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Attracting and retaining the quality staff is the competitive advantage for many organizations in challenging economic environment. There are two main approaches to attracting and retaining employees by the strategies ’employer of choice’ and employee engagement.
‘Employer of choice’ has become in HRM in contemporary business recent years. It is representative of a whole new design of corporate culture. ‘Employer of choice’ is applied in the company priorities by most successful and respected business leaders today. Now more and more employers are using an ’employer of choice’ strategy by providing and offering varieties of employee benefits in order to attract and retain best people. There are four measurements for monitoring the company’s performance. In addition to market share, consistent financials and being a valuable corporate citizen, the fundamental element for a successful company is being an employer of choice. When companies are losing talent and experienced staff, the companies are losing professionals and expertise that gained at company expense, hard -built customer relationship as well that are very hard to replace today’s labour market. To put ’employer of choice’ as the top priorities list can give the company competitive advantage because it can attract and retain critical human assets.
The employee engagement is becoming very important across the globe as the customer power and employee power are increasing in the modern economic and business world. As 200 companies survey found that it can have $21 million benefit moving a workforce of 8000 employees from low level to high level engagement. And compared with 20% of disengaged the employees, more than 65% engaged employees say that they have a better understanding how to meet the customer requirements and needs. Employee engagement can also make effort on mental and emotional commitment to the organization. Engaged employees are willing to give extra effort to their job that can lead to increase the productivity. Some researches show that the employee engagement strategy makes an average less than three days sick leave per year than six days for the disengaged employees
A successful employee engagement strategy helps create a community at the workplace and not just a workforce. When employees are effectively and positively engaged with their organisation, they form an emotional connection with the company. This affects their attitude towards both their colleagues and the company’s clients and improves customer satisfaction and service levels.
As the question mentioned that the companies must reject the concept that the loyalty is dead among today’s employees. The company has to create a challenging environment that can attract and retain people. I totally agree this conception that employee royalty and satisfactory can be build up by employee engagement. It make employee make effort to the organization from coginitive level, emotional level and physical level. Engaged employees always think about the company, feel inspired by their job, they are customer focused in their approach, they care about the future of the company and are prepared to invest their own effort to see that the organization succeeds. It is now a generally acknowledged business fact that employee engagement is a key driver of business success.
Employee engagement strategy can be applied no matter in small or large companies. It benefits the organizations and individuals, improving the performance, boosting the bottom line and makes employees happier and the work more enjoyable. However, it is not always the win-win situation. Some organization use employee engagement that can drive work intensification. It would obviously run this risk of being detrimental to the individuals concerned. The organization is expecting the employees to go one step further that can make overtime working normalised. And the over-performance rewarded can leave behind the staffs that just do a good job. In other hand, it is not easy to achieve work-life balance in some high-performance companies under employee engagement strategy. The priority of work with long and non-standard hours takes over family and social life. The increasing effort that engaged employees put into the work time make the work and life unbalanced. The latest research shows that the employee engagement by high performance work systems may accrue marginal benefits in terms of the higher level of involvement and commitment. However, these benefits are outweighed by the associated increases in responsibility, workload, work-life spill over and work stress.
2. How companies are dealing with the linkages between HR and strategic formulation.
Strategic Human Resource Management (SHRM) in an organization can be defined as accepting and involving the HR function as a strategic partner in the formulation and implementation of the company’s strategies through HR activities such as recruiting, selecting, training and rewarding personnel. SHRM means linking of HR with strategic objectives to improve business performance and company culture to develop competitive advantage, innovation and flexibility.
There are four different levels of linkage between HR strategic and the strategic management process: administrative linkage, one-way linkage, two-way linkage and integrative linkage. These four levels of linkage are very helpful for an organization to categorize which HRM strategy has to be applied.
The administrative linkage has no linkage between strategic plan and HR function. It simply engages in administrative work that has no emphasis placed on achieving the linkage in both strategy formulation and strategy implantation. It focuses on day to day activities and personal management.
In one-way linkage, the company develops the strategic plan and then informs the HR function. Although it does recognize the importance of human resources in implementing the strategic plan, it precludes the company from considering human resource issues while formulating the strategic plan.
In two-way linkage, he strategic planning team informs the HRM function of the various strategies the company is considering ïƒ HRM executives analyze the human resource implications of the various strategies, presenting the results to the strategic planning team ïƒ The strategic plan is passed on to the HRM executive, who develops programs to implement it.
