Labour Market Scarcity, Three Elements in AMO - Assignment Example

Strategic Human Resource Name Institution Professor Course Date PART A 1. Labour market scarcity is not a threat to large organisations in any industry. Discuss The Human Resource Management is centred on managing persons within the employment relationship. HRM entails the effective utilisation of people in attaining organisational strategic goals and satisfaction of individual employee’s requirements. It seeks to incorporate strategically the interests of a firm and its employees (Boxall & Purcell, 2011). With effective HRM, labour market scarcity is not a threat to large organisations in any industry. Management usually adopts different approaches to managing workers. Firms need to compete in product and labour markets. They must compete to secure well-skilled staff. However, the common severity of labour supply issues wanes and waxes with the level of economic development. Unlike small firms, large firms that are well-recognised and well-resourced hold the capacity to pay high salaries and provide career development prospects. As a result, large firms are not affected by labour scarcity because of their capacity to attract a pool of employees through their provision of career development prospects and attractive salaries. Large firms in any industry are able provide competitive job offers besides retaining their labour force. In addition to offering competitive job offers, large firms hold the ability to develop a stable production system that includes a cost-effective supply of motivated workers. These firms also employ effective motivation strategies that help them attract and retain an extensive labour force. 2. Without a formal strategic plan, an organisation is easily defeated by its rivals’. Discuss. Strategic planning is crucial to the success of an organisation. A strategic plan offers a sense of direction besides outlining measurable goals. Strategic plans are formal documents and are more common in big organisations, in public sector and in industries where formal planning is required to obtain government approvals or finance. A formal strategic plan is a useful tool that directs the daily activities and decisions of a firm besides helping the firm to assess its progress and adopt change when moving ahead of its competitors. Firms struggle to remain viable in their chosen market. However, a formal strategic plan offers firms a platform where they set their goals, table resources and attract capable people who are appropriate to keep the firm competitive. Competitors defeat a firm that does not have a formal strategic plan because it lacks a sense of direction and measurable objectives. More so, the firm is defeated because it lacks a useful guide to its daily activities and decisions besides a platform to assess its success. More importantly, a strategic plan helps a firm to adopt change needed for it to remain competitive. As such, without a formal strategic plan, a firm fails to adopt and implement change that is required to win competitive advantages. Apparently, organisations that survive are involved in a struggle to defend and develop competitive advantages. Sustained competitive advantage is attained when an organisation generates a comparatively consistent blueprint of superior returns. Superior returns are attainable if a firm has a clear guide to its decisions and practices besides constant evaluation of progress. A strategic plan helps a firm to remain different from its competitors, hence a competitive advantage. 3. If everyone copies a ‘best practice’, can it deliver a superior performance? Discuss. Before copying a best practice, it is important to understand for whom a best practice is best and whose interests are attained through the best practice. It is essential to assess whether the best practice is good for a business returns or bad for employees. For instance, downsizing is good for corporate returns but bad for employees. As a result, copying a best practice cannot deliver superior performance. In fact, copying a best practice can be more harmful than helpful to a firm. Apparently, one of the major management fallacies is that one can enhance performance via copying best practices from other firms. Although copying best practices can work in some areas of operations, it can be disastrous in other areas of performance. This is because a best practice from one firm can turn bad when transposed into another firm. However, advocates of best-practice believe that a firm can realise performance enhancement when it identifies and executes best practices (Boxall & Purcell, 2011). While best practices can be more harmful than useful, it is possible to see advantages of best-practice when the management focus on determining common principles for managing employees instead of centring on explicit practices and attempting to generalise them away from their pertinent context. Notably, best practices do not function in a vacuum. For instance, Firm A want to be innovative like Firm B. Therefore, firm A decides to copy firm’s B innovation approach. While top managers lead innovation in firm B, the firm also integrates top-down perspective with management exercises such as sharing of knowledge. Firm A fails because it fails to realise that the innovation approach by Firm B works wells because the firm integrates top-down approach to management. Therefore, copying Firm B best-practice fails to deliver superior performance for