The Four Most Important Concepts of Human Resource Management (HRM) - Research Paper Example

?The four most important concepts of Human resource management (HRM) Executive summary As the requirement of skilled resources and service sectors have been in the offing, there is an increasing need for developing the human resource management for any organization. This segment of the management deals with the problems and productivity issues of the human resources on which the performance of the organization depends. The management has become a part of strategic management concern since the advent of globalization leading to an amalgamation of different cultures and ethnicities have made the possibility of teamwork difficult. Under this situation it is important to introduce a legal framework to bind the activities of the employees within the organization and to increase their productivity in work. Feedbacks and evaluation of performance from time to time is very essential to keep the human resources on their toes. The compensation of the employee reflects his value to an organization and hence this is another aspect within the jurisdiction of the human resource management. The paper highlights these four concepts, strategic HRM, Performance management system, legal framework and compensation. Strategic HRM Strategic Human Resource Management (SHRM) can be recognized as one of the most empowering and significant ideas to have emerged in the trade management field for the last quarter of the century. Policy makers of state levels have long been arguing about the thought regarding conceptualizing promotion of “high performance workplaces” and “human capital management”. (Greame, Storey, Billsberry, 2005, pp.1-2). SHRM can be regarded as a process of linking human resources with strategic aims in a bid to substantially perk up business- related performance and grow a unique organizational culture that initiates innovation, flexibility and competitive gains. SHRM provides path to building the basis of a long term strategic advantage by creation of effective organizational skill structures and mechanisms, culture, value proposition of the available human resources, a proper communication strategy and preparing an efficient team trained for ups and downs which include mergers and acquisitions. In a more descriptive and theoretical light, strategic management is like a cycle wherein various activities are constantly taking place and are dependent upon one another. This cycle can be sub categorized into five steps: 1. Goals and mission: The first step of a strategic management model initiates with senior managers of an organization evaluating their current position in relation to the current missions and goals of the organization. Mission explains the values and aspirations of the organization; it is the organization’s main motive and indicates the future directions of the senior management levels. Goals are the desired end results sought through the outcome of the operating methods of the organization and are described mainly in short- run perspectives (Bratton, n.d., pp.40-41).      2. Analysis of environment: It looks at the internal strengths and weaknesses of the organization and looks for external threats and opportunities. The most crucial factors to an organization’s future is referred to as strategic factors summarized by the acronym SWOT-Strength, Weakness, Opportunities and Threats (Bratton, n.d., p.40) 3. Formulation of strategy: This involves evaluation of the interaction between strategic factors and formulating strategic choices to lead the managers to achieve organizational goals (Bratton, n.d., p.41). 4. Strategy implementation: This area of activity focuses on techniques implemented by the managers to execute their strategies. It mainly deals with the organizational formation, leadership styles, information-control systems and human resource management, leadership being the most difficult part of implementation (Bratton, n.d., p.41). 5. Evaluation of the implemented strategy: This activity helps determine the extent of real performance and change matching the desired performance and change (Bratton, n.d., p.41).   HRM and Legal Environment: The role of legal environment as a vital part of human resource management is well recognized by both entrepreneurs as well as researchers. An HRM manager’s duty is not only to provide awareness of laws that are directly mandatory in day-to-day activities of the employees but also to provide regular inputs into all the strategic decisions having a broader sphere of legal understanding associated with the employees’ respective fields of expertise. This also helps researchers explore an extensive range of HRM topics like HRM decision making, organizational validity links, cross cultural variations etc. Across nations, legal bindings of workplace ethics have increased many a fold in the recent decades. Almost every aspect of HRM is now being controlled by workplace laws and regulations coupled with the risk of litigation in order to safeguard the employee rights, promote job security and eradicate discrimination and inequality in workplace. (Storey, 2009, pp. 71-72) There are various local, state and federal legislations in the field of HRM. For example, we have Equal Employment Opportunity (EEO) (1972), which is a noble attempt by the government to ensure all individuals getting an equal chance for employment regardless of sex, color, race, religious conviction or nationality. We can also mention Executive Order 11246(1965) which prohibits state contactors from discrimination or Executive Order 11478 (1969) which states attainment of government employment solely based on merit and fitness and prohibits denial of appointment in governmental organizations based on race, sex, color, religion, disability, age or nationality. With the assistance of two agencies, namely, Equal Employment Opportunity Commission and Office of Federal Contract Compliance Programs, the executive law Equal Employment Opportunity Commission (EEOC) (1964) was penned. The three foremost responsibilities of EEOC are Investigation and solution of discrimination complaints, gathering of useful information and strict following of guideline issues. This law has prohibited hiring and firing without valid reasons, compensation to employees, transfer, promotions or rehiring of employees, employment advertisings, proper recruitment processes with testing, training facilities, fringe benefits, retirement pensions and disability leaves, harassment in the name of color, sex, religion, nationality, retaliation against an individual in response to an allegation of discrimination etc. Another law worth mentioning is the Office of Federal Contract Compliance Programs (OFCCP) that audits government contractors on a yearly basis. It has three primary components, namely, analysis of utilization, goals and associated timetables and steps of action to be followed. Reasonable Accommodation is another important obligation on an employer to positively take steps to ensure accommodation of a deserving person irrespective of his disability or religion (Human Resource Management: Gaining a Competitive Advantage, 2010, pp. 3-11).  