Literature Review Human Resource Management

Chapter 2

Human resource management is a strategic approach to managing employment relation which emphasizes that leveraging people capabilities is critical to gain sustainable competitive advantage, this being achieved via a distinctive set of integrated employment policies, programs and practices (Bratton J and Gold J, 2003). The actual capital of the organization is the human abilities to utilize the human being as a capital. Each organization has too much cash to commence the business but have not professional bodies to use them at the right pace and at the right time. And HR is strategic partner of the business which runs with the business and takes the business towards the success (iftikar M).

The global and competitive market environment has led to new challengers for the individuals and organization. Without having a well trained and well prepared labor force, businesses drop the ability to compete with national and international rivals, resulting in decreased economic success (Tomaka, 2001). For the last ten years, the workplace in the organization has a lot of issues, like increased international and national competition, fast technologies and scientific changes, workforce demography, wider utilization of information technologies etc (Ferner and Hyman, 1992). Humane resource managers should understand all kinds of these issues and should develop suitable strategies in order to help their organization. Humane resource management is vital for the organization to achieve its goals and success (Pfeffer, 1994 Jackson and Schuler 2000, Barney, 1991). According to Tokesky and Kornides (1994), to show the importance of HR department to the employees, managers should try to show the relation between human resource management and organizational success.

In turn, HRM is increasing used to recognize the importance of employees as corporate assets. Employees must have, therefore, a wide variety of technical and interpersonal workplace skills and competencies that allow them to work with advanced technologies and function optimally in today’s high performing organizations (Combs et al., 2006; Fernandez, 2001). The skills, knowledge and the experience of the employees are economic values for the organization because the employees enable the organization adaptable and productive. The organizations that run their HR department successfully have higher level of productivity, higher market value, higher profitability and meeting the needs of their shareholders, investors, customers, employees and at the end the needs of the society (Schuler and Jackson, 1996).

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CEOs and managers need to analysis their human resource strategies and practices if they hope to create and retain a viable workforce. In the manufacturing sector, Lam and White (1998) present strong evidence that a combination of extensive training and development programs, above-average compensation and benefits, and effective recruitment practices positively influence corporate performance. Huselid (1995) demonstrated convincingly too that human resource management practices known as high-performance workplace practices (HPWP) (e.g. training, incentive compensation, selectivity all of which are performance enhancing) are linked to greater productivity and financial performance. Combs et al. (2006) found a positive correlation between HPWP and both operational (e.g. retention and productivity) and financial (e.g. accounting or marketing returns) performance.

Role of HR department

During the 1990, the HR functions were performed by the line managers in the large organization. They were responsible for supporting daily people management and act as strategic business partners range from advisors to line managers. In the organization, the line managers are the main bodies who implement the HR strategies and policies and put it into reality.

Now recently, there almost in all the big organization, there is a separate department named HR department that performs HR functions.

This department performs a lot of functions like selection of new employees, their training and learning programs, a system of rewarding them, a system for leaves, retention policies etc

HR management practices and system have been linked to the increased productivity, higher quality work, higher level of profitability, and organizational competitiveness (Cascio, 1992; Schulr and Jackson 1996). Here the competitiveness mean in the global economy is, to take high advantageous position in the changing market environment (Pfeffer, 1994). For this linked to be accomplished between the human resource management and organizational success, the role of HR department should be strategic instead of operational, aligning the HR practices and functions with the strategic needs of the organization (Pickles et al.,1999). According to the Brewster, (1995), the mixing of HRM with business strategy is very rare and vital even among the large organizations. In many organizations, they have problems in transforming the HRM into strategic functions. They focus on the administrative and clerical tasks leaving the HRM department. In the end, their managers fail to make changes through the employees in the organization (Down et al. (1997).

According to SHRM-BNA Survey No. 60: the activities of HR department are listed below

• Employment and recruiting;

• Training and development;

• Compensation;

• Benefits;

• Employee services;

• Employee and community relations;

• Personnel records;

• Health and safety;

• Strategic planning.

HR function is a support part of the whole business management process and can not be cut off regarded (Personnel Standards Lead Body, 1993), the overall role of it is to conduct effective people management in employment and development, and organize the relationship between management and the workforce in order to make the best use of its workforce to achieve organizational goals and benefit.

HR functions have a variety of policies and activities, and vary from different level of an organization and from one organization to another (Hope-Hailey et al, 1998; Sisson, 1995; Tyson, 1987).

Who perform HR role?