Firm A. 7. Why are all three elements in AMO critical to individual performance? Discuss AMO is a performance equation that helps one to view performance as a function of three components, which include ability, motivation and opportunity. The performance equation helps firms in hiring inspired capability or employees with ability, motivation and provides them with the resources to perform a task. The three elements of AMO are critical for individual performance because the AMO blueprint stress that individual performance is some function of individual abilities, their motivation and the opportunity to carry out a task in an explicit context. A or ability entails the declarative knowledge, procedure skill and knowledge that help one to perform a given task. M or motivation entails the choice of an individual to perform, the effort employed and the extent of persistence when performing a given task. O or opportunity helps in embedding individual performance in a context. While ability or individual attributes and motivation hold a great impact on an individual performance, able and motivated people cannot demonstrate superior performance in absence of adequate technologies or equipment and a supportive environment. Therefore, individual performance calls for individual ability (A), motivation (M) and the tools to accomplish tasks, which entails opportunity (O). Based on the performance equation, individual performance that is crucial to a firm is determined by an individual’s ability, motivation and the opportunity provided by a firm to facilitate attainment of a firm’ goals (Boxall & Purcell, 2011). As a result, the three elements of AMO help in creating employee performance. Individual ability alone cannot facilitate performance and motivate employees while good abilities cannot attain superior performance if organisational support or crucial resources are lacking. PART B 1. ‘Social legitimacy is not an important goal for international companies with manufacturing plants or service sites in developing countries. These companies must meet shareholder goals for profitability. That’s all that matters’ Social legitimacy is crucial to the effectiveness of international firms. While in search of economic goals, firms must understand that they operate in societies that have laws that try to control how managers recruit people and treat them. Firms must also comprehend that the societies, which they operate in, hold their own customs and shared expectations for how employee should be treated in the workplace. Therefore, a degree in social legitimacy must be viewed as a motive in human resource management. Employment laws differ greatly across nations an aspect that instigates major disparities in human resource management across diverse national boundaries. The concept that organisations need to adapt the customs and rules of different societies where they operate in is broadly accredited in the social sciences (Boxall & Purcell, 2011). However, in practice, a great variation in the degree to which employers, particularly, international organisations consider legitimacy goals in their management of human resources exist. Fundamental motives in human resource management are portioned into socio-political and economic goals. International firms are not unconstrained economic actors only, but they are economic entity situated in a given social context. Therefore, international firms require cost-effective approach to human resource in the areas that they compete and they need legitimacy in the societies where they are situated. When firms fail to compete effectively in their specific industries and fail to maintain social legitimacy, they do not survive. International firms require establishing an extent of flexibility in the human resource management with managers securing adequate power to be productive. Firms that survive in their areas of operations are concerned with how to defend and develop competitive advantages. This entails thinking about human resource advantage and promoting social legitimacy. Based on the above analysis, social legitimacy is crucial for survival of firms at an international level. Some level of social legitimacy is essential to firms. Social legitimacy entails an outward and inward face that implies a crucial social order within the firm, which in turn links the reputation of a firm in the wider society. Although social legitimacy is a crucial goal for international firms with manufacturing plants or service sites in developing nations, these firms focuses on attainment of shareholder goals for profitability. This is because development of a suitable social order depends on a firm’s management accepting some limitations on its power. The management want to use its power without limitations. Apparently, managers of international firms seek out production sites, which provide both greater freedoms to manage and lower costs. Although the exercise of power can introduce legitimacy challenges, most international firms do not focus on social legitimacy but on attaining the profitability goals of their shareholders. The collapse of Rana Plaza in Bangladesh is a clear indication that social legitimacy is not an important goal for international companies with manufacturing plants in developing countries. The collapse of Rana Plaza demonstrates the need for international companies to attain the shareholder’s value at the expense of social legitimacy. Although international firms are required to