Human Resource Management Concepts And Contexts Commerce Essay

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Nowadays, with the development of globalization, there is a huge change taking place in the workforce---Diverse workforce. The reasons for this situation are mainly due to two factors: firstly the national population composition has changed and secondly globalization. Mayo (quoted by Elmuti, 2001) reveals increasing diversity is a global trend¼Œwhich extended to many countries of the world. The high rates of birth and the increasing number of immigrants lead to the national population change, which consequently is reacted in the workforce (Abbasi and Hollman 1991; Cox and Blake, 1991; Donnelly et al, 1998). According to the research by Elmuti (2001), in the US, the percentage of minorities in the workforce is expected to rise to 29% in the first decade. Globalization means that no matter large or small companies in today's society are faced with increasing fierce competition, in order to improve the self-competitiveness, the company must take some new ways to doing business (Jana, 2000). They must strive for the best talents, and use various methods to retain the existing talent (Thomas 1991; Datt 1997). As more and more international business in a company, these employees will be scattered around the world. Part of this trend is the increasing reliance on virtual teams, made possible by information technology (Zakaria, Amelinckx and Wilemon 2004). Therefore, managing a diverse workforce in today's organization is very important. Kandola et al.(1995, p. 2) defined diversity is "virtually all ways in which people differ, not just the more obvious ones of gender, ethnicity and disability." How to manage a diverse workforce? The method of human resource management can be divided into reactive approach and proactive approach. Reactive approach is a method that waits for something happen and then to react and solve it. While proactive approach is expected to needs and problems and tried to prevent them (Jenner, 1994). Both proactive approach and reactive approach of HR is used to add value to an organization. There is a book named Strategic Human Resource Management by Mello explained the terms reactive and proactive approach as:

"Reactive HR focuses on implementing the business strategy; that is, given a clearly formulated business strategy (e.g., growth, new product, innovation, cycle reduction, new market entry). Such activities include identifying and developing the technical knowledge, tactical skills, and business culture that are consistent with the demands of the business strategy. They may also include facilitating change management and organizing HR into service centers."(Mello, Jeffery A., 2006, p. 238)

Proactive HR focuses on creating future strategic alternatives. Such activities include creating a culture of innovation and creativity; identifying merger and acquisition possibilities and creating internal capabilities that continually track and align with the marketplace for products, markets and capital with their respective lead indicators. (Mello, Jeffery A., 2006, p. 238) Most organizations usually use a reactive rather than a proactive approach to managing its diverse workforce. Actually, rather than using reactive approach and waiting for a "diversity crisis" to occur (i.e. Coca-Cola), an organization need to using proactive perspective to managing diversity (Joplin and Daus, 1997).

This paper will focus on the issues about why and how organization should take a strategic approach to managing its diverse workforce. The first section will briefly examine the reasons and benefits of taking a strategic approach. The next section will focus on issues of the implication on HR function. Finally, it will summarize the paper.

2. The benefits of taking a strategic approach

Empirical research supports the view that using a strategic approach can have a positive effect in the diverse workplace.

Creativity: The creativity of teams that were homogeneous on a train of attitude methods were compared against teams with heterogeneous attitude. Problems solution creativity was judged on originality and practically. The results show that, as long as the team members had similar ability levels, the heterogeneous teams were more creative than the homogenous ones (Cox & Blake, 1991).

Cost: The adoption of using strategic approach that employees will be more loyal to employers who recognize and value their individual differences (Robinson & Dechant, 1997), and for this reason, the costs of turnover and absenteeism will be reduced.

Customer and market: Cox and Blake (1991) advice that organizations which have adopted a strategic approach will put themselves to be 'employers of choice' by enhancing their labor market. The managing diversity literature suggests that organizations with visible diversity in their staffing can attract a wider customer base and be more sensitive to different customers needs in their products and services (Thomas and Ely, 199; Whitehead, 1999).There is a research by Johnson-Hillery et al.(1997) found that older customers thought sales staff of the same age more positively than younger staff. Those supports of using a strategic approach argue that diverse workforce generate more ideas and solutions than homogenous group.

