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There is no doubt that human resource management (HRM) is playing an important and vital role in contemporary business environment and human resource department has become imperative for the large organizations. The rapid globalization and increased reach of organizations to global markets have intensified the competition among them. The analysis of these competitive factors facilitate the understanding that the bases on which everything rely are people and their position (ÄurkoviÄ‡, 2009). Baird & Meshoulam (1988) state that environmental changes including technological, economic and other social changes are making the organizations to heavily depend upon the human resources to fulfil the required objectives and the goals. This is the reason that today research on innovative, ethical and strategic roles (Caldwell, et al., 2011) of human resource management has increased to a large extent.
Becker & Gerhart (1996) are of the view that swiftly changing economic environment, which is characterized by the market factors such as globalization (Budhwar & Debrah, 2009) and deregulation of markets, ever-increasing product-market competition, changing needs of customers and the demands of the investors and suppliers, have become the norm of most of the organizations. In order to compete in such a competitive environment, organizations must have to improve the efficiency can effectiveness of operations by different competitive strategies such as cost reduction, through differentiation, improving quality, flexibility to the environment, and speed to the market. In such an environment the role of human resource decisions in creating and sustaining the effective organizational performance and gaining competitive edge has become more significant.
Having the involvement in the strategy making of the organization, the role of human resource management for effective performance of the organization cannot be ignored at all. From hiring the employees to effectively perform at the workplaces till the active participation in strategy making of the organization, the job of the human resource management (Noe, et al., 2010) is to contribute towards the profitability, quality and other business goals through enhancement and support of business operations.
The purpose of this report is to analyse the importance of human resource department for the large organizations and to research the significant factors in context of an organization. The organization selected for this purpose is Xerox. The importance of human resource department for the effective performance of the organizational activities has been analysed keeping in view the HR related practices at this organization. With a brief introduction of the company, the report follows with the important aspects of human resource management for the effective performance of the organization.
Xerox has been a market leader in document technology and services for more than half a century. Starting the operations in 1930s with the creation of first xerographic image, Xerography was formally announced as "Xerox" in 1940 (Xerox Corporation, 2013). Up till now, Xerox has been a market leader in document technology and provides services to major industries and organizations. The organizational structure of Xerox has been provided in Appendix - A.
The Xerox Case
In 2000, the debt of Xerox reached to $17 billion and stock price has decreased to around $4 by the year 2001. Company suffered continuous loss for seven straight quarters. Then with the change in business operations the company managed to get stable. And ultimately the company experienced a great comeback with the net income risen to $222 million from $19 million. The different steps taken by the company to survive included the key role played by the human resource department. Some of these strategic initiatives taken by human resource department were sales of international operations and business units, layoffs, early retirements, to name a few (Starner, 2004).
Effective Performance of Organizations
The effective performance of the organization depends upon its sustainability and stability in the changing global environment. In the midst of the intense global competition, organizations face different challenges such as i.e. sustainability, globalization, diversified workforce, economic changes, technological advancements, to name a few. For the effective operations, organization must face and withstand these challenges. If the organization is able to manage the gusts of these challenges, then it can carry out its operations effectively (Noe, et al., 2010). To withstand these challenges, human resource department plays a vital role, as discussed below generally and in Xerox's case particularly.
Sustainability refers to the organization's capability to withstand the changing and dynamic competitive environment. Here company's success depends on how well the company is able to satisfy the needs of its stakeholders i.e. customers, employees, community, investors etc. The sustainability challenge also includes the ability to deal with economic and social changes, provide high quality products and services, and effectively plan the future growth of the business. Changes in the economic conditions have several implications for the human resource department i.e. to provide skilled workforce, meet the demand of labour, effectively run the labour relations, provide competitive salaries and benefits etc. (Noe, et al., 2010). These challenges are discussed as follows:
Structure of the economy and changing economic conditions pose a challenge to human resource department. With the downfall in economy the company's sales and market share get a setback. In such a situation the human resource department plays a key role to reduce the HR related costs. The economic challenges faced by the Xerox were cured with the help of strategic initiatives by the human resource department. As Starner (2004) says that when Xerox business became tough in 1999, the human resource department had come up with several alignment workshops and retention incentives to help the company. The single biggest achievement was the cost-saving strategy implemented to consolidate the operations of HR service centre. With the use of technology and web-based processes, HR service centre was able to manage the HR relations effectively. This enabled the HR to minimize the staff without having any effect on the level of the services provided by the department.
Similarly HR department of the Xerox helped the company by conducting the workforce reductions and selling off businesses. HR performed all these downsizing processes maintaining the dignity of employees i.e. salaries of up to one year, full benefit coverage for employees of more than 30 years of experience etc. The company also allowed the early age retirements along with the benefits. The surveys conducted to know the views of the organization showed that employees tried to understand the company's directions and willingly supported the company.
Right employees for right job
ÄurkoviÄ‡ (2009) states that the intellectual capital has gained importance in organizations. Tangible assets such as raw materials and basic assets are not any assets that help to survive. Instead knowledge, innovation and cooperation have gained the importance as the three important elements. The new economy and business environment demands the creative, problem-solving and innovative employees. Along with the downfall or transitions in economy, the challenge to hire and retain the best employees become difficult. Several companies now take effective steps to deal with the shortage of labour in the market. The operations of the organization are difficult to sustain without having active workforce with right skills to perform the right job. Here human resource department helps the organization by fulfilling this need.
Another key issue faced by the HR was to retain the most talented employees from leaving. In this regard several steps were taken including solid-cash compensation packages etc. Today the HR department ensures that the right employee is performing the right services with the focus on employee development and career plans.
