Patterns of Industrial Growth - Essay Example

?Introduction Changing patterns of industrial growth have led to changes in the workforce. The traditional pattern of local employment has given way to the concept of global employment. The cost on the workforce was earlier considered a liability with measures designed to control or reduce it as per business needs. The workforce is now a mix of cultures and attitudes. Besides, opportunities are available across the globe for the right type of talent. This situation calls for an approach to managing people as assets or human capital. The cost on the workforce is an investment to enable the achievement of business objectives. What is strategic human resource management? Strategic human resource management can be considered to be the capability of an organisation to ensure that it has the right mix of talent and skill in order to meet its business objectives (Armstrong and Baron, 2002, p. 42). Holbeche (2001, p. 13) highlights strategic human resource management as a ‘focus on implementing strategic change and growing the skill base of the organisation to ensure that the organisation can compete effectively in the future.’ SHRM involves the recognition of the internal intelligence available at all levels of the organisation and creating processes to draw upon this knowledge. Communication ‘is at the heart of these processes (Brewster, 2000, p. 153). The author discusses Mintzberg’s observation that strategy involves planning ahead of time and making changes to the plan on the basis of real world situations. The ability of an organisation to alter its course is dependent on the ability of the culture to allow for internal flexibility. SHRM then is an attempt to link organisational strategy with human resource management and drawing from this effort, makes an attempt to provide direction to the functional areas on HRM. Salaman, Storey and Billsbury (2005, p. 5) view SHRM as a ‘repository of ways in which academics, consultants… think about ways to change organisations’. SHRM then is the key to how business is run and people managed. Huber and Glick (1995, p. 297) highlight the importance of facilitating organisational learning as a means to understand and adjust to changing business environments. Organisations that are designed to allow two-way information flow to ‘reflect cultural values and economic perspectives of top management’. This is of particular relevance in a multinational corporation. Ready and Conger (2007) reiterate the role of talent development in providing company’s the competitive edge to stay in the marketplace. They believe that companies that create ‘talent factories’ have the right mix of ‘functionality and vitality’ to fill key positions as and when the need arises. Storey (2007, p. 79-80) foresees a risk to the study of human resource management claiming to be a strategic function in the absence of a ‘robust analytical framework’. Terms like knowledge management have not been proven on grounds of efficacy in gearing the business up for change. The author suggests that some part of the responsibilities can as well be transferred to departments like marketing for managing the communications and the HR department relegated to the purely administrative practices of yore. The traditional role of HRM as policy maker to guide people management is incomplete without a conscious alignment to business goals. Strategic HRM aims to utilise the capabilities of the workforce towards a unified goal. The match between employee talent, employee goals and business goals is the key to successful work organisation. The necessary ingredients for an effective Strategic HRM process are the learning processes to facilitate future strategy development and adaptation to changes in the business environment. Who takes responsibility for strategic HRM? Ivancevich (2004, p. 48) recognises the role of the leader in laying the foundation for strategic HRM. Functional specialists provide the framework to carry out effective talent management processes; individual team heads determine motivation and advocacy for the framework. Hamm (2006) adds to this thought with the five areas that leaders must commit to communicate on, ‘organisational structure and hierarchy, financial results, the leader’s sense of his or her job, time management and corporate culture.’ All too often, the author finds leaders getting by with platitudes of intent that are left for audiences to decipher and a failure to commit on areas that employees deem necessary and are directly concerned with. Gratton (1999, p. 123) uses the example of ‘the HP way’ a belief system that prescribes desired outcomes to highlight how a workforce adopts a way of work without advocacy by the HR department. The owners, line functionaries and implementers own this belief. The HR department provides a platform to execute and convert this belief into reality. The organisation has successfully modeled strategic human resource management without the HR department as the main architects. Evidence of usefulness Is there evidence of usefulness? The evolution of thought regarding people management started from a basic administrative framework that slowly grew to involve negotiations as unionization brought the workforce under sway. The focus was hierarchy and clearly laid down rules for managers to demand adherence to and for the workforce to follow. Subsequent changes in the business world have seen the development of flexibility in working conditions, a greater weight provided to intellectual property and willingness to pay greater premiums for effectiveness. Bratton and Gold (2001, p. 53) highlight the difficulty faced by traditional policy makers to make a connection between the goals of HRM and organisational goals. The authors quote Purcell’s view that the strategic role for HRM is the development of long term strategies that place a premium on talent, learning and skill transfer. The dynamic business situation demands flexibility within organisations to gear up to new challenges. McCourt and Eldridge (2003, p. 325-338) point out countries like Japan that preferred to employ methods to include the workforce in a participative approach rather than alienate them with an antagonistic manner. These methods worked in culture-specific scenarios and were more successful in new set-ups than long running organisations. Outside Japan, the participative approach faced reactions of hostility since they ‘undermined the power of collective bargaining.’ In UK and other parts of the western world, companies utilize downward communication models like meetings and briefings, written communication and formal channels. Upward communication with the introduction of suggestion schemes and staff surveys are used to engage with employees directly and keep unions at bay. The universality of thought on the subject of SHRM is debatable but its usefulness is not. SHRM paves the way for flexibility of job descriptions to allow organisational responses to external situations. Unions are often at loggerheads with the notions of flexibility that SHRM demands in the workplace. Organisations may choose to maintain an orientation of conflict or partnership with the unions. Some prefer to maintain good compensation to avoid unionization of staff members (Lewis, Goodman, Fandt and Michlitsch, 2006, p. 257-258). Though theoretically, Strategic HRM flows from business objectives, Brewster (2000, p. 58-60) points out that business reality differs. The context of the business, the various groups that must be catered to and the rules of the country plays a large part in the development of a human resource management strategy. Brewster (2000, p.16) is critical of SHRM literature that places emphasis on the American style of functioning and points out how the approach is at odds with European reality. American corporate houses follow the concept of shareholder value while the European paradigm is more context-based. Even within Europe, countries like Germany and Finland follow differing notions about the place of HRM in the organisation and consider employee consultation an inherent part of business. Organisations are increasingly involving an HR representative at senior management. This helps the human resource viewpoint to add value to business discussions. However, internal realities will hold sway over the involvement. If the business leader has provided a token representation to ‘show’ support, it is unlikely that the HR representative will be able add any value to business decisions. Political strength holds sway over decisions. The attitude of the business leadership with respect to human resources as a whole determines the attitude of the levels of management across the organisation. A view that supports hierarchical communication can hinder the communication pathways and block out unpleasant realities. A view that demands worker obedience to larger goals and sees union negotiations as an exercise in confrontation will face resistance to the tenets of SHRM – a process that is viewed as a means to undermine the power of unions. Leadership provides the direction by adopting strategic human resource models to empower the workforce and create a sense of energy through involvement and consulting. This approach has the capacity to alter the mode of union negotiations and pave the way to union cooperation. Summary To sum up, SHRM denotes a method of management that seeks to align human talent with the changing demands of the business. SHRM is not the purview of a single department; rather it denotes a way of life, a way that employees at all levels view as necessary and relevant to business operations. It pre-supposes a leadership that places emphasis on the ability of the organisation to ramp up to face changing demands and is willing to invest in developing internal skills to afford the expected flexibility. It pre-supposes an organisation where alignment with business objectives is a constant feature. Regular meetings or communication forums re-iterate the connection between a plan of action or a new expectation in relation to an organisational goal. It pre-supposes the capability of each member to go beyond the ken of job descriptions and return with solutions if a pre-agreed plan is not providing the expected results. The Human Resources department is responsible to create an environment, a framework of processes to support and facilitate the organisation. The development of two-way communication mechanisms allow for clarity between different layers of management and create the scope for the workforce to be involved and aligned with business needs. It also prevents the creation of policies from an ‘ivory tower’ and keeps the members grounded about the realities of operational issues and their impact on overall objectives. The right match of talent and skill availability can be made effective only if the organisation provides clear expectations of the workforce and creates ongoing processes to find solutions. Similarly, the higher levels of management must be in a position to provide necessary support to implement the solutions that are found to be feasible. However, there are limitations to all the efforts of the strategy and human resource management. Organisations in an obsolete business niche and has been unable to reinvent itself, those that fail to be equipped with updated technology and process intelligence to improve competitive capabilities and organisations that opt a route that is inherently flawed can achieve little success with the best SHRM models in place. SHRM then, remains a supporting model to well-laid business strategy. At best, it can be a pointer to flawed assumptions and has the potential to keep the organisation open to inputs that reflect the aptness of the business direction. It has the capacity to keep the workforce in line with the changing business environment and build on their capabilities to adapt. The focus on communication and learning ensures that the organisation is abuzz with current information and is alive to the need for minor improvements or a major change of course. Case of Watson Engine Components The case of Watson Engine Components throws light on the inherent assumptions of business leadership