Human Resource Management in International Settings - Dissertation Example

Human Resources Management Central Theme of HRM Companies and organizations are made for people and by the people, and obviously their effectiveness depends on the behavior and performance of the people running these companies. The true importance of the human resource of any enterprise lies in its ability to respond favorably and willingly to performance objectives and opportunities and in these efforts gain satisfaction from both accomplishing the work and being in the work environment. Core areas of HRM include the individual, the organization and the social context of work and how all of these factors shape relations at work and result in organizational performance. To get the optimum from a satisfied and participative individual is considered to be the ultimate objective of HRM policies. HRM itself is the new avatar of 'Personnel Management'. Personnel management was largely concerned with the technical aspects of hiring, evaluating, training, and compensating employees. HRM on the other hand leaves scope for career building of the employee, development of a professional relationship and the satisfaction aspect. as per the latest trend, the 'individual' acquires a central place in the HR policies being devised by the management. HRM mainly intends to bring optimum out of the individual so that the company gets maximum output and in turn the individual too gets his due share of profit. This further inspires the individual as well as the team to perform par excellence. HRM: Efforts for enhancing performance of an organization and the individual. Human Resource Management is a very crucial and an integral part of any organization. The very fact that now people are being considered as resource instead of liability marks the importance of human beings constituting this resource. Human Resource environment as such is affected mainly by the following five factors; i. Economic: The economic environment of host country, inflation rates, growth factors and the levels of unemployment affect the HR policies. ii. Demographic: The demographic composition of the workforce like the communities involved, the caste consideration (this becomes a reasonable factor in case of some of the developing economies), the male-female composition, the population density of the country/ region also helps in devising effective HR strategies. iii. Socio-cultural: Religion and culture never tell a person to 'not to work', yet people of some socio-cultural background are found to be less workaholic than others. The effect of family systems like 'Joint family system' or 'Nuclear family system' become crucial factors in forming the habits of individuals and thus formulating of HR policies. Employees sometimes prefer flexibility in their work schedule depending upon the local festive season, local climatic conditions etc. iv. Technological: Rapid technological advancements have reduced the dependence on muscle power to a certain extent. Modernization and automation lead to increased accuracy and less redundancy in the output while increasing the comfort level of the workforce. v. Politico Legal: Prevailing political situation in the country, the party in power, the ideology of government functionaries affect the business environment. Whether it's a democracy, autocracy, monarchy, one party system, or a multi-party system gives enough room for strategy planners to devise HR policies accordingly. The law of the land has always to be kept in mind while doing the recruitments or managing the human resources. For example in some countries, formation of 'workers union' is not allowed while in some others it's mandatory. All these efforts are to be kept in mind while devising strategies/ policies for HRM, with the prime objective of HRM being 'developing congruence between individual goals and organizational objectives while striving for realizing higher standards of performance, satisfaction and quality of working life'. The HR manager is therefore directly responsible towards the retention and upkeep of 'human assets' in an organization. In a recent survey conducted in Canada by Hewitt Associates, a global HR services company, it was found out that that big and small organizations in all industries throughout Canada are finding it challenging to attract and retain workers. On analyzing the responses it figured out that most of the employers in the survey have put emphasis on flexibility as a means of addressing the problem. While three-quarters of Canadian companies are finding difficulties in attracting or retaining employees, 44% have problems with both. The situation is worst in Alberta where 97% of respondents were having difficulties and almost two-thirds reported that both attraction and retention were challenging. With an aging workforce - half are over 40 - the problem can only get worse. The suggested flexible arrangements are; - Job sharing - Flexible hours - Compressed work schedules - Vacation buying and selling - Working from home - Elder care support - Wellness accounts - Unpaid time off for charitable work - Assistance with home technology purchases Hewitt has advises employers to take a disciplined approach to such working arrangements. For any organization to function effectively; three main aspects are critical; Eliciting the contribution from all concerned Organising the workforce by assigning them the responsibilities, and Developing an information system for monitoring and coordination activities. HRM therefore becomes a part of strategy for the organization. Strategic decisions are concerned with the issue of setting a direction for the organization to move or the course the organization will follow Though very crucial, yet preparing 'strategic moves' for future often is not based on hard fact, but on presumptions. It involves past experience, forecasting and 'surround-effect'. Strategic management can be described as what Bernard called 'maintaining the organization in operation1. HRM and Productivity: In today's swiftly changing and highly competitive corporate world, the biggest challenge for the managers is 'How to inspire the team' to