Human Resources for Industry - Essay Example

? Human Resources for Industry (College Human Resources for Industry Introduction A joke in the business field oncesaid that the organisations in the future will be run by just an individual and his dog; the person will feed the dog and the dog will make sure that the person is not touching anything. In more direct terms, the future workplace will be highly technologically advanced so that there is no need of any human touch. However, history has proved that the joke was just a wrong but colorful imagination of human mind. In fact, the workplaces required more people when technology came. Moreover, it has become a more complicated task to find and utilise workforce for highly specialised positions. Thus, there is more importance of human resource management in organisations than ever before. This paper will try to analyse the importance of HR management, the present day challenges faced by HR management in common, the different ways the HR managements usually adopt to cope up with the changes, the changing nature of workplace, and some modern studies into HR management. The Role and Importance of HR management One can undoubtedly say that the role of HR has increased tremendously in all organisations. The role of Human Resource Management in the 21st century starts from the board room to the market place. The challenges before HR managers in the twenty-first century, according to Bohlander and Snell (2007, p.5) are going global, embracing new technology, managing change, managing talent or human capital, responding to the market, and containing costs. In recent years, more attention is paid to how the human resource management affects organisation’s overall performance than to what practices are adopted in human resource management. Presently, some clear areas of responsibility attached to human resource management are selection and recruitment, training and development, pay and conditions, industrial relations, employee welfare, and occupational health and safety. The Challenges Faced by HR Management in the Modern Business Climate Globalisation has made it necessary for companies to partner with firms in other parts of the world through information technology. In addition, many well-known products no longer have the geographical tag along with them as they have gone global. For example, the Vodafone Company, started in England in 1982 has now operations in Europe, Asia-Pacific, Middle East, Africa, and the Americas. In addition, the GlaxoSmithKline has its origin and headquarters in UK, Consumer Products headquarters in Pennsylvania, and major centre for biopharmaceutical products in Germany, Canada, and USA. It sometimes becomes necessary to assess the skill of a foreign workforce, translation of some materials into regional languages, training for foreign workforce, and many a time, deciding the compensation for foreign employees. The onslaught of new technology The advent of technology made it possible for organisations to store, retrieve and analyse data easily. As a result, the nature of the workplace changed a lot. Instead of the large number of workforce of the past that required only little knowledge, today, the job positions require considerable amount of skill and the present jobs involve a lot of planning, decision making and problem solving. In addition, the present workplace more often requires retraining of employees when they are displaced. Human Resource Management too has changed considerably through the use of technology. The first and foremost development is the adoption of human resources information system (HRIS), thus making response times, decision making, and customer service faster and easier. In UK, the National Health Service has started implementing the Electronic Staff Record, a national, fully integrated payroll system. Many other UK firms too have same form of HRIS in use. The first advantage of this system is greater efficiency and reduced cost. For example, Cisco Systems have developed an intranet system which helps them save about $ 1.75 million a year. However, there are things to be assessed before adopting human resource software. Firs of all, the nature of the workforce should be taken into consideration. In addition, compatibility of the new software with the existing system, the possibility of future upgradation, user-friendliness, and costs involved should also be considered. Managing changes There are various strategies like downsizing, reengineering and outsourcing, which are normally adopted by organisations to meet the changes. However, these changes can be of two types; either reactive or proactive. Reactive changes come into existence only when external forces have already affected the company while proactive changes are taken in advance, often to make use of an existing business opportunity and it is taken to further improve the performance of a company rather than coping up with a change. For example, Bob Nardelli, the CEO of Home Depot started improving the company’s customer service. This initiative was not intended to fix any problem but for further growth. Organisations, like Home