The Integrative linkage is based on continuing interaction. The HRM function is built right into the strategy formulation and implementation processes.
In the higher level linkage such as two-way linkage and integrative linkage are characterized by a close relationship between HRM and business strategies. HRM effectiveness can be explained by examine the contributions of the HRM function in the process of achieving strategic integration. In both of the short term and long term, SHRM should complement and contribute to the improvement of the productive capacity of enterprises.
Strategic business partner: a role performed by HR practitioners, aiming to execute organisational strategy by aligning HR processes with the organisational strategy.
HR managers become able to reengineer the way HR department executes its job, accomplishes those transactional HR job’s cost-competitively, and increasingly turn
its attention to truly being a strategic partner with the firm’s top executives
With an integrative linkage, strategic planners consider all the people-related business issues before making a strategic choice. These issues are identified with regard to the mission, goals, opportunities, threats, strengths and weakness, leading the strategic planning team to make a more intelligent strategic choice. While this process does not guarantee success, companies that address these issues are more likely to make a choice that will ultimately succeed.
Research has supported the need to have HR executives integrally involved in strategy formulation.
The level of HR involvement was positively related to the refinery manager’s evaluation of the effectiveness of the HR function.
HR involvement was highest when top managers viewed employees as a strategic asset and this was associated with reduce turnover.
HR practices that are properly implemented do deliver significant financial benefits to an organization. ( profitability, shareholder return, stock prices and organizational survival)
Administrative linkage level will either become more integrated or face extinction. In addition, companies will move toward becoming interactively linked in an effort to strategically manage human recourses. Integrating the HR function into strategy formulation may help the strategic planning team make the most effective strategic choice. Once the strategic choice is determined, HR must take the active role in its implementation.
HR is emerging as the key concept in assessing the competitive assets of organizations. HR managers and professionals, by virtue of their knowledge of human performance, are well positioned to exercise strategic leadership and contribute significantly to a firm’s competitive advantage. Therefore, the company has to create opportunities for the HR function to develop a more strategic role in a firm’s operation (Lawler & Mohrman, 2003).
As the arrival of the global economy, the HRM has more challenges to create an environment to maintain the competitive advantages. In order to become a strategic partner in the organization, the HR executive must have the abilities to research and training that from being acknowledge of the HR concepts, logic and practices. HR executives have to show the competencies which add more value to the organization. The role of HRM is becoming more creative and strategic to adapt the changes of worldwide workforce structures. More and more high performing companies have HR executive involved in business at a strategic level. There are four major factors of competencies related to how well an HR professional contributes in a strategic way to businesses in areas such as strategic decision making, culture management, fast change, and market driven connectivity.
Previously, organization structured on a centralized and compartmentalized basis-head office, marketing, manufacturing, financing etc. By the end of the 1980s, HR played largely on administrative work that focus on HR operations and processing standardisation and technology which has no connection with the strategic management. The role of HR traditionally in the organization is no more than a one- way linkage role. They were doing what the business manager wanted.
In recent years, there’s a fundamental reassessments of human resources structures and positions.
The massive change of business conditions, organizational structure and strategic decision makers has been leading HR to develop their perspectives and functions. Today, senior management expects HR to move beyond its traditional. HR is more tightly linked to corporate strategy and to creating business value through HR services that address a company’s most pressing strategic challenges. HR now seek t decentralize and to integrate their operations and developing cross-functional teams. HR is anticipating critical workforce trends, shaping and executing business strategy, identifying and addressing people-related risks and regulations, enhancing workforce performance and productivity, and offering new HR services to help a company improve and grow.
In order to become a strategic partner in the company, the HR executives need to fulfil five challenges to help the company to achieve critical goals.
Posses and use their knowledge of how people can and do play a role in competitive advantage as well as policies, programs and practices that can leverage the company’s people as a source of competitive advantage
Firstly, knowledge management is essential for competitive advantage for helping HR to play an important role in developing company culture for organizational learning as a strategic partner. With knowledge management, business success is achieved in a culture of learning and workplace planning. The Research Quarterly found that the HR executives can leverage the company people through knowledge management, for competitive advantage in a challenging economy. HR executive and professionals has to acquire the knowledge and skills that are necessarily link HR to stakeholder value. And HR related policies, programs and rules can have a fundamental influence on workforce behavior that helping company to achieve the competitive advantages.
To become the strategic partner, it requires HR executive to be involved in transferring knowledge. HR professionals must know how to optimize policies and practices, how to manage the learning that results from any change or execution process associated with new business structures. And HR executives need to have multiple channels to make sure the engagement of business strategies.
