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This report attempts to analyse and evaluate HR policies and practices within Southern Foods Limited, using academic research and theory. According to the case study, Southern Foods Limited (SFL) manufacture and supply customised menu items to the food industry, which are developed in partnership with the food retailer Billy’s Big Boy Hot Dog Restaurants Ltd.
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In order to achieve consistency and uniformity in the quality and ingredients of their individual food items, Billy’s Big Boy Hot Dog Restaurants Ltd. tend to emphasise single-supplier relationships which enables the company to have a very high level of determination over the quality, costs and ingredients of their finished products.
This relationship spanning a period of 15 years has impacted very profitably on SFL’s business, yet there is no formal contract confirming it. In effect, major issues that both customer and supplier may have to contend with are the lack of security in the relationship between them and in the demands that Billy’s Big Boy places on the Southern Foods production processes and employee behaviours.
The volume and nature of business transactions between both companies requires the use of personnel (skilled and unskilled) within the different departments or units of the organisations. These all have to be effectively managed in order to generate optimum productivity for the companies without undermining the welfare and well being of their staff.
Boxall & Purcell (2000), described Human Resource Management as encompassing anything and everything associated with the management of employment relations within an organisation. Storey (2001, p.6) elaborated further by defining HRM as “a distinctive approach to employment management which seeks to achieve competitive advantage through the strategic deployment of a highly committed and capable workforce, using an array of cultural, structural and personnel techniques.” In his own words, Armstrong (1999) defined HRM as “a strategic and coherent approach to the management of an organisation’s most valued assets – the people working there who individually and collectively contribute to the achievement of the objectives of the business.”
In addition, HRM encompasses all major activities in the working life of an employee, beginning from the point of entry till exit from the organization. According to Purcell (1966a): 4), these include:
Careful recruitment and selection (with emphasis on traits and competency)
Extensive use of systems of communication
Team working with flexible job design
Emphasis on training and learning
Involvement in decision-making with responsibility
Performance appraisal with tight links to contingent pay.
Therefore, HR policies and practices within Southern Foods Limited are worth ‘looking at’ in order to have a good understanding of Human Resource Management. The role of HRM is putting structures in place that will enhance the human resources within the organization in order to generate optimum productivity. This is an uphill task for HRM. Yet, it is needful in order to effectively conduct business in today’s global economy. Designing organizations for knowledge creation and sharing across borders leads to learning and innovation on a global basis. This will ultimately give an organization sustainable global competitive advantage.
The Harvard framework for Human Resource Management
However, in order to effectively analyse and evaluate HR policies and practices, there is a need to identify the HR policies and practices within this case study. There is also a need to understand what constitutes ‘best practice’ HR in order to see if the HR policies and practices within SFL conform to these standards.
In concluding this report, we shall be looking at implications for management and future directions. Hopefully, recommendations will also be made to address the observations that were made.
An Overview of the HRM Policies and Practices
Several HRM policies and issues featured notably in this case study. These include:
Training and development
According to the case study, things were often done “in line with the ‘Big Boy Way’ (the corporate philosophy of the American giant)”. As we know, culture refers to the underlying values, beliefs and codes of practice that make a community (Billy’s Big Boy Hot Dog Restaurants) what it is. Culture consists of the customs of society, the self-image of its members, the things that make it different from other societies. It is also said to be powerfully subjective, reflecting the meanings and understandings that are typically attributed to situations. As a constituent element of the society, people bring their culture with them as they join an organization although organisations also have their own cultures. They constitute communities of their own with distinct rules and values.
Deal and Kennedy (1982) described culture as “the way we do things around here”. It is a system of shared meaning held by members that distinguishes the organization. A pattern of basic assumptions – invented, discovered, or developed by a given group as it learns to cope with its problems of external adaptation and internal integration – that has worked well enough to be considered valuable and, therefore, to be taught to new members as the correct way to perceive, think and feel in relation to these problems (Schein).
Culture has long been on the agenda of management theorists. Culture change must mean changing the corporate ethos, the images and values that inform action and this new way of understanding organizational life must be brought into the management process.