Depot, successfully incorporate change management strategies into their business plan. Some of these strategies are engaging key employees, customers and suppliers well in advance, integrating required behavioural changes, investing enough time and money on implementing changes, and communicating well with the employees about changing strategies. Managing Talent This is one of the key responsibilities of the human resource management; the maximum utilization of the employees’ knowledge, skills and capabilities. It is a well known fact that building human capital in an organisation involves developing knowledge, skills and experience in the workforce. A perfect example of building and sharing knowledge is seen in Boeing Satellite Systems where a website is created named ‘lessons learned’ that accumulates the intellectual capital of the employees which can be accessed by each employee later. Meeting customer expectations In today’s marketplace, the success of organisations is determined, to a great extent, by the ability of the company to meet their customer expectations. In such cases, companies often adopt Total Quality Management (TQM) or Six Sigma. Six Sigma is a statistical method of converting the customers’ needs into different tasks and analysing the best way to perform each of the tasks by comparing each other. The role of HR in Six Sigma comes in developing teams, providing training, communication, and in giving rewards. Some giants that successfully used Six Sigma strategy are Motorola and Ford. While Motorola claims to have saved $ 16 billion in a twelve year period, Ford saved $ 4 billion in a single year. Lowering costs As everybody knows, labor charges are one among the most important expenditures of any organisation. In addition, there are expenditures associated with insurance and other benefits too. There are a number of ways adopted by companies to lower the costs associated with labor. Some common cost cutting measures adopted by HR in common 1) Downsizing The word downsizing means elimination of certain jobs. Companies, at times, require this strategy to manage their financial crisis, and it was very commonly used in the UK between 1995 and 2002. A perfect example is the BBC which is planning to cut its staff, and is annual online budget by 25% by 2013. As the company predicts, it would be able to save about $ 600 million a year. Similar is the case with British Airways that sheds its thousand full time job positions and incorporating three thousand part time work positions. Another company that effectively used this strategy was L.L Bean which introduced voluntary separation programs and employee sabbaticals. According to Rhodes, Pullen & Clegg (2010), downsizing has become a potential business strategy in the present business world to cope up with the changes brought about by economic changes, technology, and globalization. However, those who are against lay off point out a number of hidden expenditures involved in the practice of lay off. Some of them are the costs involved in rehiring, pension and other benefits, loss of experience, lack of security among the remaining staff, and so on. Moreover, there are certain advantages only enjoyed by the companies that avoid lay off. Some of them are a more productive and innovative workforce due to the feeling of security, more experience of employees leading to better customer satisfaction, and possibility of getting more potential employees due to job security. 2) Outsourcing It is another commonly used strategy to save costs. Outsourcing means to hire someone outside the company to do the tasks of the company that can be done internally. Some commonly outsourced works are maintenance, security, advertising, and accounting. A per reports, the number of UK firms outsourcing their business has risen to 57%. In addition, the predictions are that the boom will continue for at least a decade, and India will remain as the first priority. As study reveals, cost is the main factor that prompts companies, followed by skills, flexibility and quality. For example, the shipyards in UK outsource certain tasks including electrical and painting works to outside firms for many reasons ranging from cost and availability of skilled workforce. An example is the SPV management, a UK-based company, which outsourced its total HR operations following its acquisition by an American company. As per reports, as early as in 2005, more than 85% US firms were planning to outsource at least one of their HR duties. 