perform. Now it is no more a mere "staff" function in the organizations. Multi-National Companies in particular take good care of their employees (or that is the kind of impression they wish to circulate around). The main reason for attempts to avoid bad publicity is because as per a study, seventy percent of world trade-"including one-third of all manufacturing exports, three-quarters of all commodity trade, and four-fifths of technical and management services trade"-was accounted for by the 500 largest MNCs. A strategic approach to HRM offers an opportunity for practitioners to break out of the personnel management mould, and it offers a logical framework for practitioners to add value in the HRM function To get individuals to a highly motivated level, certain incentives (in addition to the pay and perks) are required to push him or her towards the accomplishment of the task. The approaches used by managers to motivate the employees are largely selected on the basis of the complexion of workforce they are working with i.e. different motivational strategies are needed to get each set of employees to perform at their level best. In general the approaches used are; I. The Rational-Economic Man: Here the belief is that only money can motivate an individual and any reward that is given to an employee towards motivation should be economic in nature. This approach is also called monistic or monetary approach. This approach though has its limited area of application. The plant workers, front office workers etc. happen to be the beneficiaries of such an approach. II. The Social Man: This approach assumes that social needs of a person are more important than the economic needs and so he is more responsive to the demands of his peer group than to the commands of his supervisor. This approach has the pitfalls in that at times it strays the organization towards becoming a Public Sector Service Unit and not being very efficient. III. Self Actualizing Man: The concept states that each human has a desire to grow, even the lowliest, untalented man has the desire to become more of what he is. As a human nature each of us wants to be most effective performer in our roles and we make the full utilization our talents and potentialities. For this purpose we strive to seek some meaning and challenge in the job and this has made the study of jobs more complex. For a manager to study such person, he'll have to keep off his own presumption/ bias, which is extremely difficult for the social animal called 'human being'. Therefore this approach too cannot be implemented in isolation. IV. The Complex Man: Looking over to the world we can say that there can be no single concept that can apply to all men. As man is very complex and has several motives, which weave into his unique need pattern at any one time. So each individual needs to be studied separately and then motivating element be traced and used. The individual employee is the key unit in any organization. Developing skills of his work and his will to work is the real challenge for the organization. Skills of course can be competence building through training while the 'will' can only be developed through a supportive climate, which comes from necessary changes made in the various sub-systems of the organization. Quite often, a role does not allow the individual employee to use his skills and he feels frustrated. This not only results in lower output from that individual, but may frustrate the chain related to this link. At times a lowly qualified boss becomes a weak spot for the organization if workers under him start feeling frustrated. Therefore Human Resource Development has to lay greater emphasis on enriching the role of an individual rather than only his job. Rideau Construction Inc. a general contractor located in Bedford, Nova Scotia, has only 54 employees consisting of project managers, project coordinators, site superintendents, engineers, technicians, accountants, and administrators. The company and its employees feel guided by the following principles: Integrity Fairness Confidentiality for clients and other employees Individual Responsibility" The company believes that "a complete and comprehensive benefit package is essential in attracting, retaining and motivating outstanding employees. The company provides vacation time with pay to all employees, and it insists that all employees take the vacation time that they are entitled to. During the first year of employment, an employee gets 1 vacation day for each month of service, up to a maximum of 10 days. After 6 years of employment, an employee is entitled to 20 vacation days. Employees who get married are entitled to an extra week of vacation for a honeymoon. Flextime is not a formally stated policy but it appears to be practiced by employees at all levels. The company also acknowledges that employees will have to be absent from work on occasion and its policy is to grant leaves of absence, with pay, when sufficient notice and flexibility have been provided. Because the company is small, human resource issues can be addressed in an informal way and approaches can be tailored to meet individual needs. For example, one employee, considering retirement, was given an indefinite leave of absence to think about his decision. Another employee, with a son who was moving to Toronto, was given the keys to a company truck, as well as time off, to help his son settle in. Providing unconventional ways of doing things also encourages the individual to try for creativity in the job content. Taking the example of 3M, a diversified Technological US company gives time and resources to its employees within the working hours to help foster innovative ideas and if the idea or technique is found to be good enough it is worked upon and the employee is rewarded. This way the incumbent is not only motivated to exploit his creative skills but also gains monetarily. The company respects the differences that make each of its employees unique, and valuing diversity is a key component of the company's organizational culture. HRM: Desirability to foster the potential of the corporation's human capital/asset Organizations are no