when managing its workforce. These assumptions are coupled with internal complacency about the capability of the organisation to forge ahead in an increasingly competitive environment. The organisation is a part of but not alive to the changing business environment brings out the drawback of the absence of an organisational model to provide leadership and manage employee communication. There is an overweening sense of inadequacy in the face of new technology that has overtaken the market and rendered the less technologically adept unable to respond. The management considers the workforce to be loyal and committed. There is little connect between the directors belief in workforce commitment and capability and the reality of high level of absenteeism (as high as 9%) and a high attrition rate of 35-45%. This reality is juxtaposed with the management method of centralized decision making and control. The organisation must re-define the meaning of commitment to understand whether the parameters that denote commitment are being met. Among the characteristics of high-commitment work practices are extensive participation and reformulation of work to make use of skills (Holbeche, 2001, p. 202-203). The workforce displays an absence of awareness to the changed market scenario and their place in making change happen – a reflection of the belief expressed by the directors. Absence of flexibility and untapped awareness pave the way for mental stagnation and acceptance of status quo. The workforce displays an awareness of how things can be improved in informal discussions - this intelligence remains untapped with the current top-down approach of management. An organisation may take time to respond to the need for a technological overhaul. The capital investment and time to market can delay the decision. In the meantime, process corrections within the organisation can help to improve the capability to respond to the market. An application of some of the basic tenets of strategic human resource management to the company will allow it to engage the workforce and utilize the latent strengths to manage market expectations. Armstrong (2000, p. 44-51) advocates a model that provides a strategic fit between business and human resources. Vertical and lateral integration that allow organisational issues and strategies to be viewed at par when viewing business strategy is suited to this larger aim. An alternate strategy may be aligned as the main business strategy evolves. The third and most common method adopted by companies is to allow the development of a separate strategy focusing on solely human resource issues. Swansburg and Swansburg (2002, p. 46) apply Schuler’s 5P model by considering HR Philosophy, HR Policies, HR Programs, Practices and Processes. The philosophy is an outcome of understanding organisational processes like employee empowerment and learning that affect employee participation towards larger goals. In the context of Watson Engineering this would mean the following: Leadership commitment to the methods that alter the approach to business Communication of intent and management of expectations and reactions Demonstration of intent by showing openness to feedback and speed of idea implementation Developing an HR philosophy towards empowerment and involvement Engage the workforce Leadership commitment This is a key area to be addressed. The members of the leadership community in the organisation must commit to bringing the company to a competitive slot in the marketplace. The issues to be addressed are manifold: obsolete technology, rising prices, dipping profitability, larger markets and many more players, demands for greater efficiency with lower prices and higher quality. Add to this situation the top management stand of finding difficulty in seeing scope for improvement. The meaning of leadership in this context goes beyond acceptance of inherent goodness and commitment of the workforce. Leadership commitment is an organisational demand to ‘look within’. It involves a critical view of where the business currents are leading the organisation and an acceptance of the reality that there is a need and a way to change how things are done. It involves strengthening personal belief systems in the capability of the organisation to compete in the changed situation. This process involves revisiting the main purpose of the organisation and clarifying that this purpose is accepted by all members of the leadership community. It involves thinking through the impact of alterations and recognizing the limitations of any route that is chosen. Armstrong (2000, p. 145) uses Ulrich’s model to highlight the role of the leader as one who owns, champions and publicly commits to change. The leader is willing to commit time and resources to making the change occur. The need of the hour is leadership that is willing to draw upon internal resources to drive the organisation to achieve higher-order goals and carry the workforce along. The concept of leadership in this case is not limited to an individual. Every managerial role holder may be expected to take on a leadership role. The leaders may draw up methods to be adopted to improve organisational capabilities and to harness the talent of the skilled workforce. Another aspect of commitment is the design of communication processes that are relevant to the organisation and reach the aim of carrying relevant information across the workforce. In this manner, the organisation is brought alive to the expectation of adapting to change, is made aware of areas of dispute that must be soothed and areas where learning is required to enhance the ability to adapt. Communication of strategic intent and action The organisational context is one that follows traditional methods of management. A top-down approach to communication is preferred and decision making is centralized. Employees are open to sharing ideas when a survey is conducted – these ideas can be brought to the fore if a mechanism is put in place. Care must be taken to retain the importance of the managerial positions in the perception of the workforce. A communication system