Role of line managers

Line managers put HR policies into reality (Nicola, eds; Hutchinson and Wood, 1995; Hall and Torrington, 1998; Hutchinson and Purcell, 2003; Renwick, 2003). HR managers initiate HR policies and practices, but it is the line managers that implement them because of their “direct accountability” over the utilized human resources at workplace (Nicola, eds). Purcell et al (2003) pointed that line managers own the “largest amount of discretion” in the ways of execute policies and lead and control over issues during the process.

The factors affecting the role of line managers are their reluctance to carry out assigned HR tasks (Purcell, 2003), and their ability to do the tasks (Hirsh et al, 2001; Hamel, 1994). As acknowledged by Hamel (1994) that it is difficulty for line managers to identify the relevant skills of people who comes from other departments, as well as negotiating transfer’s issues. This requires the training of line managers’ skills in people oriented activities, such as interviewing, coaching, providing feedback, and identifying learning and development needs. Besides, line managers should be given enough guidance from HR managers on the way to achieve success.

Motivation

One of the vital function of HR department is motivation and it is taken to mean as a state arising in processes that are internal and external to the individual, in which the person perceives that it is appropriate to pursue a certain of action directed at achieving specific outcomes and in which the person choose to pursue those outcomes with a degree of vigor and persistence (Rollison D.2006).

The employee motivation is the willingness of employees achieve core corporation goals with high level employee job satisfaction also fulfill individual needs and want as well (Robbins, 1998). This is very crucial for any organization that its employee have been motivated, because if employee motivation level is at strong position than they can make good performance to get organizational goals.

In 2000, Hendry said that in the past decades, employee motivation is very deficient area, therefore it is the responsibility of managers to take solid and effective steps to building motivation level of employees. On the other hand in 1994, Lawler stated that if your labour is less motivated than there would be high labour cost, less productivity, poor performance and also affect other working environment of organization. Therefore it is necessary for an employee to be motivated at his workplace.

In 2000, Thomas said that if your employees are committed and motivated with organizational vision/mission statement then it is easy for management to tackle its competitors through this competitive edge. When employees are motivated intrinsically and extrinsically their job performance defiantly improves and corporation goals will be achieved efficiently and effectively with in short time period. Therefore these days’ modern organization’ policies and procedures are mostly focuses on employee’s motivation area in HR. Because highly motivated and skillful employees are the core competitive advantage of any organization.

Actually employee’s best performance rewards and job appraisal are performing fundamental role in job satisfaction and motivation on the workplace. Therefore it is vary from employee to employee and corporation to corporation. But this is very magnetic tool for HR to build efficiency and effectiveness in corporation (Hendry, 2000). It is very vital for organization’s management to know about their employee’s motivation needs and wants according to their social and professional requirement (Linder, 1998).

Beach. S (1994), described that there are two kinds of motivation, one intrinsic and second extrinsic. In extrinsic, it refers to the holding out of incentive or external rewards for the successful completion of tasks. Such incentives may be bonuses, higher pays, better working condition. In intrinsic motivation, the work itself is satisfying to the individuals who takes pleasure in the work or schooling and derives a feeling of accomplishment upon the successful completion. Walton, (1985) in particular, argues that commitment results in better quality, lower turnover, and a great capacity for innovation and flexibility to employees. Commitment could be influenced by the personal characteristics of the employee, the job role experience, structural factors, and personnel policies. If the behavior in an organization is favorable, and its employees are motivated, satisfied and committed then it is more likely that the business they work for will have a competitive advantage as well as good performance in the market (Torrington, D & Hall, L.1995).

Motivated employees are despartely needed in a fastly chaning workplace. No matter the size of an organisation, having a team of motivated and hard-working employees is critical to business success. When employees lose their motivation their job performance suffers, less creative, they become less productive and less of an asset to the organisation. Further, when employees lose their motivation they are more likely to seek alternative job opportunities thereby incurring a great cost to the organisation. And when an organisation replace an employee the organisaton bears indirect direct and expenses such as headhunting fees, cost of advertising, human resource costs, new hire training, customer retention and loss of productivty. According to an estimation, all of these expenses can add up to anywhere from 3 to 200 percent of a single employee’s annual salary. (U.S. Department of Labor, Bureau of Labor Statistics).

Benefits of motivation to the organization

Employee’s turnover in the organization could be reduced with the motivation. There are a lot of motivation factors that mitigate the employee’s turnover in the organization. Best factor among them is problem solving of the employees given by  Gradle Gardner, (2009)  because if their problems would be sort out then they would have no need to leave the job. First see, what is the problem with which employees are leaving the organization, as may be they are not being offered enough responsibilities to satisfy their needs. This may be in term of self management, development, creativity etc. secondly, increase responsibility of employees. Organization should give extra responsibilities to make full satisfaction of her/his job. Like, they should be free for organizing their working days. In this ways, they would show their trust and loyalty in the work. There are different theories of motivation that elaborate how employee turnover could be reduced in the organization. Because there are massive losses that are caused to the organization with high turnover ration.