Social: Some reported also show that the benefits of using a strategic approach include a greater concern for socially responsible behavior in organizations (Wentling and Palma-Rivas, 1998), at the same time, more flexibility in organizational polices because of recognizing the differences needs of staffs will require that polices are more innovative and less formalist (Cox, 1993).

Individual: The purpose of using a strategic approach is to create and maintain a positive work environment, which making the diverse workforce can be valued, so that maximize their potential and ultimately to achieve the objectives of the organization.

How to using a strategic approach

Recruitment and Selection

The traditional way of recruitment and selection is given differences individuals and jobs, and the organization matched the individual to the job. However¼Œ this approach neglect the aspect of exchange and viewed as a one-way decision-making process, in other words, it is a way that the recruitment managers selecting from a number of passive applicants. From the strategic perspective, both of recruiting managers and the candidates has expectations in their current or future needs and values. It is a process to determine whether there is indeed ability between the individual and the organization through a mutual information exchange and negotiating. The result of using this approach, if successful, managers and candidates will reach a consensus on their expectation of needs and values (Loden and Rosener, 1991). However, if the process of negotiation failed due to the parties cannot agree with this sense, this still can be called "success"-or using the terms by Herriot,'valid negative'-because this way avoid recruiting unsuitable employees for the organization and avoid candidates taking on a unsuitable job (John et al, 2005).

In a word, both the traditional approach and the strategic approach emphasize'suit'between the individual and the job environment (Schneider et al., 1997). However¼Œthe former one put the emphasis on the fixed dimensions of both the job and the individual¼Œand the managers have the right to determine whether this candidate suit this job or not; While the latter one put the emphasis on through the exchange and negotiation of each other (manager and candidate) to determine the 'suit'. In other words, the traditional approach is related to personal characteristics and ability of the individual and the skill demands of the specific job ('person-job fit'). The strategic approach is related to the matching of each other's expectations of needs and values, even the environment of the organization.('person-organization fit') (Ostroff and Rothausen, 1996).In particular, where an organization intend to recruit and retain employees which has high level of knowledge, skills and expertise , the strategic approach is likely to be more effective.

Training and development:

The following sample is about some specific steps of training and developing strategic method (Ford and Chan, 2003).

Training and Development Plan(Objectives, aims )

Identification the needs of Training and Developing(Assessment of employees needs and organization needs or Job analysis; Define goals- Individual needs or Organization needs; Long term or Short term)

Development the plan of Training and Development Plan(Types of training and developing required - Knowledge, Skills, Attitude, Individual Development, Continuing Professional Development; Establishment of standards)

Selection of Training Methods(Formal and Informal; On-the-job methods - Coaching, Mentoring, In-house courses; Off-the-job methods - Work placement, External courses, Distance learning, Workshops; Design of in-house programmes or Participation in externally run programmes)

Implementing Training and Development (Selection of candidates; employees scheduling; Recording the results of training; Conducting training and development)

Evaluating Training and Development Process (Measurement of results against standards; Reaction, Learning, Behavior, Results; Feedback and redesign if necessary of company policy and objectives)

Companies need to ensure that the training and developing plan is scientific, in order to attract and retain excellent staff¼Œso¼Œthese key points need to considerate before taking a strategic approach (Donnelly, 1998)¼š

Strategic-- the content of the training and developing need to integrate with the goals of organization.

Process, not event-training and developing is a continues process which involved with various leaning methodologies¼Œsuch as workshops/seminars¼Œself-leaning¼Œweb-based interactions and so on.

Competency driven-training and developing need to put emphasis on increasing proficiency in the critical competencies required for success.

Coaching-trainer must understand the content, and need to know how to deliver the useful information to employees.

Integrated-training and developing should be linked with other parts of HR function (recruitment and selection¼Œperformance management and reward management ).

Performance management

Employees need to understand the organization strategy, clear the future direction of the company. Senior management of the enterprise involved in strategy development is very important, so that they can truly understand the strategic goals of the organization, departments and staff assessment objectives set, it will not deviate from the corporate strategy (Hodge, 1996). In addition, the strategy of indoctrination and training industry is very important, so let ordinary employees know what's what, and corrected their behavior in line with corporate norms. Of course, the strategic transparency premise is the feasibility of the strategy, the strategy is established based on scientific analysis to know ourselves and other factors, the wrong strategy, the wrong direction, and the role played by the perfect performance appraisal system is limited (Saville and Holdsworth, 1997).