3) Offshoring It is one of the most cost-effective ways presently adopted by organisations. It is estimated that about 40-60 percent of total labor cost can be saved through Offshoring or global sourcing, in which jobs are moved overseas. However, it is necessary to let HR take a look at the proposed Offshoring plan so that it can analyze the possible problems of language barriers, labor costs, training, local work laws and other, better alternatives. An example of the firms that benefit from business Offshoring is the Citigroup which has operations in India since 1985. Another group is GreenPoint that has outsourced its call centers in India. According to the Cocheo, (2004) the real advantage is the quality of work, easy availability of skilled labor and more importantly, monetary gains. Now, having seen the challenges and different ways adopted by HR in different firms, it is time to move on to analyze the changing nature of American workplace. The changing demography of workplace The percentage of ethnic is estimated to grow considerably in the coming years and will reach nearly 8% by the year 2020. As per predictions, the net migration will amount to 40% of the working-age population growth by 2020. In addition, the new recruits will contain a whole range of people ranging from Indians, Bangladeshis, Pakistanis, and Chinese. These people will vary considerably in their education and skills. Hence, it becomes an important task for companies to make a workplace that well accommodates a diverse workforce. Many organisations have already identified the situation and have started steps to enable recruitment of minorities. As a part of it, an organisation named ‘Inroads’ is developed by 600 firms including Chevron and AT&T to offer summer internships to promising minority students. The aging workforce As per reports, the percentage of older people is increasing at an alarming rate. As a result, many have a huge proportion of their workforce to retire in the near future. Mass retirement of employees means a considerable loss of expertise, and hence, companies are developing strategies to retain the older ones in job and to attract the retired ones back to job. A perfect example of the changing attitude is the DIY retailer B&Q. The company enjoys considerably low turnover of staff, very low levels of employee absenteeism and high profits. The reason behind this success is the presence of staff aged more than 50, presently, the organisation has a total of 37,000 staff and about a quarter of the workforce is aged over 50. Home Depot is one among the many organisations that has taken steps in this regard. The company is planning to hire older ones in direct proportion to the increase in aged population. Similar is the case with the bookseller Borders. As per studies Strreter, (2007), though recruiting the older ones involves risk in the form of higher healthcare costs, there are savings in the form of training costs, transition costs and recruitment costs. The increasing presence of women HR managers are well concerned about the fact that the presence of females in the work place has grown from 59% to 70 % between 1980 and 2010. In addition, the Equality Review has placed mothers as one of the top three groups facing continuous and severe unemployment. So, it has become highly necessary to offer them equality and safety in the workplace. In addition, allowing females in to the workforce include parental leaves, telecommuting, flexible work timings and job sharing. The changing attitudes of people The government has issued a lot of new rules regarding employee rights in the past few decades. Some of them are a government regulated pension plan, right for a safe workplace, equal remuneration to men and women, and equal employment opportunity to all. All these hurdles make it difficult for HR management to devise strategies that promote the welfare of the company and that of employees simultaneously. Graduate online recruitment In UK, the stress on online recruitment is growing as employers have realised the need for personalisation of communication. Most employers have understood the nature of ‘Generation Y’; they are fond of changes, they advocate fast thinking and quick learning, prefer independence, like enterpreneurship, are looking for opportunities of growth more than money, and value respect and liberty highly. Strengthening HR Strategic capability –Microsoft UK According to Dave Gartenberg, HR director of Microsoft, HR should be a driving force in business. According to him, the success of HR depends on; exploiting talent, reducing external hires, life balance, and self-satisfaction of employees. The company achieved these through Total Quality Management and Six Sigma. As a part of this, firstly, the employee requests for administrative requests were processed faster and more efficiently, thus gaining employee satisfaction. In addition, a programme for on the job development was introduced for the HR team. Some Modern Views on Human Resource Management Walton developed a human resource management model that stresses on the transition of management from control to commitment and below is the table that juxtaposes the information. Management practice Control Commitment Job design Focused on the individual Focused on the team Performance management Measured standards for minimum performance Higher “stretch” objectives Management structure Top down and hierarchical. Emphasis on management symbols Flat organisation structure. Minimum status differentials Compensation Individual pay linked to job evaluation Pay linked to skills and mastery Employment Employees viewed as variable cost Assurances that participation will not result in job losses Employee voice Employee input allowed on a narrow agenda Employee participation enacted on a wide