Maslow need hierarchy theory

Robertson.et al(1992), quotes American physiologist Abraham Maslow. The theory suggested that motivation claims that human hierarchy of needs develop sequentially.

In 1954 Maslow presented a theory that it is human nature that his needs can’t be fulfill, if first need has fulfill then he will move toward second one. After the satisfaction of second need human is ready toward his third. Therefore this chain is continuously moving onward. Maslow hierarchy of need runs step by step. first is physiological need in which all basic need are involved for instance food, water, sex, sleeping ; in second step safety need in which shelter, employment, family, health; in third step social relationship like friendship, sexual intimacy; in fourth self esteem, self confidence, respect from other and in fifth one creativity , problem solving, morality, experience purposes are involved. There are many universal concepts in this theory; that’s way this theory is very useful in research objectives to enhancing employee motivation. Once all these level are achieved by the organization for the employees in their particular job, the company can be confident of retaining the employees for considerable time of period.

Herzberg’s motivational theory

Herzberg’s motivational theory in 1959, in which Frederick tried to change the Maslow theory. It also named as two factors theory. According to this there are intrinsic factors that are linked with satisfaction and extrinsic factors linked with dissatisfaction. Motivational elements are related with employee intrinsic like individual challenges, personal growth, personal goals achievement, fulfill responsibilities etc directly and hygiene elements are represented the extrinsic for instance job security, workplace conditions, corporation policies for employees, supervisors relationship with subordinates. Therefore in this theory Herzberg’s said that employee’s dissatisfaction comes due to hygiene factors and employee’s satisfaction toward their job come from motivational.

Expectancy theory

One of the most charming and vital theory is expectancy theory to motivate all employees. It state that an individual has the highest motivation to put forward effort if he/she believes the effort will lead to good performance and good performance will lead to ideal outcomes(Newsom, W). In the case of problem employees they have a negative doubt or expectancy that effort will lead to performance or that performance will lead to outcomes. Also, problem employees may not like or want the outcomes connected with performance.

Walter Newsom, (a professor at Mississippi State University), gave a methods to use this theory into practice called 9Cs. The nine Cs can be used by a manager/supervisors as a diagnostic tool in understanding employee motivation.

These nine Cs are questions that supervisors/managers should ask when a problem employee is detected. By asking questions from the employees, their problems would be solved and they would not think to leave the job.

Capability. Does the employee have the capability to perform the job in a proper way[4]. Too often managers guess that people have the capability to do the job assigned to them and leave them alone in their own way. The incoming new employees especially need to watch them carefully because they are new to work. And a active role of the managers and supervisors will build the capability of the new hire until the supervisor can take a more passive role. If this active role is not taken by the managers or supervisors then new employees may quickly become a problem employee.

Confidence. Does the employee believe he/she can perform the job well? As confidence is the perception one has of their ability and directly affects capability.

Managers/supervisors sometimes suppose that the employees can do it when they may not have the confidence to do it. Managers can avoid this difficulty by describing confidence in the subordinate, which will remove the passive employee. l

Challenge:

Does the employee have to work hard to perform the job in a proper way and well?

Jobs that are so easy for the employee that they can do them in their sleep usually result in employees working as if they are asleep. Problem employees must be made to take responsibility for their work and expand the meaning of their work with job enrichment. In production lines, which have traditionally little challenge) quality circles make employees responsible for the quality of their work, which in turn lets them be treated as responsible adults. Managers should be aware that individuals perform best when they have the capability as well as How to motivate problem employees Desmond Daly and Brian H. Kleiner CONTRIBUTED PAPERS

Work Study, Vol. 44 No. 2, 1995, pp. 5-7, © MCB University Press, 0043-8022 the confidence to do the job, and they’re challenged”[4]. In other words a manager should make sure that any problem employee has the right balance between capability and confidence with challenge in their job, and correct the mix where necessary. L

Criteria: “Does the employee know the difference between good and bad performance?”[4]. A common misconception by managers is that they assume that the difference is obvious. In numerous cases people are fired for bad performance when they feel they have been performing satisfactorily. A simple method to solve this problem “is for the manager and employee each to list four or five major responsibilities of the employee’s job according to importance. Compare the two lists. This can reveal major discrepancies in their understanding of job responsibilities, as well as daily reality in the office of which a manager might be unaware”[5]. When an employee is new or is a problem, it is critical that positive performance be commended and negative performance be specifically addressed in a constructive manner. “Some managers dislike saying anything critical. They hope subordinates figure it out for themselves and change. Effective managers don’t hope – they act”[4]. l