develop social issues into policy in a manner that mirrors their actual business performance, the case of the Rana Plaza demonstrates how international firms treat their employees. However, most Multinational footwear and clothing firms are greatly concerned that they do not need a reputation for sourcing their products from contractors employing developing countries’ labour on exploitative terms. As a result, firms such as Gap Inc, employs over eighty people in its CSR department to establish standards and assess employment practices across its supply chains in fifty countries. However, some international firms fail to articulate a firm’s social construction where a business should demonstrate a close relationship with the society in which it operates. Given that shareholder’s value matters most to international firms than social legitimacy, these firms treat social issues as unjustified vehicles or irritating distractions on business. Ironically, focusing more on attaining shareholder’s value may deter firms from maximising the much-needed shareholder’s value. This is because such an approach leads managers into focusing excessively on enhancing the short-term performance of their firms while neglecting essential long-term issues and prospects (Boxall & Purcell, 2011). However, when international organisations reach employment agreements with their employees, legitimacy of employment is embraced and when they embrace International Labour Organisation’s decent-work agenda, the legitimacy in both home country and around the globe is likely to be enhanced. However, most international firms operating in third-world countries want to fly under the radar where they fail to uphold social legitimacy in efforts of promoting the shareholder’s goal of profitability. 2. Why is recruitment and selection crucial to organisations? Why is it particularly important where higher levels of discretion or specialised blends of skills are required in the work? Recruiting and selecting qualified persons can make a difference amid a firm’s long-run ultimate failure and success. Recruitment and selection are essential part of any organisation. They are among the most essential parts of HR practices. When recruitment and selection is done effectively, firms attain their goals and objectives and minimise potential workers’ issues. Apparently, when firms select the right persons for a given job, train them effectively and treat them accordingly, these people produce good results and remain loyal to their organisations. Notably, a firm may hold the best physical resources and technology, but if it fails to hire the right people, the firm is destined for failure. Notwithstanding there are many other factors that can influence a firm’s success or failure, performing a competent job in recruiting and selecting qualified people promotes the success of a firm. Besides qualifications and suitable experience, a firm should recruit and select a candidate who demonstrates goodwill, allegiance and dedication towards a firm’s objectives and goals. Apparently, the most critical decisions that human resource managers make is to select people who will support them and their organisations (Boxall & Purcell, 2011). In highly technological competitive labour market, HR managers need people who are not only well informed, committed, loyal and technically competent, but also people who demonstrate good judgement even when under pressure. Drawing from the AMO model, human resource managers should aim to hire motivated and capable people. Ability and motivation are essential components that HR managers should look for when recruiting and selecting candidates. All organisations require a blend of solid citizens and stars while at the same time aiming to reduce the number of chronic under-achievers and marginal performers. The recruitment and selection process helps in determining the stars, solid citizens, marginal performers and chronic under-achievers. This determination is essential where high level of discretion or specialised blend of skills are needed in the work. Star employees hold qualities that are crucial for path finding and innovation while solid citizens makes things happen unfailingly once the path has been decided. Organisations, therefore, require recruitment and selection of stars and solid citizens given that these firms require managing both stability and change. In this perspective, recruitment and selection is essential where higher levels of discretion or specialised blends of skills are needed in the work. The stars include advanced, highly regarded technical experts, highly creative business winners and very capable general managers. Such employees operate with essential motivation and are capable of numerous periods of outstanding attainment although they may be vulnerable to work holism and burnout. Solid citizens, on the other hand, hold value through managerial or technical knowledge linked to developed business operations. Such workers ensure that firms deliver reliably what it has promised its clients (Boxall & Purcell, 2011). Solid citizens are capable of sustaining excellent performance through periods of high pressure. As regards, marginal performers, they are adequate but not in a position to handle high-pressure situations. They are usually slightly below performance standards and may demonstrate inconsistent motivation. Chronic under-achievers carry major emotional or intellectual weaknesses and although they may be highly