Managing diversified workforce
In today's organizational set-up workforce is becoming more diverse as women, members of the minorities and older workers get into jobs. Similarly the global market has facilitated to get the services of the people having different ethnic backgrounds, cultures, values etc. Diversity refers to the differences among members of an organization based on demographic characteristics such as race, ethnicity, gender and age (Olsen & Martins, 2012). Managing the diversified workforce and to make that to meet the organizational objectives is a tough job for the human resource department. However diversified workforce is a source of competitive advantage, if utilized effectively. Wentling & Rivas (1998) are of the view that effective and efficient management of the demographic workforce shifts has an impact on the competitive and economic outcome of the organizations. Furthermore they add that increased competition and access to global market has urged the management of organizations to consider diversity as an essential component of the business strategy. The human resource department at Xerox ensures that employees should have mutual understanding and cooperation helping to achieve the organizational goals, regardless of the demographic factors. For this human resource department provides the e-learning facilities, offers training programmes and conducts different events on a periodical basis (Johnson, et al., 2007). These steps help the employees to have increased coordination among themselves.
Globalization and Increased Competition
There are different perspectives among researches regarding globalization but a generally understandable definition refers globalization as the tendency of the organizations to extend their sales, ownership and/or manufacturing to new markets particularly in foreign countries (Dessler & Varkkey, 2009). With the access to markets, the competition has been increased among the firms. More organization with an access to global market will lead a tough competition. In such a situation organizational performance depends upon its ability to survive and sustain the cutthroat competition. However the human resource department can play a major role to help the organization survive the competition and gain market share. According to the resource-based view of the firm, a firm's pool of human capital can be leveraged to facilitate the competitive advantage over other firms in the industry (Huselid, et al., 1997). They further add that competitive advantage is possible if the human capital is a difficult to imitate and a unique source and it ensures that people add value to the overall productivity of the organization.
Chen & Wilson (2003) study the localization-standardization concept of human resource management particularly in the context of international joint ventures. They say that international joint ventures have increased along with the increasing globalization of the industries. In this perspective, the challenge for human resource department is to maintain the local HR practices (localization) and follow the global integration with the parent companies (standardization).
Ichniowski & Shaw (1999) highlight the importance of innovative human resource management practices as a source to improve firm's economic performance by promoting employee motivation. They make a comparison between the Japanese and U.S. manufacturers and assert that large Japanese organizations do not have distinct system for employee participation. This paves the way to understand that it is very important that innovative human resource helps to gain competitive advantage where number of organizations participate and it is very easily possible to imitate the human resource strategies and methods. Huselid et al. (1997) are of the opinion that strategic human resource management helps to recruit the employees having rich and high abilities and such talent is rare by definition and then to train employees in order to develop the unique skills needed. From the diversified multinational corporations' perspective, the managers had to face several challenges such as to develop strategies, deploy effective resources and compete (Prahalad, 1990).
At Xerox, the human resource department helped the organization to save costs by reducing the business units in different countries. As the business was not growing the organization had to come up with effective strategies in order to cover the set-back. Human resource management helped the organization to reduce the costs and diversified the business. Moreover, most talented and effective human capital was utilized in order to regain the strength, and this ultimately had helped the organization to be the market leader.
Technological advancements have changed the way the organizations used to do business. The internet has played a key role in changing the business environment and by providing a new platform for the businesses - Electronic commerce, which helps to conduct the business transactions electronically. With the help of internet and electronic commerce, organizations can have presence in almost every part of the world. This also increased the competition as consumers have the numerous opportunities regarding the products and services. These advancements in technology has changed many aspects of the human resource management. It has helped the human resource management to reduce costs, manage the workforce effectively and participate vitally in the effective performance of the organization. On the other hand, it has posed certain challenges for the organizations as well. Technology has changed the nature of work and skills required to perform the job. Inclusion of technology to perform jobs has increased the productivity of employees. But conversely reduced the need of labour force. Human resource department in organization has to manage the layoffs in order to reduce the overall costs of the organization.
Another aspect in the technological challenge is the training and development of employees. Technology, especially in the manufacturing sector has changed the way of performing the business activities. And in this regard human resource department faced the challenge to train the employees according to the changing work setups. The efficient and productive performance by the employees greatly depend upon their training and development and knowledge to handle the technological equipment. Human resource department in this regard directly influences the effective performance of the organization. Therefore for any large organization the importance of human resource department cannot be ignored.
Human resource department uses technology in many different ways in order to improve the productivity and efficiency of employees. Several technologies are used by human resource departments which perform different functions. Some of them are listed below (Dessler & Varkkey, 2009):
Application Service Provider (ASPs): Used to automate the employment and hiring processes
PCs and high speed internet access: Majority of organizations provide their employees with access to computers in order to perform their jobs
Web portals: employees can use the web portals to access details of the benefit programmes, upcoming training and events, promotions etc.
Network monitoring software: Used to track the activities of employees
The strategic planning by the human resource department helped the Xerox to shift the operations to desktop copiers and high-quality printers as the main business. In this perspective, human resource department was able to provide the talented and experienced employees to perform the required jobs. During the layoffs in different business units, the human resource department managed to retain most effective employees by offering different bonuses. Similarly the human resource department conducted the two-month programme that uses e-learning, virtual learning programs, coaching etc. Such workshops helped the employees to accept the changing working setup.
The analysis of different perspectives of human resource department helps to understand that its importance is crucial for any organization. There are several challenges which an organization (particularly Multinational Corporation) faces in the global competitive environment and human resource department can play a strategic vital role to help the organization survive the challenges and perform effectively and efficiently. Thus it can be concluded that for Xerox in particular and all other large organizations in general, the importance of human resource department cannot be ignored.