Credibility: “Does an employee believe the manager will deliver on promises?”[4]. The most effective managers are those who deliver on their promises, no matter how small a promise and to whom they gave it. However, many managers forget what they said, or were lying for convenience. Problem employees often arise because they were promised rises, bonuses or promotion for good performance and the manager does not come through. A manager must first obtain approval for any promise he may give outside his authority, so that the promise can be acted on. Conversely, threats which a manager may make need to be followed through to preserve credibility. Any threats that a manager makes need to follow company policy; otherwise they lack force and authority. Problem employees need to believe in the promises (threats) made to them by their manager; otherwise they will not take that manager seriously. New managers who take over problem employees need to take scrupulous care that all promises and threats are fulfilled to the letter, since even a minor deviation will be seen as a weakness.

“Threats need to be followe through to preserve credibility” l

Consistency. Do subordinates believe that all individuals obtain similar preferred outcomes for good performance and similar less preferred outcomes for poor performance?

Many managers/supervisors treat their employees in same way and think that this consistency.

A problem employee can result from mixed treatment by the managers/supervisors. For instance,

A problem employee can result from mixed signals being sent by a manager. For example, one employee who is regularly late may never be reprimanded while another might be disciplined for being one minute late.

Compensation. Do the outcomes linked with good performance reward the individual?

Many managers/supervisors do mistake of thinking that money is only compensation and forget about employees that they also look at the nonmonetary rewards for their good performance. The most overlooked source of compensation for an employee is a simple “Thank you”. Many bosses of the organization suppose that their pay is enough compensation to retain employees and to make happy.

Cost. What does it cost an individual, in effort and outcomes forgone, to perform well? Some managers allot projects to employees without taking into account that employee’s life activities outside the organization. For instance, giving a task that requires many times to complete it to an employee going to studying MBA School. That employee will become a problem employee simply because he/she cannot give the time essential to work and school as well.

Communication

It is very vital element of the 9Cs and since none would work without it. Does the manager communicate with the subordinate?

Almost all supervisors/mangers assume that communication is talking but actually it is listening. Most of the problems have very little communication. Thus, using the nine Cs, communication is the main way for a supervisor to turn a problem employee around.

David McClelland Theory of Motivation

According to Silibiger S (2005), David McClelland suggested that people have three kinds of basic needs, (a) need for achievement, (b) need for power, (c) need for affiliation. According to Rollinson, D, (2005), the McClelland theory also suggests that certain needs of employees are expression of the childhood culture in which they are nourished and thus are connected with the behaviour in the adult life.

The different theories of Motivation suggest that employee’s motivation is directly proportional to the work value being allotted to him along with it, is dependent upon priority of needs of an employee along with the presence of intrinsic and extrinsic motivators and demotivator factors in the employee environment.

In the nutshell, motivation results in the well vision of getting better performance resulting in the job satisfaction and then encourages Retention process and policies of a organization. Other factor for employees motivation are , social behaviour, bonuses, incentives ,working conditions, nature of growth and personal growth, gratitude, accomplishment and responsibility.

Training and development

Almost all the organisations provide training for their employee for many reasons. The purpose of training the employees is to teach them in their initial tasks and produce more skills to enhance organizational productivity.

According to Cole (2002, page, 330), in his book “Personnel and Human Resource Management:, training is a learning activity directed towards the acquisition of specific knowledge and skills for the purpose of an occupation or task.

Training improves the present performance of employees who may not be working as efficiently as desired or plan employees for future promotions or increase organizational productivity, for coming changes in design, processes or technology in their present jobs (Fisher et al., 1999).Trainees obtain new scheming skills, technical knowledge, , problem solving ability good tricks to perform good tasks, attitudes.

Training is different completely from the education that is gained in the universities, colleges or school. It is Organisational Vocational and work oriented in nature.

Long term profitability, good productivity and optimum performance of organizations are determined by the quality employees training and development in the organization.

It is good policy to invest in the development of employee’s skills, knowledge, and abilities so that organizational productivity could be increased. Training is only given to the new employees traditionally. This is mistake made by the organization. Training for the existing employees also help to enhance productivity (Evans and Lindsay, 1999).

According to Evans and Lindsay (1999), Xerox Business Products and Systems invest over $125 million in quality training. Motorola & Texas Instruments give at least 40 hours of training to every employee quarterly. Now training and development have become a vital responsibility of Human Resource Management departments in organizations mainly as employees require new knowledge, skills and abilities, which enhance the employee’s performance, organizational productivity and increase profit of the organization. Now organizations are starting to understand the important role of training and development that it play vital role in increasing productivity and enhancing performance, and eventually stay in competition.