range of issues Labor-management relations Adversarial labor relations Mutuality with joint planning and problem solving (Source: Walton’s Control to Commitment Model, as in Control or capability? Human resources practices for a changing environment, 2006, p. 8) Another modern theory of management comes from David Guest, who proposed a theory which results in four outcomes; namely integration, commitment, flexibility and quality. Human resource management policies Human resource management outcomes Organisational outcomes Organisation and job design. Management of change Strategic integration High job performance Recruitment, selection and socialization Commitment High problem solving, change and innovation Appraisal, training and development Flexibility/adaptability High cost-effectiveness Reward systems communication Quality Low turnover, absence and grievances (Source: Guest’s human resource management, as in Control or capability? Human resources practices for a changing environment, 2006. p. 9). The control strategies used by companies A study by Truss (1999) proves that in companies like Glaxo Pharmaceuticals and Hewlett Packard, the levels of trust by the employees on the management is quite high as the employees feel that the management communicates well with them. Similar is the case with Llyods Bank and BT Payphones (pp. 49-50). However, in the case of the latter two, the level of employee trust on the company was relatively less as they feel that the company management does not understand what the employees think and do. From this, it is evident that most successful companies in UK follow the ‘commitment’ pattern of management, and communicate the aims of the organization relatively well. However, the communication ‘upwards’ is not as good as the communication ‘downwards’ (Truss, 1999, pp. 49-50). Payphones develop an Employee Communications Plan each year to make sure that the management succeeds in communicating well with the employees. Similarly, other important players, including Glaxo and Llyod Packard too have developed their own systems of employee communication. The Power of Tactical Flexibility In the present fast changing business world, tactical flexibility gives companies a competitive advantage over other firms. A research paper by Awwad (2011), analyses the benefits of having tactical flexibility in an organisation. Flexibility is the ability to change or react in the shortest period of time and with the minimum cost and effort possible. The competitive priorities in the present business world are competitive pricing, premium pricing, and value to customer quality, dependable delivery, and product innovation. The influence of tactical flexibilities on the competitive advantage of a firm: an empirical study on Jordanian industrial companies, International Journal of Business Management (Awwad). Conclusion It becomes evident that in the future, HR management is going to gain more importance in all organisations. Jobs are getting more and more sophisticated and specialised in nature. Instead of raw physical force, the present day work requires a lot of decision making, critical thinking, and analysing ability. As a result, finding the best candidates, identifying their skills, and deploying them suitably have become complicated tasks to do. In addition, the volatile business environment requires constant changes in organisational strategies, and consequently, redeployment and retraining of employees. Thus, it becomes evident that HR professionals are going to have a say in the important management decisions of future organisations. Reference Awwad, A. S. (2011). The influence of tactical flexibilities on the competitive advantage of a firm: An empirical study on Jordanian industrial companies. International Journal of Business Management. 6,1. Bohlander, G. W & Snell, S. (2007). Managing human resources. USA: Cengage Learning. Control or capability? Human resource practices for a changing environment. (2006). Consortium Research Program. Retrieved 9 March 2011 from http://www.consortiumresearchprogram.net.au/html/images/stories/Documents/ra6_issues_paper.pdf Cocheo, S. (2004). Global think? Or job shrink?. ABA Journal. 96, 40. Flamholtz, E. (1999). Human resource accounting: Advances in concepts, methods, and applications. USA: Springer. Truss, C. “Soft and hard models of HRM”. In L. Gratton, V. H. Halley, P. Stiles & C. Truss (Eds.). (1999). Strategic human resource management: Corporate rhetoric and human reality. US: Oxford University Press. Guest’s normative model of human resource management. (2006). Consortium Research Program. Retrieved 9 March 2011 from http://www.consortiumresearchprogram.net.au/html/images/stories/Documents/ra6_issues_paper.pdf Rhodes, C, Pullen, A & Clegg, S. R. (2010). ‘If I should fall from grace’: Stories of change and organisational ethics. Journal of Business Ethics. 535. Streeter, B. (2007). Briefing. ABA Banking Journal. 99, 7. Walton’s control to commitment model. (2006). Consortium Research Program. Retrieved 9 March 2011 from http://www.consortiumresearchprogram.net.au/html/images/stories/Documents/ra6_issues_paper.pdf Read More