There is an evaluative element involving social expectations and standards; the values and beliefs that people hold central and that bind organizational groups.
Culture is also a set of more material elements or artefacts. These are the signs and symbols that the organization is recognized by but they are also the events, behaviours and people that embody culture.
The medium of culture is social interaction, the web of communications that constitute a community. Here, a shared language is particularly important in expressing and signifying a distinctive organizational culture.
All of the above elements are interlocking; culture is rooted deep in unconscious sources but is represented in superficial practices and behaviour codes. Because organizations are social organisms and not mechanisms, the whole is present in the parts and symbolic events become microcosms of the whole.
Training and Development
Training, development and skills are essential ingredients of economic life. By improving skill levels, productivity and the ‘value added’ at all levels of the firm and national economy, training offers the hope of increased competitiveness. Training and Education are required to develop democracy in an organisation. Employees need to be trained in professional aspects so that they are useful to their organization, their opinions are taken into account in decision-making, and the workers become more flexible for the firm. Education in democracy is also required, so that the workers assume values such as respect for the opinion of others, trust or participation, all elements which are vital in democratic processes. In order to achieve this, financial resources are required for training, departments need to be developed for promoting training, and internal promotion needs to be encouraged to give people avenues to develop personally and gain experience in the organization. (Forcadell F.J, 2005).
Within firms, training and development is a key element of human resource management, indeed Keep (1989) argues that it is the litmus test against which other aspects of management practice should be gauged. When firms compete on the basis of quality and adopt high-commitment work practices such as employee involvement, team working or merit-based pay; developing employees is the key element in performance. It can raise the capacity of the individuals and groups employed, enabling them to participate meaningfully in systems where their contribution is encouraged (Keep and Mayhew 1996).
Arthur (1999) also linked the ‘commitment’-oriented human resource practices in steel mini-mills to the strategic focus on quality and batch production. He contrasted this with less developmental ‘control’ mechanisms in organisations where production was routine and where human resource practices focused on minimising labour costs.
In addition to these substantive factors, training and development also serve an important and positive symbolic function. Everything that a firm does sends messages (of one kind or another) to its employees (one of the key elements of the positive side of HRM). Organisations that spend money on raising skills are, quite literally, investing in their workers. Employees who participate in firm-sponsored training are more likely to see themselves as having better career prospects and say that they are intending to stay with their employer than those that do not (Heyes and Stuart 1996).
Karen Legge (1998) is of the view that “business ethics is about reflection on the nature and place of morality in business.” Ethics in business cannot be divorced from organisational ethics considering the fact that this includes concepts such as rights, obligations, justice, fairness, good, virtue, responsibility, trust, etc.
All organisations and markets rest on the assumption of some level of trust, but we sometimes forget the extent to which our assumptions about the management of employment relationships have ethical foundations.
There are four normative ethical theories in terms of which we can evaluate HRM policies, but they can be broadly categorise into two main types. These are:
Deontological theories – these are theories that emphasize the rules and principles that should guide actions. There are two main sub-categories of Deontological theories: Kantian ethics and the Contractarian theories.
(a.) Kantian Ethics: this position upholds morality. These present an argument that what makes an action right or wrong is not the sum of its consequences but the fact that it conforms to moral law. Moral laws of duty demand that people act not only in accordance with duty but for the sake of duty. It is not good enough to perform a morally correct action, because this could stem from self-interested motives that have nothing to do with morality. Rather, an action is moral if it conforms to moral law that is based not in intuition, conscience or utility, but in pure reason.
When analysed, Reason itself has three major characteristics: consistency (moral actions must not contradict one another); universality (because reason is the same for all, what is rational for me is rational for everyone else) and a priori derivation (it is not based on experience) – hence the morality of an action does not depend on its consequences).