must be formulated bearing these factors in mind. A formal communication by the top management may be followed by team briefings to reiterate the intent and decipher the immediate impact. The workforce may be expected to be wary of open feedback and remain accepting of the top-down communication method. In order to encourage two-way communication, a suggestion scheme may be introduced to understand the reactions and expectations of the workforce. Alternately, due to the existing practice of centralized decision making, the department heads may be retained as the agents to garner involvement and ideas. Methods like the introduction of small team briefings help to reiterate the strategic intent and provide a mechanism for discussion. This approach allows department heads and team leaders to allow for open discussion without feeling undermined by the new process. The workforce retains a feeling of stability and continues to hold the manager in the esteem afforded by the position. Advocacy by managers and relating the impact of a changed action to overall business objective is another way to strengthen acceptance of the revised strategic intent. The example of HP (Hewlett Packard) demonstrates how new work habits and focus can be created with adoption and advocacy and continuing follow up to ensure that the required change is occurring. The highlight of this method lies in its rigorous adoption by functionaries across the organisation without undermining the importance of individual role-holders. Demonstration of intent The follow up on ideas and suggestions provided by the workforce with visible implementation is an effective means to strengthen the belief that employee involvement is encouraged and provided due importance. Recognition for individual and team suggestions that can be implemented allow for a visible demonstration of the value placed on workable ideas. The effective utilization of talent in line with the changed strategy may call for changed roles with a need for a flexible approach. The key areas where immediate improvement may be expected to show results should be communicated to the entire workforce. Work profiles may undergo alteration and reporting structures may change. These changes must be supported by a suitable training mechanism to ready the resources for the changed work profile – an area in which Watson has shown willingness to invest. An appraisal mechanism that recognizes the adjustments made by these resources and the time required to come up to speed must be formalized and communicated. A tracking system is required to identify the success of the changes and pay schemes that recognize the enhanced efforts must be designed and communicated. Since the organisation has rejected incentive mechanisms, alternate compensation designs are required to recognize the attitude and success of a flexible approach to work. Transparency about feedback and compensation mechanisms provides the dual advantage of visible recognition and greater acceptance by other members of the workforce for future need. Talent alignment with organisational objectives requires the involvement of the managerial role-holders. This is the level that understands the current talent and skill availability and the demands of the changed working methods. The focus on skill development, talent management and deployment of resources are new roles that managers are required to fulfill. Developing an HR philosophy With organisational objectives clarified and the desired corporate culture communicated, it is now possible to develop a philosophy regarding the management of talent. A unified approach to managing talent that reduces the effect of individual management styles should be designed to ensure that employees are managed and appraised in a similar manner across the organisation. What are the behaviors or attitudes that the managers and workforce are expected to display? Managers are being expected to adopt a two-way communication pattern – an expectation that calls for a paradigm shift on the part of the role holder. The open acceptance of feedback from subordinates, overcoming a sense of dissonance in the face of individual recognition mechanisms that reward team members and maintaining an environment that allows for regular communication are new requirements of the managers. While training may be provided, the managers require feedback to know whether they are performing as expected and the changes they may have to undertake for increased efficacy. The senior management must accord due importance to the managerial role even while recognizing the efforts and ideas from the workforce. The policies and practices applicable to different levels of employment flow from the philosophy of managing human resources. This would involve defining processes starting from recruitment to the management of internal talent. A recruitment process based on merit and ability allows the organisation to be assured of the human investment being made. The connection of every recruitment decision with the organisational goal forces the choice between accepting a candidate on merit rather than referral. Every individual that participates in an interview process must be trained in analyzing the suitability of the candidate to the job requirements and in conducting interviews. Though training is currently conducted, it has not yielded visible results at the workplace. Talent enhancement with training inputs must result in knowledge sharing by the trained resource, higher productivity or a similar outcome. Training budgets must be justified with the outcome of visible returns to the organisation. The expectations from a training process must be clear before resources are allocated to the function. Performance management involves the creation of systems and processes that allow organisations to monitor and improve the standard of work being carried out. Well-laid out policies for promotion, definitions of expected performance, formal review processes with documented feedback, mechanisms for addressing aspirations are some of the ways in which talent may be managed. These processes provide