Organization need to refine corporate strategy, corporate strategy into specific indicators. This requires the establishment of the target system (Locke and Latham, 1990). Formulation of business goals is not only to take into account the financial data of enterprises, but also to consider the coordinated development of all aspects of the customers, research and development, and management. One of the objectives of the trip, in addition to the goals need to be deliberated, but also to determine the causal relationship between the relevant objectives and consistent consider other aspects of the enterprise standby pay, as well as the overall business income is the best . To meet these requirements, the Trinity enterprise target system is essential; it is composed of three dimensions from the crossbar and strategic framework of integrated enterprise goals. 3D target system is the core of corporate strategy and corporate-level goals, is the starting point of all the objectives of the enterprise: the horizontal sector target system, decomposition and support of the company-level goals (Dustdar and Hofstede, 1999). Longitudinal employees goals, is the ultimate goal of the strategy. Establishment of a three-dimensional target system, many seemingly not associated with the enterprise competitive elements together to achieve the efficient allocation of resources of the company, to ensure that the sustainable development of the enterprises benign.

After the establishment of a three-dimensional target framework, strategic objectives need to be careful decompose, to implement it to the specific sectors and specific person. The transverse target decomposition focuses on the coordination, the longitudinal target decomposition focus on consistency. This is the key to turn strategy into employee performance.

Reward management

Performance-related pay-A reward system should ensure the difference based on employees performance (individual and group). Differentials in payment levels, increments and incentives favoring the good performers will drive positive behavior.

Guaranteed Pay-Guaranteed pay should according to internal equity¼Œindividual performance . To retain their position as outstanding employees, achievements should exceed the norms on a continuous basis with enhanced standards each year¼Œrather than an historical once off achievement.

Short term incentives-Variable pay is a important part in reward management. It is not only a good way to stimulate employees harder working¼Œbut also can bring market profit for organization (Torrington, 1989). Comparing to the fixed salary¼Œvariable pay is more flexible. The incorporation of reasonable fixed salary¼Œand an aggressive incentives mechanism will motivate good performers and ensure the best salary expenses.

Long term incentives-â‘ It gives the employee the right to buy company stock at a specified price. The company may provide loans for employees, allowing employees to phased return. To encourage employees to buy company stock company may purchase stock discount, or give stock bonuses and other incentives¼›â‘¡The stock options are in a certain period of time, by agreed purchase price of the right to a certain number of shares of the company. It is oriented to one of the company's senior management long-term incentive plan. The stock option incentives from this assumption that the company's stock price to a certain extent by the impact of corporate profitability and profit growth, these factors can affect the company's senior management to a considerable extent¼› â‘¢Companies usually extract a small portion of its pre-tax profit on a bonus to be allocated based on each employee's basic salary. The profit-sharing plan is usually once a year. In practice, the profit-sharing plan in the more mature enterprises. Its advantage is that: the award for the interests of the employees in the same plan embodies, so that all employees are concerned about the profits of the company, the size of the company's profits directly affect the income of the employees (White and Druker, 2000).

Personal Development- a key reward broader than remuneration. Employees can grow during work; can improve their skills to a certain extent, in order to qualify for the greater challenges in the future. The practice shows that the motivating factor of the challenges and opportunities of self-development is a very important factor in attracting and retaining employees (Armstrong, 2003).


The structure of this essay is divided into three parts, the first part describes the causes and background of diversity workforce; the second part detailed analysis the benefits of using proactive approach management from creativity, customer needs, individual, social, cost five aspects. The third part explains how to implement each module with a proactive approach from several modules of the HR function (Recruitment and Selection, Training and Developing, Performance Management and Reward Management).

Human resource capacity core competitiveness and sustainable development of enterprises and build strategic human resource management system is to ensure that the premise and foundation of the enterprise to achieve strategic objectives, is a necessary condition for the formation of the core competencies of corporate human resources.