more considered as passive components. They are live, full of activity and environment-responsive like living beings. Organizations do acquire character and develop a typical personality with time and we tend to make an image of the employee depending on the organization he/ she works for. This very personality of the organization considerably influences the functions of the organization in the long run. For example we tend to remember ENRON as a company which killed many of its employees and general people through the gas leak in Bhopal (India). Similarly some companies like CASIO, SONY etc are thought of as employee friendly, as well paying, as investor friendly, as market friendly, as customer friendly etc. depending upon their past performances and behavior. To meet and exceed customer satisfaction, the business team needs to follow an overall organizational strategy. Traditionally 'maximizing' profits has been considered to be the objective of any organization. Not any more.This criteria has been discarded. Now organizations are supposed to have multiple objectives, monetary as well as non-monetary. There are short-term objectives as well as long-term ones. Strategists are supposed to prioritize all such objectives, so that there is clarity and ease of decision-making in situations where there is an apparent clash of objectives. Now MNCs even 'invest' in the Human Resources by way of providing good and relevant training and development opportunities. Such training is imparted to the individual thinking that the individual will spend the coming years with the organization, put in a laborious effort towards achieving the goals of the organization. This way the training and development investment bears fruits. Maintaining worker friendly environment and entrusting responsibilities to the responsible one's is very crucial from the point of view of management. The workforce if kept in good humor will not only help in efficient output but also work as a goodwill messenger for the organization. It is said that average managers play checkers, while great managers play chess. Difference lies in their approach and rules of the game. In Checkers, all the pieces are uniform and move in the same way; they are interchangeable. Their movement needs to be planned and coordinated as per the requirements. But they all move at the same pace, on parallel paths. In the game of Chess, on the other hand, each type of piece moves in a different way, and to play we need to know how each type of piece moves. Great managers are therefore supposed to know abilities, positive and not so positive traits of their employees. For employees, monetary aspects ease of work are no doubt triggers for better performance, but recognition of their work is equally important. Top management often spends a lot of time working out strategies, but at times fails to execute well. One big reason - the workforce remains totally aloof to organization goals. Execution of a plan involves more people than the strategy formulation often calls for. It can very well be argued that all information must not go to all men, but at least the requisite information must percolate down to the last person, so that he gets the feeling of being an inseparable part of the team. Some managers love to have the perception that 'smart people plan and grunts execute'. Unfortunately, this has become an outdated perception. The point is, there has to be a logical flow of strategic information between the upper and lower levels in terms of strategy and tasks, and there has be accountability along the way. If a goal is set for an organization but we fail to identify who, what, when and why up and down the organization - accountability varies along the way. Focus of HRM: Importance of HRD: A person's strengths may not always be visible, it might be overshadowed by something that he has done in the past. Sometimes it requires a personal trigger from the manager. When they feel that the bosses have enough confidence in them they come out of their shell and ready to take initiatives. The trigger has to be the right one, because squeezing the wrong one might lead to further detachment. Strategies must be in place to support such initiates and experiments. Exodus of trained manpower hurts the organization much more. Trained professional takes away with him not only the training costs but some trade secrets and unique information of organization as well. Maslow's hierarchy of needs identifies the needs from physiological to self-actualization for professionals ranging from lower to higher levels in the organization. It can therefore be very well argued that the faith the top management shows in its professionals is very crucial to retaining the manpower. Every individual tries to fulfill his/ her needs, realize his/ her dreams, and establish himself/ herself as successful in life. The organization may well provide him a platform to realize all these goals, provided the individual develops an attitude towards synchronizing his goals with the goals of the organization. Attitude influences the work, relationship with colleagues, and success. Two main components of attitude are; The internal part is the way we see things, our inside point of view or orientation. The external part of attitude is our disposition, the image we project to others. Factors that affect attitude of an individual are; Financial matters Recognition and acceptability in the organization Personal problems Certain beliefs and presumptions Emotional environment, feelings and behavior Self image problems Feedback from the organizational bosses Grooming, both at home as well as at the workplace Organization i.e. HRM can do a world of good for the organization as well as for the individual by keeping a close watch on the needs of the individual, so that it helps in the development of a positive attitude in the individual. Positive attitude in turn helps the organization by; Triggering enthusiasm: It creates enthusiasm and extra energy not only for the individual but for the people around him as well. This results in a chain reaction of positive attitude amongst the group of individuals. Enhancing creativity: A