But a recent ACAS Consultants, John Bradford, survey indicates that too little attention is paid to this area of human resource development, could have a lot of advantages like, high performance, high productivity and profitability. Human resource development (HRD) consists a set of activities that develop the performance of individuals and the organizations.

……………….

The central job is that HRD may have traditional training, career development and organizational development.

Education activities are designed to improve the overall competence of an employee. Development goes beyond education to encompass life-long learning. Therefore at its most basic, HRD increases workforce competence, skills development and quality, as well as motivation and commitment to the organization and the development of teams.

At its most sophisticated, organisational learning providesemployees with skills in responding to change and an appreciation for lifelong learning. Strategic HRD is concerned with linking training and development to organisational objectives and responding to changes in technology and other factors in the external environment (McLagan, 1989). Reasons why strategic HRD may not occur in SMEs include cost, ill-defined or absent strategic objectives, lack of managerial support for the value of training, neglect of long-term plans and a lack of training-needs analysis (Beaver, 2002). Kotey and Slade (2005) argue that training in SMEs has been described as informal and on the job, with little or no provision for management development and little systematic approach to undertaking a training needs analysis (Marlowe and Patton, 1993; Loan-Clarke et al., 1999; MacMahon and Murphy, 1999). Indeed, Kotey and Slade (2005) further suggest that in SMEs training often is perceived as an unaffordable luxury involving not only course fees but also the cost of unproductive labour, with owner-managers arguing that training results in highly specialised staff, as opposed to the multi-skilled workforce required in an age of high job flexibility (MacMahon and Murphy, 1999). In contrast, however, Hornsby and Kuratko (1990) earlier reported the use of a variety of training methods in small firms with on-the-job training being the predominant method. Moreover, in the most micro organisations, owner-managers perform or directly supervise most business activities themselves, including HRM and therefore take direct responsibility for employee training and the methods that are employed (Timmons, 1999). The research of Kotey and Slade (2005) found that HRM in small and medium-sized organisations changes with size toward more enunciated and prescribed practices and that these changes begin early in the growth process and proceed at a faster rate than during the latter growth phase. Furthermore, the adoption of formal HRM practices at the managerial level lags behind that at the operational level in many smaller organisations.

Benefits of training and development to the organization

The advantage that many smaller firms have over their larger counterparts in terms of HRD, is their ability to be more innovative and entrepreneurial and respond quickly to the diversity that modern workforces present. Certainly the management of diversity is a complex affair that requires more than simple representation of diverse groups in the workforce but sustained efforts by HR practitioners to develop the human capital. The creation of a culture that values and appreciates differences requires major, systematic planned change efforts and creating such transformation depends upon a fundamental change in the thinking of HR managers and organisational leaders (Bowens et al., 1993; Thomas and Ely, 1996) – a situation that provides real challenges but also potentially rewarding opportunities for those SMEs that avail themselves of such prospects to attain competitive HRM advantage and become preferred employers of choice

The purpose of training is mainly to improve knowledge and skills, and to change attitudes or behavior. It is one of the most important potential motivators which can lead to many possible benefits for both individuals and the organization. Changing technology requires that employees possess the knowledge, skills and abilities needed to cope with new processes and production techniques. According to Cole (2002) training can achieve:

1) High morale – employees who receive training have increased confidence and motivation;

2) Lower cost of production – training eliminates risks because trained personnel are able to make better and economic use of material and equipment thereby reducing and avoiding waste;

3) Lower turnover – training brings a sense of security at the workplace which reduces labor turnover and absenteeism is avoided;

4) Change management- training helps to manage change by increasing the understanding and involvement of employees in the change process and also provides the skills and abilities needed to adjust to new situations;

5) Provide recognition, enhanced responsibility and the possibility of increased pay and promotion;

6) Give a feeling of personal satisfaction and achievement, and broaden opportunities for career progression; and

7) Help to improve the availability and quality of staff.

Derrick et al (2000:55) looked at the training environment and the structure of organizations, and emphasized on the effects of internal political and cultural factors on training and development. Sherman et al (1996:16) argues that many new employees can be equipped with most of the knowledge, skills and attitudes needed to start work, but others may require extensive training to ensure their effective contribution to the organization. A majority however, will require some type of training at one time or another to maintain an effective level of job performance.

According to Krietner (1995:8) in his book The Good Manager‟s Guide, no matter how carefully job applicants are screened, typically a gap remains between what the employee does know and what they should know. An organization which desires to gain the competitive edge in its respective indu