motivated, they are not capable of bridging major gaps in their abilities and experience. Based on the four categories of potential employees, the recruitment and selection process helps firms to understand the qualities, skills, strengths, weaknesses, expertise, motivation, competency, knowledge and experience of candidates. The recruitment and selection process help HR managers to determine the ability of a candidate that mirrors the skills and knowledge that one has obtained through experience and education. Recruitment and selection helps firms to hire the underlying potential of employees. As a result, recruitment and selection is a buy option that helps firms in hiring the right people for the right job. It is helps firms to determine the training and learning and development needs of their potential candidates. It is during the recruitment and selection procedure that the employer and candidate discuss what they can each offer in the potential relationship. The employers get to know the skills, experience and competency of the candidate while the candidate gets to understand what the employer would offer in return of good performance. The recruitment and selection facilitates the imposition of a standard form contract that guides the employee. 6. Boxall and Purcell (2011) argue that the critical question for HRM is how the corporate office seeks to manage the SBUs or operating units. Discuss Most organisations begin as single businesses, but as they develop, they regularly diversify and experience intricate issues of how to manage their spread activities. As organisations grow, the unified or simple functional structure becomes strained. Operating decisions and policy become considerably intricate when managers hold responsibility for multiple markets and sites, which calls for distinctive adaptation to their given situation. Therefore, a general form of operation for multi-business firms is the holding firm where the corporate office owns the different firm’s units with each unit allowed to manage and control its own affairs (Boxall & Purcell, 2011). However, the holding firm may add little value or, damage value through protecting the ineffective businesses, or hinder the products and services from getting access to the capital market to seek further expansion. The management of diverse businesses calls for implementation of M-form or the multidivisional structure that comprises of U-form profit centres where a corporate office is established and assigned the role of presiding over a firm’s SBUs (Strategic Business Units). SBUs are limited liability firms and they face distinct and narrowly defined markets. Between different SBUs, the corporate office exists to coordinate the entire geographic area. Organisational executives are devoted to the overall corporate performance and are not enthusiasts for a given SBU. As a result, the crucial question for HRM is how the corporate office seeks to manage operating units or SBUs. This is because the corporate office may add little value or damage value through protecting the ineffective businesses. The corporate office may also hinder the products and services from getting access to the capital market to seek further expansion, hence stagnant growth. However, there are two basic approaches to managing SBUs or operating units. The first approach is to stress financial control through keeping the Strategic Business Units not far from the corporate office and from each other. The other approach that facilitates effective management of SBUs by the corporate office is to develop synergy aimed at emphasising knowledge sharing and collaboration. However, this approach is not effective for firms based on separation of units. The financial control approach is effective as it allows for negotiation of budgets on a yearly basis, short planning horizons and frequent assessment of performance (Boxall & Purcell, 2011). This approach allows for decentralisation of operating decision but it promotes powerful centralised control of budgets. The approach holds essential implications on people and work. Based on the financial control approach, SBUs managers hold a lot of independence over many aspects of Human Resource Management. However, the operating budgets of SBUs hold no reserved area for Human Resource priorities such as investment in employee development and training. As a result, issues relating to investment in employment development and training are devolved to the general manager of the SBU. As a result, the management of SBUs or operating units by the corporate unit is a major concern for HRM because the financial control approach promotes short-run financial targets that make HR goals intricate to attain in the long-run. Given that human resourcing is an indirect cost, SBU managers often get means to lower HR overheads through outsourcing. Attaining the numbers can make SBU managers to lower longer-run HR investments. More so, separation of businesses to expose profit accountability and powerful decentralisation makes it intricate to capitalise on relationships among business units. As regard the development of synergy that stresses on building knowledge or technological links among divisions, corporate management cannot at the same time attain the financial economies of decentralisation and separation as well as those of synergy. This approach calls for making of decisions that promote shifting of structural models and alignment of HRM requirements. However, to