HR executives must demonstrate business knowledge includes not only how it fulfills its mission, but also how it serves its customers and differentiates itself from its competitors. When HR professionals demonstrate their understanding of what is driving their business, they will add value by mobilizing the right workforce with the right skills to achieve the business goals of enterprise.
Knowledge management requires knowledge managers. Key business resources like labor and capital have substantial organizational functions devoted to their management. Knowledge won’t be well managed until some group within a Â®rm has clear responsibility for the job. Among the tasks that such a group might perform are collecting and categorizing knowledge establishing a knowledge oriented technology infrastructure, and monitoring the use of knowledge.
HR need to have clear strategies, outcomes, products , services and structures
So the HR staff can achieve their goals and deliver the necessary outcomes.
HR staff can do this to fulfilling for management roles
Strategic HR role- aligns HR and business strategy and delivers the executive of strategy
HR executives must be able to translate business needs in HR strategies to build up individual, team and organizational capabilities. HR strategy should be directly relevant to business requirement and delivering value that lead to an intense focus on structural realignment for HR teams. It requires HR to have competing perspectives, values and services. It also involved meeting stakeholder need for respect and ownership. HR executives need to widen the focus on learning new behaviours, changing attitudes and processes.
- Management of company infrastructure role- reengineers organization processes and builds an efficient infrastructure
- Management of employee contribution role- listening and responding the employees- employee commitment and capability is increased
- Transformation and change role- ensuing the organization has the capacity for change and delivers a renewed organization
- HRIS- HR information systems- technology is facilitating the transformation of HR function
HRIS is designed to help provide information used in HR decision making such as administration, payroll, recruiting, training, and performance analysis. HRIS makes HR department working more effective to handle daily administrative tasks. Using the value-added approach to justify the HRIS expenditure links the system with the key business direction of the organization, and makes the critical of HR information to business success. The HRIS becomes not just a way to reduce administrative costs, but a key element of the business strategies. In additional to providing a framework of justifying HRIS expenditure as a strategic investment, the value-added approach emphasizes the role of HR as an active strategic partner in achieving the origination’s strategic business objectives Technology is facilitating the transformation of HR function. These technology solutions can cover multiple HR tasks, such as recruiting, benefits administration, and training administration. Applications and data are usually shared in common across the company, with links to other systems in services centre operations, finance, and accounting – as well as third-party systems for such tasks as payroll and benefits.
Modern HRIS are comprehensive, accurate and accessible systems for recording employee and work data relevant to HRM, HR and organizational planning. HRIS helps the organization to improve strategic planning and program development and faster information processing times.
By increasing administrative efficiency, technology allows HR to have fewer staff marking more value-added contributions to their organizations. The rapid evolution of electronic HR delivery systems is pushing more information in more usable formats to employees and managers who can use it directly for the benefit of their organizations.
Fast and cheap access to accurate real time HR information
Access and the ability to analyse, assess, interpret, manipulate, leverage and share the information effectively will be key to giving organizations a strategic edge. Successful data mining will be made possible by the use of date warehouses with their ability to consolidate internal and external information with powerful analytical tools
Ubiquitous access to information to improve employee effectiveness and efficiency.
This means working from anywhere and at anytime, the size, format, the footprint of technology deliverables will more from departmental desktop devices operating under the full control of the user organization to a mixture of hand-held, pocket-sized, integrated devices and wireless linkage that provide needed access on a real time basis to centralized processing and data storage capabilities. Instant access to all needed knowledge and to essential meaningful data will be a keystone for the successful enterprise.
- A variety of analytics and decision trees.
- Smart self-service.
- Customized content.
HR executives must implement the new plans or programs. HR executive must have the skills to oversee the change in a way that ensures it success. Change was more successfully where HR professionals had been involved in developing the vision of the organisation, strategic planning, the change required and where the HR manage was well paid and reported directly to CEO.
In previous times, change is constant. HR executives like scanning, scenario building and search conferences can help to predict the future and manage change. However, the most effective HR executives will not depend on formulas but will develop their strategic intelligence including foresight, partnering with people who complement their strengths, visioning with systems thinking, motivating and empowering their collaborators to realize their visions to create a winning future for their organizations.
HR executives must have integration competence, the ability to integrative the three other competencies to increase the company’s value. Although specialist knowledge is necessary, a generalist perspective must be taken in making decisions. This means that how HR all functions fit together to be effective and recognising that changes in any one part of HR package are likely to requires changes in other parts of the package.