Compensation of HRM: The compensation and benefit areas of Human Resource Management remain a very specialized area. Compensation and Benefits more often than not play the crucial task of HR controlling, stating the rules and processes around the remunerations, variable pay and incentives. This particular function of HRM is mostly connected to the competitors in the market and helps bookmark payment policies that are very much competitive in the market, yet the policies are made to meet the targets set by the organizations. For this purpose organizations often tend to take the method of job evaluation, which helps decide the relative value of every job in the organization. (Compensation and Benefits HR Processes, 2008) The main purpose of job evaluation is to be certain of the systematic assessment of each job to decide their true value in terms of wage and remuneration supervision. The procedure initiates with a plan, forwards to job identification and classification dimensions and ends with proper implementation of the assessment. Job evaluations can be both quantitative and qualitative, both having their pros and cons. An employee’s compensation depends mainly on three factors, basic salary, incentives and other perks. The basic remuneration is used to calculate the overall compensation of an employee. Moreover, wage can be of three types, the minimum wage, fair wage and the living wage. Minimum wage is the subsistence level of wage payment to an employee just to fulfill his and his family’s basic amenities of life. The fair wage considers the true paying ability of the employer. The living wage is the highest among the three aimed at providing luxurious living to the employee and his family. It helps provide good health, good education and other social facilities. Variable compensation is more like temporary shocks where employee gets incentives for better performance and not for their position in the hierarchy of the organization.  This is provided mainly to encourage the employees to work more for the organization and bring in more business. An effective as well as an efficient plan of compensation has various factors associated with it, like objectives of the organization, expectations of the stakeholders etc. Wage differentials can be considered as difference in wage payments for the same job due to various factors like variation in job schedules, associated hazards of the job, cost of living etc. This difference in wage payment across the globe has given rise to the necessity of a national wage policy. There are also long term incentive plans like sharing profit percentage with the employee as a return to his performance for the organization over a long time. The basic motive behind permitting employee benefit schemes is to retain good employees and improve their commitment to the organization. More organizations are coming up with innovative benefit proposals to lure and retain talent. The diversified portfolio of benefit schemes is now flexible than ever which help the organization to match newer individual desires. The compensation schemes now a day should be productive positively to both the employee and the company (Introduction to Human Resource Management: Compensation Management, 2010).     Performance management system (PMS): One critical issue that the MNCs often face is the administration of their multinational workforce, by formulating guidelines on ways to staff, appraise, compensate and train them in the context of international conglomeration (Varma, Budhwar and DENisi, 2008, pp.4). An effective performance management system (PMS) is based on certain features, which helps it make successful. One method can be by linking a single employee’s work efforts with that of the goals and objectives of the organization, which help them, understand how their jobs would really contribute to the organization. Another way can be by setting clear expectations regarding performance, which can help the employee know what the requirements to succeed in the job are. Defining job-mastery as well as career building goals helps to make clear how the current designation could support employee growth. Regular interactions with the employees by coaching and feedback help to increase flexibility allowing the employee and the employer to identify problems and alter the course of the work to solve the problem. Another way can be by emphasizing that the yearly appraisal should be nothing but a simple summary of discussions between the HR managers and the employees during the entire span of year as it helps relax the candidates and also the HR managers can make better assessments (Performance Management: Concepts and Definitions, n.d.). So, PMS generally have two-fold purposes, taking administrative decisions such as bonuses, incentives and promotions and developmental goals like providing feedback and proper training. It would seem quite predictable that MNCs would well be able to achieve their targeted goals by setting up required systems to link performance and results but that is just a mere misconception. Most MNCS also do the same mistake. They fail to understand that most of the MNCs are set in U.S and it becomes very difficult to gauge the performance of those working outside U.S by adopting U.S based methods. Moreover, the system of performance is multi-dimensionally culture-bound and it is more likely that managers measure performance differently based on different cultures thus leading to an inter as well as intra- cultural variation in definition and analysis of performance. For this reason, performance appraisal should be addressed in the local context than in the global context (Varma, Budhwar and DENisi, 2008, pp.4).      References 1. Greame A., Storey J. and J. Billsberry (2005) Strategic human resource management: theory and practice, London: SAGE Publications Ltd. 2. Bratton J., (n.d.), Strategic Human Resource Management, Palgrave, Retrieved on May 14,2011 from: http://www.palgrave.com/business/brattonandgold/docs/bgcha02.pdf 3. Storey J. (2009), The Routledge companion to strategic human resource management, London: Routledge 4. Human Resource Management: Gaining a Competitive Advantage, (2010) McGraw-Hill Irwin, Retrieved on May 14, 2011 from: http://www.lcsc.edu/jbowen/HRM/PPTs/HRM03.pdf 5. Introduction to Human Resource Management: Compensation Management (2010), Case Studies and Management Resources, Retrieved on May 14,2011 from: http://www.icmrindia.org/courseware/Intro%20to%20Hrm/hrm-DS12.htm 6. Compensation and Benefits HR Processes, (2008), HRM Advice, Retrieved on May 14,2011 from: http://hrmadvice.com/hrmadvice/hr-processes/compensation-and-benefits.html 7. Varma A., Budhwar P.S. and A.S DENisi (2008), Performance Management Systems: A global perspective, London: Routledge 8. Performance Management: Concepts and Definitions (n.d.), Human Resources at UC Berkeley, Retrieved on May 14, 2011 from: http://hrweb.berkeley.edu/guides/managing-hr/managing-successfully/performance-management/introduction Read More