attain cross-business synergies, high levels of trust and sharing must be attained with employees and suppliers demonstrating high levels of commitment. Part C Question 1 Companies have goals that they aim at achieving over some period of time and some of these goals are related to HRM. An effectively run HRM department offers organizations with the ability and the structure to fulfil their business needs and this is done through the management of the most valuable assets in the organization that is the company employees. HRM are tasked with performing six major functions that is the work place safety, recruitment, employee relations, training and development, compensation and benefits and compliance (Collings & Wood, 2009). Of all the above stated functions a major goal that has been paramount in the company’s approach to HRM is the recruiting and management of the plant managers. Recruitment is termed as the process of attracting, then selecting and appointing the most suitable employees to fill vacant position in an organization. Prior to undertaking this process, the company needs to determine the manpower requirements in terms of quality and number of personnel needed. These will ensure that the organization is not over staffed or under staffed. Additionally, as the new operations manager, one will be tasked with the responsibility of measuring the performance management of the plant managers and solving any people management issues that may crop up in the process. This will ensure the effective running of the clothing firm since there will be minimal disturbances. This portrays another goal that is paramount in the company’s approach HRM which is training and development. Employers need to offer their employees with all the tools that are essential in ensuring to their success which in most instances refers to offering employees with orientation training to ensure that they are able to transit well into the organization. After performance management and evaluation the company also needs to offer professional development and leadership training. Leadership training should be enhanced to ensure that managers gain more knowledge on performance, management and how they should handle their employees in their respective departments. The other goals relates to employee relations as managers are tasked with the duty of solving any people management issues that may arise (Paauwe & Boon, 2009). Successful managers and leaders are dependent on their abilities to manage and deal with any kind of interruptions, stress, conflicts that are inherent when managing others. The new manager is expected to take up the role of the previous manager by concluding on a collective agreement that is cost effective and at the same time ensure that production in the clothing firm go on uninterrupted. This will entail the maintaining of good work relationship to enhance efficiency and harmony and handling unproductive situations that may arise in the company by resolving any kind of conflicts and communicating effectively to ensure that message delivered to the employees is understood clearly and there is no communication breakdown. With good working environment the employees are likely to work towards the achievement of the set organizational goals and thus meet the production target on time (Collings & Wood, 2009). Question 2: Business risks and relative merits Based on the case study there are complaints of human rights abuses on one of the contractors plants such as the suppression of union activity by sacking of union activist, declining to meet and discuss a process of collective bargaining and there have also been instances of child labour. since they is a link between the contracting company, the firm and the prominent western retailers a leakage of such information may be fatal for the company and thus something need to be done as a matter of urgency. The company can make use of a number of options to deal with the issue but each of it is likely to be associated with some business risks relative merits. a. Do nothing about the contractors A major business risk arising from doing nothing in the manner in which the company manages they are likely to the contractors and if any kind of bad publicity eventuate, distance the company from it saying that it is a matter for the contractors is that if exposed the organization is likely to face sanctions from their customers and this will have adverse effects one the company since they are likely to experience reduced sales and thus lower level of profits. Additionally, the prominent Western retailers may also cut ties with the company thus augmenting the risks that the company may face. If the issue is not noticed by others and the information is kept a secret the company is likely to benefits since it will continue with the partnership it has with the contractors and thus they will deliver the products on time and also meet the peak-level of demand that they are currently experiencing (Paauwe & Boon, 2009). b. Cease using contractors A major business risks and relative merit of not using contractors is that they may fail to meet the high demand of their products. The company seems to be on peak-level demand and it certainly outstrips what the company’s plants can deliver to their retailers. A relative merit that the company may achieve by choosing this option is that they will manage their own plants effectively and thus they will not be affected by any issues related to third parties