There are a few competencies the HR executives have to master to become a strategic partner. The integration competency is one of the most important that can integrate the other three competencies together to increase the organization’s value. HR executives are playing the role as connecting hiring, training and worker evaluations via organizational competencies. From talent mapping and planning to performance evaluation, recruitment, retention and even benefits administration, today’s human capital professionals are constantly seeking new ways to streamline, integrate and align human capital functions with broader corporate objectives
The organization management has to realize that it is very important to have an integrated and consistent technology platform for HRM. The more integration between activities as diverse as recruitment, payroll and benefits management, training/development and performance measurement, the better HR executives can be at overall workforce planning and managing and motivating individual workers. As the result, the organization can be more effective
These developments lead to an entirely new set of competencies for today’s strategic Hr executive. The new strategic role of HR shows both opportunities and challenges. These include forming a series of partners with senior executives, line managers and external providers of HR services.
As companies cope with the economy, HR can be instrumental in helping organizations leverage knowledge-based resources for business results. As highlighted in Creating People Advantage, critical HR challenges focus on three strategic categories, all related to knowledge management: 1) developing and retaining the best employees (talent, leadership development, work/life balance); 2) anticipating change (demographics, change, cultural transformation, globalization); and 3) enabling the organization (becoming a learning organization). (4) As indicated in a SHRM April 2009 poll of U.S.-based organizations and multinational companies, the primary focus of companies now is workforce planning. Although hiring expectations are low, talent management priorities remain high despite the economic downturn (see Figure 1
Competitive challenges influencing HRM
The challenge of HR innovation
It is no secret that knowledge is power. Knowledge management can create competitive advantage for a company and its customers. By sharing information and best practices, organizations create expanded opportunities for market share and financial growth. Furthermore, knowledge management provides a means for organizations to differentiate themselves from competitors. Second, KM can create a truly customer-focused culture. Appropriate organization resources can be directed toward solving customer problems or meeting customer needs quickly and effectively.
Third, knowledge management can be a catalyst. Through tools, resources, and systems, it can help ignite creativity and innovation in the development of an organization’s products and services. Fourth, KM can improve time to market. By leveraging best practices, learning and other time-savers to improve productivity, products can be introduced faster. Last, KM can expand a company’s strategic options. By leveraging intellectual property in research and development efforts as well as overall market and business strategy, organizations can discover new ways to create value. Knowledge management can provide an organization with man benefits. Organizations can more effectively counter problems and threats and can respond more proactively to opportunities. In a knowledge based economy, managing knowledge along with other resources is a requirement, not an option.
Self-managing, automony, responsibility for continuing innovation
Knowledge workers in today’s workforce are individuals who are valued for their ability to interpret information within a specific subject area. They will often advance the overall understanding of that subject through focused analysis, design and/or development. They use research skills to define problems and to identify alternatives. Fueled by their expertise and insight, they work to solve those problems, in an effort to influence company decisions, priorities and strategies
As the workers become more knowledge based, firms will need to implement strategic human resource practices in order to retain their tacit knowledge base either by retaining the tacit knowledge or by retaining the knowledge worker and thus retaining a critical competitive advantage. Performance of knowledge based industries depends on organizations attracting, holding, and motivating knowledge workers (Drucker, 2003). The transition to knowledge workers is having a significant impact on human resource practices. The knowledge workers must think like entrepreneurs, and the firms must think of the knowledge workers as entrepreneurial professionals as well as ensure a learning organization where tacit knowledge is actively diffused throughout the firm. This will allow the firm to better manage their knowledge resources through HR practices and help sustain their competitive advantage.
- High-performance work systems (HPWS)- combining people and technology- self-managing work teams
- Change in employees work roles and skill requirement
- The use of teams to perform work
- Changes in the nature of managerial work
- Changes in company structure
- Increased ability of HR information
- HRM practices in HPWS
- The challenge of sustainability
- The challenge of globalisation
- The challenge of attracting and retaining people
NOKIA CASE:- Connecting People
Exernal and internal people
Nokia is the world’s leading mobile phone supplier and a leading supplier of mobile and fixed telecom networks including related customer services. Nokia’s corporate headquarters are in over 120 countries and employees are more than 47000 people worldwide. Human Resource Management plays an important role for Nokia to become the giant among the communication rivals, HRM in the new economy should to be human centric with a strong technology focus. Nokia use the SHRM to leverage on emerging technologies to better satisfy the wants and needs of the knowledge workers and in the process to build a competitive advantages.