the organisation with an understanding of work allocation and provide the employee with a view of the possibilities in the company. These processes allow the managers to go beyond disciplinary and corrective action and be involved in resource development. Engage the workforce A committed workforce is an engaged workforce. A workforce that is engaged in the business is also aware of the individual and team level adaptations required to face competition. The absence of flexibility in work habits when the situation calls for it and the presence of viewpoints about possible improvements that remain unstated are indicators to the contrary at Watson. Organisations have found consultative methods and allowing the free flow of ideas useful for engaging the workforce. Consultation and involvement of the workforce in decision making is a paradigm shift for both worker and management and may be started in a phased manner. Communication of the realities of the business and the revised methods of communication will have some unintended but expected outcomes. Unionized staff will feel threatened; part of the workforce will bring management intent under the scanner and some parts of the workforce will advocate the changes. The management must build bonds of trust with the workforce and assuage the feelings of all representatives of the workforce. Since 25% of the workforce is unionized, the role of the unions can also be enhanced to that of partners to the organisation. The unionized members must be educated about the need for yielding higher productivity and quality within tighter timelines. The limited financial earnings must be known in order to enhance the process of advocacy of the changed methods of working without undermining the position of the unionized members. The development of an HR philosophy requires the involvement of those who are responsible for implementing it and those who are the recipients of the process. An effective method of workforce engagement is encouraging involvement in setting up practices and processes pertaining to it. This allows the workforce to recognize what constitutes high and low performance, desirable and undesirable behavior and understand the position of those in power. Conclusion The adoption of strategic human resource management processes can lead to the opening up of new possibilities for Watson Engine Components. Well-designed, strategically communicated and clearly defined policies and practices set the expectations of the members of the organisation. The organisation undergoes a transformation as new learning sets in at different levels. The directors start to view themselves as the guiding forces of the fortunes of the company with the controls in their hands rather than in the hands of the environment. The managers function beyond the ken of their current responsibilities. The workforce finds ideas and suggestions being implemented with the assurance of recognition. Talent management takes shape through resource deployment on the basis of knowledge and skill rather than habit. Two-way communication throws up new insights as feedback is made available from individuals with varied perspectives. Considered decisions about human resources are made on the strength of defined processes that each individual is aware of. Ad-hoc decisions pertaining to staff recruitment, retention and deployment will reduce as the organisation becomes aware of the importance of every member of the talent pool in helping the business to remain competitive. Flexibility is an outcome of diversely skilled and willing labor force that sees its role in the larger picture and bears the responsibility of carrying it through. The processes described have the capacity to make the organisation view itself in a different light. However there are inherent risks involved. The outcomes can be quite different from the picture presented above if the top management continues to see itself as a victim of circumstance and tries to shed the responsibility of providing strategic direction. This process demands that each director takes responsibility of the current state of affairs and commits to change. If this is not effectively conducted, the organisation runs the risk of failing to draw up realistic objectives that can yield short or long term benefits. The outcome will be uncertainty about the intent of the top management and a mental rejection of all that is intended. Suspicion and reduced productivity will result as the workforce finds itself increasingly isolated from the grand schemes of the top management. The managers will continue to micro-manage the team’s work and ideas and innovative processes will remain in the intent statements. The presence of suspicion will lead to a skewed view of the communication efforts towards the larger goals defined by the company and the anticipated buy-in will fail to happen. In the absence of top management acceptance of responsibility the mid-level managers will find themselves being called upon to take the responsibility of communication and garnering the buy-in of the workforce. The exercise will lead to increasingly strained internal relations and can derail the entire exercise of restoring the company’s competitive advantage. In order to make a change come about, Watson Engine Components will do well to bear its individual context and historical base in mind. Instead of focusing on large steps to reach an uncertain goal, the company will do better to focus on small steps and incremental changes. This method will lead to the development of confidence and provide the impetus to take the process further. It also instills confidence in the lower levels that the management has identified the means to bring about a change for the better. Bibliography 1. Armstrong, Michael (2000). Strategic Human Resource Management: A guide to action. Kogan Page. 2. Armstrong, Michael and Baron, Angela (2002). Strategic HRM: The Key to Improved Business Performance. CIPD Publishing 3. Bratton, John and Gold, Jeffrey (2001). Human Resource management: Theory and Practice. 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