Kant is of the view that an action is moral if it fulfils the following conditions:
It must be amenable to being made consistently universal
It must respect rational beings as ends in themselves, never solely as means to the ends of others
It must stem from and respect the autonomy of rational beings
(b.) Contractarian theories: So called because it tries to establish universal principles of a just society on the basis of what might be called ‘social contracts through experiments’. It is another form of Deontological theory, but focuses less on the rules that might identify what is ‘good’. However, it should be noted that these theories are those involving stakeholder/Rawlsian analysis. These theories assert that organisations have stakeholders (shareholders, management, other employees, customers, suppliers, local community) whose stakes are reciprocal. This means that stakeholders affect each other “in terms of harms and benefits as well as rights and duties.” Legge (1998).
Two other principles have been derived, based on this principle of reciprocity. These are that:
The organisation should be managed for the benefit of its stakeholders – all those whose fortune can be influenced one way or the other by the organisation. Their rights must be ensured. They are also expected to play a participatory role in decisions that affect their welfare. In other words, stakeholders should have a “say” in the affairs of the organisation. This is does not seem to be the practice in SFL.
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Management bears a fiduciary relationship to stakeholders and to the organisation as an abstract entity. It must act in the interests of the stakeholders as their agent, and it must act in the interests of the organisation as well in order to ensure the survival of the firm, safeguarding the long term stakes of the stakeholders. This justifies principles and theories of employee involvement and participation as a form of ‘best practice’ HR.
Teleological Theories – these are in sharp contrast to Deontological theories. There are also two sub-categories of Teleological theories:
(a.) Utilitarianism: This theory adopts a teleological approach to ethics and claims that the morality of actions is to be judged by their consequences. An action can only be moral if when compared with an alternative action, it produces or tends to produce the greatest amount of good (or the least possible balance of bad consequences) for the greatest number of people directly or indirectly affected by that action. The ‘good’ may be variously conceptualised as ‘pleasure’ (hedonistic utilitarianism), ‘happiness’ (eudaimonistic utilitarianism) or all ‘intrinsically’ valuable human goods (ideal utilitarianism)”. Legge (1998). The maximisation of the good calls for efficiency. It also allows that people might be treated as a means to an end if the end is the maximisation of the good (or minimisation of the bad) for the greatest number.
(b.) Aristotelian ethics: These are teleological in the sense that they consider that ethics should be based on the achievement of a desirable end state. It holds that human beings have the purpose to actualise their mental, moral and social potential. Humans are not individualistic, but must be understood as part of a broader social community in which fulfilling one’s potential involves developing wisdom, generosity and self restraint, all of which help to make one a good member of the community.
Analysis and Evaluation of New HRM Issues
The focus of this study and report is on Flexibility in Human Resource Management. Flexibility, as a topic has and is still being used in a variety of overlapping senses. Hence, it portrays complexity. Often times, we hear of terms such as labour market flexibility, the flexible firm and flexible specialisation to mention a few. In simple terms, the Oxford Advanced Learner’s Dictionary (2007) defines flexibility as an “ability to change to suit new conditions or situations”.
Over time, especially towards the end of the 20th century, major changes have taken place in the workplace and in the relationship between organisations and employees. In the past, employees expected to remain in the jobs for a lengthy period of time and enjoyed a relative level of security (Osterman, 2001; Claydon). Work patterns were designed and distributed by supervisors and the role of employees was restricted in the narrow tasks assigned to them. The last two decades of the 20th century witnessed international competition, domestic competitive pressures, technological changes and major financial events that made organisations to seek “greater flexibility and productivity as well as new strategies focused on speed, responsiveness to changing market conditions and innovation â€¦.. have induced organisations to eliminate jobs, not just in the factory floor as often as in the past, but also among those who have traditionally been offered a long-term career within the organisation” (Hiltrop, 1925).
Sanchez (1995) defined flexibility as the ability of a firm to respond to various demands from its dynamic competitive environment. Sheridan and Conway (2001) tend to agree that “flexibility” is truly flexible in the sense that it derives its meaning from the context in which it is used at particular times. However, when used in the business context, it portrays the reorganisation of work in such a way as to bring about increased efficiency and decreased costs.