such as the suppliers since they will have no partnerships with them. c. Change the manner of managing contractors A major business risk that they face in the manner in which they manage the contractors is that they may lose some of the prominent and most efficient contracts. At the same time they may be accused of changing the agreement terms which are signed before entering into partnership with each other. A relative merit of this option is that they may achieve benefits such as reduced number of issues since by managing the contractors in a different manner they may eradicate issues raised by the human rights groups. They will ensure that contractors do not victimize union activists and engages in collective bargaining with the employees and ceases form using child labour. This will ensure that the products are ready on time and thus no delay will be experienced thus meeting the peak level demand of the products by the various retailers and consumers (Klerck, 2009). d. Make changes to the way you manage contractors and own plants A major business risk in making changes to the manner of managing the plants and contractors is that the company is likely to incur additional costs. This will be so since additional resources such as time and manpower will be needed to implement the proposed changes. A relative merit of this option is that the company and plants are likely to benefit through effective and efficient delivery of products and a condusive environment in the plants and in the contractors companies. Question 3: implication of a change in goals of the company Based on all the options stated in the question two above the most appropriate action to take is to make changes in the manner in which the company manages the contractors and also their own plants. This change will imply a change in the goals the company should pursue in its HRM. This will be done in that the company needs to engage the employees more in matters relating the organization for them to feel more connected to the organisations and always strive towards the achievement of the set goals (Klerck, 2009). As seen in the case study the company is not well acquainted to the modern HR jargon and they do not value unions and they have a pragmatic attitude towards them. Modern day organisations need to be acquitted to the HRM jargon since it is currently viewed as being an essential factor to success of organisations. This means that in most instances they do not actively negotiate with the unions but in country where unions are a strong industry feature the plant managers are expected to conclude a collective agreement that is cost effective and at the same time maintain uninterrupted production. In regard to this the company need to engage with the trade unions in all their operations since with a clear agreement between the two parties both parties will aim at delivering the best based on their agreements. Some of the company contractors also seem to be victimizing trade unions activists. Both the plants and contractors need to allow the formation of trade unions since when employee seem to be unsatisfied they are more likely to cause disruptions in the production process and both the contractor and the company are likely to incur great losses as a result. Additionally, the company needs to ensure that the contracting companies meet certain standards before forming partnerships with them. One such condition is that they should not make use of child labour in their companies and if found to have bleached some of the conditions they can terminate their contracts with them. This change will be of great importance to the company due to the numerous benefits that the company will achieve long relationships with the contractors. At the same time the consumers will be satisfied since they will be consuming goods developed under the right conditions. Consumers tend to avoid goods made by companies which are violating some rights such as use of child and cheap labour. This will in turn mean that they will able to meet the demand of the goods since their main reason for using contractors is that they help them in achieving the demand of their products. Additionally since they make use of contractors who have meet the good quality standards they will continue to offer the same high standards products to the consumers thus enhancing their reputation further and thus creating a group of loyal customers over some period of time. The loyal customers will in turn acts as advocates for the company products meaning a greater customer base and thus greater profits for the company (Johnason, 2009). Reference Boxall, P., & Purcell, J. (2011). Strategy and human resource management: Third Edition. UK: Palgrave Macmillan. Collings, D. G., & Wood, G. (2009). Human resource management: A critical approach. In D. G. Collings & G. Wood (Eds.), Human resource management: A critical approach (pp. 1-16). London: Routledge. Johnason, P. (2009). HRM in changing organizational contexts. In D. G. Collings & G. Wood (Eds.), Human resource management: A critical approach (pp. 19-37). London: Routledge. Klerck, G. (2009). "Industrial relations and human resource management". In D. G. Collings & G. Wood (Eds.), Human resource management: A critical approach (pp. 238-259). London: Routledge. Paauwe, J., & Boon, C. (2009). Strategic HRM: A critical review. In D. G. Collings & G. Wood (Eds.), Human resource management: A critical approach (pp. 38-54). London: Routledge. Read More