Nokia Australia is recognized as an employer of choice having been named National Best Employer in 2002 by ‘Best Employer to Work for in Australia Awards’ sponsored by Hewitt, AGSM and John Fairfax. Nokia is one of only five companies to have consistently featured in the Best ployer category since the inception of these awards.
Nokia’s HR policies have played a key role in helping the company to reach its 45 percent share of the global handset market and industry-leading profit margins of 20 to 25 percent, at a time of technological change and intense competition from Asian manufacturers.
At Nokia values are the foundation and people the core. Nokia offer a workplace with a world of opportunities, engaging work, global culture and competitive rewards.
The goal of Nokia HR is to create an environment in which all employees can fulfill their potential. It is crucial for the company to have the ability to adapt successfully to the high speed of change in the global market. The scale of Nokia’s business also means that Nokia employees can lead or participate in projects that have global impact, affecting the lives of millions of people and fulfilling Nokia’s mission: connecting people.
Attracting, motivating and retaining people have become the main external influence on Nokia’s HR strategies. These four elements are:
The first element of Nokia HR strategy is the “Nokia way and values”. Nokia is a networked organization with speed and flexibility decision making. Nokia provides individuals with a platform for personal growth in a challenge environment with a clear vision, goals and management principles. The Nokia Way brings talented people together who share the principles and success. Through the extensive employee engagement, Nokia have renewed their values that reflect their business and changing environment. Nokia is continuing engage all the stakeholders and employees to meet the needs of customers. And Nokia’s HR strategy includes the passion for innovation through new and improved ways and better understanding the world.
- Professional and personal growth (Challenge of Innovation)
Nokia is focusing on professional and personal growth. Only with truly innovative ideas can make the company and its people to develop the industry and improve the products and services.
- Commitment to Self-developments
People at Nokia is continuously looking for ways to improve their performance in order to stay at the forefront of technology and develop own competencies. Employees are encouraged to create their own development plan and take advantage of the variety of available learning solutions and methods. On the job learning is heavily encouraged.
- Nokia has the high-performance work systems (HPWS).
First, Employee’s reward and compensations at Nokia is related to the company’s performance.Nokia provides employees with market competitive rewards through a flexible global structure, which can address diverse and changing business and employment environments, as well as specific individual preferences. Nokia rewards employees for good performance, competence development, and for overall company success. This creates a positive and encouraging environment with opportunities for employees to optimize their potential and be rewarded fairly. Higher performance and contribution will lead to higher rewards. The Nokia global market competitive rewards structure addresses the need for flexibility, personalization, empowerment and commitment. Second, Nokia has the coaching and management training system. Coaching is regarded as a vital part of continuous learning. Highly skilled colleagues at Nokia provide employees with rich sources of experience and knowledge. Receiving coaching and participating in different teams will fuel employeesÂ´ development as well as give them the opportunity, every day, to share ideas and goals with innovators and industry leaders. Employees have access to a wide variety of training activities. Through global network of Learning Centers, Nokia HR aim to offer a consistent standard of training and development to all employees. The Learning Market Place Intranet contains information on all NokiaÂ´s learning solutions including e-learning as well as classroom training. Management Training Nokia place particular focus on developing managers in management and leadership skills. It is one of the key areas in competence development. There is a full range of training available from new managersÂ´ programs to senior programs for our more experienced people.
Internal Job Market (Changes in the place of work)
All employees at Nokia are invited to look at the job opportunities available inside Nokia. All vacancies, with the exception of very senior positions, are advertised internally. Employees are encouraged to improve their competencies through changing their positions. Internal job opportunities, the possibility to register to our internal candidate pool and other services for job-seeking inside the company are available through the Internal Job Market Intranet. The aim is to give Nokia people the opportunity to manage their own careers.
Nokia has created a successful performance management system across the whole company called Investing In People (IIP). This system is closely aligned to the company strategy and planning processes and involves biannual formalized discussions between employees and their managers.
Employees are encouraged to be active and to “own” their IIP. In this way, employees always understand what is expected from them, how their individual achievements support the Nokia overall strategy, and how they are rewarded.
- Work-life balance
The well-being of our employees is important and also fundamental to the Nokia Way. We as an employer recognize the importance of the balance between work content and personal interests and needs, as well as the impact of that balance on employee well-b
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