(Source: Strategic Human Resource Management by Charles J. Fombrun, Noel M. Tichy, Marry Anne Devanna)

Deloitte Merges Property unit with Drivers Jonas Consultants

Deloitte has merged its real estate arm with property advisory firm Driver Jonas to create new business revenues of 100 million pounds.

The deal marks a push by the consultancy titan to expand its property capabilities. It is expected that around 650 Drivers Jonas partners will join a strong team from Deloitte's corporate finance division.

(Source: Metro Daily Date 22-01-2010)

Social and Environmental Responsibility at KIA Motors-

At KIA motors, the management strives to create a fruitful life through automobiles and with their creative challenge to deliver harmony and mutual benefits to the shareholders, customers and the automobile industry.

Management vision of KIA motors

According to KIA motors' management, innovation for the humanity begins with striving to be the World's Number One. Their aim is to grow the KIA brand to a world-class level and become a leader in the global automobile industry.

Secondly KIA motors pursue 'Customer Happiness,' which is their ultimate goal. At KIA they believe that customer confidence and trust are earned by providing the best technology and the highest levels of quality and service.

Thirdly, KIA prides itself on reform and the spirit of challenge. They work hard at growing out of conventional modes of thinking and embracing creativity and spontaneous innovation. To realize their long term vision, KIA Motors ceaselessly strives to satisfy the customers through technological innovations that respect people and nature while simultaneously building a corporate culture that contributes to the co-prosperity of human kind.

In June 2004, KIA Motors, in a concert with the ministry of Environment, declared the "Globalization of Sustainable Management." Furthermore, KIA Motors focuses on promoting open communications among all that concerned parties at home and abroad and publishes related reports to share progress and evaluation results with the public.

Environmental Goals/ Specific Objectives/ Planning

KIA's environmental goals are based on their environmental policy with realistic, attainable targets set up by their individual units. To achieve those goals, detailed targets and plans that can be applied at the department level have been established

Environmental Committee and Ethics Management at KIA motors

An Environmental Committee has been launched by KIA Motors to play a leading role in environmental management and address relevant issues. The committee is convened once a year to assess environmental performance and promote further improvement.

At KIA Motors Environmental Committee includes

An Environmental Products Committee

An Environmental Production Committee and

An Environmental Management Committee

An another social and responsible strategy developed by KIA Motors is that they have announced and implemented an Ethics Charter in order to be a respected and healthy through Trust Management, on-site management, transparent management and strengthening their corporate ethics based on the horizontal management system.

The latest business strategy adapted by KIA Motors is that of providing the customers with 7 years of product warranty instead of the normal 3 or 5 years warranty provided by various competitor car companies, that will give KIA Motors a Global Competitive advantage.

(Source: www.kiamotors.cz/media/Files/WeltweiteKooperation.ashx Dated 13-02-2010)

Recruitment and Staffing strategy at Sainsbury's

Sainsbury's is implementing a series of new HR initiatives in an attempt to improve staff morale, as part of a 950 million pounds rescue plan.

The supermarket chain has unveiled the results of a three-month strategic review and admitted that low staff morale has been a major factor in its financial struggles of recent years.

"Sainsbury's has highly committed staff but the morale is low," the review said.

As a result the company announced a strategy of a new bonus scheme, which "rewards all colleagues on store standards and availability" to help create a culture focused on support and customers. Staff suggestions and reward and recognition schemes have also been introduced.

Also the review confirmed that Sainsbury's would take on 3000 extra store staff, with working hours "optimized to match customers' requirements".

(Source: www.personneltoday.com/articles/2004/10/19/26156/sainsburys-rethinks-people-strategy-in-bid-to-turn-business.htm ; Dan Thomas 19 October 2004)

Working at Wal-Mart: Recruitment and Human Resource strategies

As the world's biggest retailer, Wal-Mart realizes the benefits of maintaining a happy and efficient workforce. Since opening the first store in Bentonville, Arkansas, the company has become a global phenomenon with the workforce of 1.6 million employees or 'associates'.

It came into the knowledge of the Human Resource department that the retail industry wages are typically 25 percent below manufacturing wages because it is a labor intensive industry without the fat margins of a business that produces products.

Wal-Mart does in fact offer its employees a multitude of benefits in an attempt to attract, retain and train the best people. Pensions are another perk of working at Wal-Mart.

Additionally, employees also have the opportunity to become shareholders through the Associate Stock Ownership plan. Other benefits include childcare discounts for employees with children, reimbursement for GED completion for both employees and their spouses, and the company has also provided many scholarships to help further the education of employees and their families.

Also the company is in the process of implementing a new program using technology to promote and hire employees. The system will be available to analyze data about a potential employee and 'best fit' that person to a suitable job.

(Source: www.gdpublishing.com/ic_pdf/ers/walm.pdf dated 14-02-2010)

Sportech Buys US sports Betting Business

POOLS operator Sportech is supposed to buy racing and venue management business SGR from US group Scientific Games Corp for up to $83m in cash and shares to become a world leader in pools betting.

According to the chairman of Sportech, it would be a transformational transition. It would catapult the business onto the international stage.

Sportech has also planned to raise $47m in a fully underwritten placing and open offer of 58.4 million pound shares, priced at 50p each.

(Source: City A.M Dated 15-01-10)

EXECUTIVE SUMMARY

Human Resource management is an umbrella term that encompasses

Specific human resource practices such as recruitment, selection, and appraisal

Formal Human Resource policies, which direct and partially constrain the development of specific practices

Undertaking HR philosophies, which specify the values that inform an organization's policies and practices.

But it is not the same any more with many companies in today's time are adapting a new Strategic Human Resource policy in order to gain Competitive Advantage in today's world.

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