The boundary of flexible labour was extended beyond part-time, temporary or casual work to include freelancing, sub-contracting, self employment, outsourcing, home working, teleworking, franchising, zero-hours contracts, fixed term contracts, seasonal working, flexi-time and consultancy work (Felstead and Jewson, 1999), cited in Sheridan and Conway (2001).
They are of the view that the disparity in the notion of flexibility represents a significant HRM issue because what employees may mean when seeking flexibility may be different from what the organisation is seeking in implementing more flexible work practices. There has to be a meeting point – the different needs of employees and employers have to be laid bare and negotiated. HR continually aims at narrowing the gap between employees’ potential and their actual performance. Best practice HR informs employees and receives input from them before making changes to work practices.
The management of employment relationships is dynamic. The needs of the employees, the business strategy of the organisation and the conditions under which it is operating as well as the management philosophy of the organisation can change over time. HRM must be prepared to respond to those needs.
Atkinson’s Model of the Flexible Firm
Four broad categories of labour flexibility have been identified by Atkinson (1984). These include:
Functional flexibility – the “firm’s ability to adjust and deploy the skills of its employees to match the tasks required by its changing workload, production methods and/or technology” (Atkinson and Meager, 1986:4). Functional flexibility is obtained by training workers to perform a wider variety of tasks and breaking down barriers to the development of workers across tasks.
Numerical flexibility – this refers to the “ability to adjust the level of labour inputs to meet fluctuations in output” (Atkinson and Meager, 1986: 3-4). This is achieved by altering working hours or by altering the number of workers employed.
Financial flexibility – this “is concerned with the extent to which a company’s pay and reward structure supports and reinforces the various types of numerical and/or functional flexibility which are being sought” Atkinson and Meager, 1984:4).
Distancing – this form of flexibility replaces employees with sub-contractors. In this case, employment contracts are replaced by contracts for services. Distancing enhances numerical flexibility of the organisation.
According to Pinfield and Atkinson (1998), “firms use these types of employment flexibility in different dimensions, depending on their specific competitive situation and the constraints and opportunities they face as they attempt to adjust their employment policies.”
These different types of flexibility often have the effect of restructuring the labour market in firms into “core” and “peripheral” workers. The core group consists of the multi-skilled, permanent employees, participating in decision making, enjoying significant opportunities for training and development as well as being relatively well paid. The peripheral group provides numerical flexibility in the sense that they are “casuals” and are requested to work only when there is demand for them. They are relatively low paid and their degree of autonomy inside the organisation is limited (Dyer, 1998). In their own case, there is no bonding between them and the organisation. This means less job security, part time work, working on temporary contracts, or being involved in sub-contracting. Their services are more or less determined by the market and the security of their jobs depends on the volume of the firm’s business.
HRM continues to seek to narrow the gap between employees’ potential and their actual performance.
On a personal note, most authors, whose work I reviewed or used referred to skilled labour as employee while describing unskilled labour as labour.
Increased HR flexibility provides the firm a greater ability to respond to more substantial variation in the business environment (Weick, 1979).
Increased HR flexibility also implies a speedier response time to changing environmental conditions.
Organisations can adopt a combination of internal and external labour markets, promoting individuals internally for specific tasks whilst hiring externally for other duties (Claydon, 2004; Claydon & Collins, 2005).
Exploiting core and peripheral labour management, an organisation would be able to break the rigidities associated with the traditional labour market segmentation such as Trade Unionism. In this way, management is infusing a flexible model in the organisation (Dyer, 1998).
Functional flexibility is beneficial to both employee and employer. It enables organisations respond more flexibly to future changes in product or production methods, serves a good recruiting tool and improves organisational efficiency as well as productivity. As for the employee, flexibility enhances self confidence as more skills are acquired and there is greater job security. Job enlargement, job enrichment, job rotation and semi-autonomous work groups are all instruments used in enhancing functional flexibility
The measures for skill, behaviour and HR practice flexibility could benefit from further refinement as well as replication in different industries.
Firms do not develop HR flexibility quickly; it is generated through a long-term process of hiring and development of human resources, combined with strategic planning and coordination.
The nature of HR flexibility might vary according to the nature or category of jobs within a firm, especially in larger firms.
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