positive attitude allows an environment of possibility. Ideas get a chance to be explored. Suggestions and improvements are readily heard and accepted. Causes good things to happen: When the individual has a positive attitude, good things just seem to happen, which in turn create a good working environment. Three main issues addressed in HR strategy formulation include: Staffing: Key questions that have to be addressed by staffing are; i. Does the firm rely primarily on internal versus external sources in filling jobs ii. Are career paths broad versus narrow iii. Is there a single or are there multiple promotion ladders iv. Are the criteria used in making staffing decisions explicit versus implicit v. Does the firm rely on extensive versus limited socialization vi. Are the staffing procedures generally open versus closed and secretive Compensation: Key questions that this part seems to answer are; i. Does the firm pay generally low versus high wages in comparison to the market ii. Is there an emphasis on internal (taskbased) versus external (market-based) equity in compensation decision iii. Are there few versus many fringe benefits iv. Does the company utilise many versus few performance incentives v. Finally, does the firm offer high employment security, coupled with variable pay, versus low employment security, coupled with fixed pay (i.e., does the firm lay people off rather than cut pay in times of adversity) Training and development: HRM seeks to solicit the answers to; ii. To what extent does the firm engage in training and development efforts iii. If it does, are these short-term versus long-term in focus iv. Is training narrow versus broad and is the focus on enhancing productivity versus improving employee quality of life v. Is training planned and systematic versus spontaneous These three components work well towards effective operations when the organization possesses a motivated workforce. Deepak Chopra an internationally renowned Indian philosopher says, "The first spiritual law of success is the Law of Pure Potentiality. This law is based on the fact that we are, in our essential state, pure consciousness. Pure consciousness is pure potentiality; it is the field of all possibilities and infinite creativity. Pure consciousness is our spiritual essence. Being infinite and unbounded, it is also pure joy. Other attributes of consciousness are pure knowledge, infinite silence, perfect balance, invincibility, simplicity, and bliss. This is our essential nature. Our essential nature is one of pure potentiality."2 An effective HRM therefore tries to carve out this potentiality of the individual towards achieving the larger goals of the organization. Organizations have persons of different temperaments. The likes, dislikes, preferences and different needs of individuals come to interplay in the work situation. Hence not only is the formal interpersonal relationship important for the organization, but informal person-to-person relationship is also equally important. It is imperative for an HR Manager to develop a sound interpersonal relationship among his people and also enhance their positive aspects. Good interpersonal relationship makes the environment more congenial to work. There are essentially four stages of developing interpersonal relationship; i. Forming First Impression: When an individual joins an organization, he forms an impression about the organization. Similarly the organization and fellow colleagues form an impression about the individual. 'First impression is a lasting impression', they say, as it influences the way people see each other, but a professional HR manager has to discount this as well. This may not guarantee long-term relationship but it is important to make favorable impression for starting an enduring relationship. ii. Developing Mutual Expectations: Organization has recruited the individual with some expectations. Similarly the individual has also joined the organization with some expectations as well. A set of mutually synchronized and realistic expectations are then worked out by the HRM. This involves a series of exchanges and adjustments to each other's expectations. Individual expects rewards/ good compensation for his work while organization wants optimum out of the individual. Organization's HR Department has to play a very crucial role in this adjustment process. Frederick Herzberg's Two-Factor Theory suggests that rewards affect work behavior in substantially different ways depending upon whether they are intrinsic rewards (motivators/ satisfiers) or extrinsic rewards (hygiene factors etc.). Intrinsic rewards are those that are built into or inherent in the job such as recognition, responsibility, accomplishment and autonomy. Employees gain or experience these rewards as they perform their job. Extrinsic rewards are external to the job and include such aspects like pay, benefits, working conditions, job security, etc. The extrinsic rewards, largely form part of the compensation package and some of these in fact become intrinsic, as entitlements once give are seldom withdrawn. iii. Honoring Psychological Contracts: A set of mutual expectations, which is worked out and understood by the concerned parties is called a psychological contract. For an effective interpersonal relationship, the participants must honor their psychological contracts. Each party must be faithful in the relationship and should not take any arbitrary action. iv. Developing Trust and Faith: Honoring of psychological contracts results in an increased level of trust and influence, which in turn increases each party's ability to affect the behavior and thinking of the other. FedEx one of the largest integrated express transportation company in the world, and employing approximately 148,000 employees. FedEx Express, a labor-intensive company, was very much affected by fewer job applicants and higher turnover. The company bosses were little disturbed as recruiting new staff every month, providing them training etc was costing a big amount to the company. A task force found that the key reason employees were leaving was their weak relationships with managers. The company has a limited onsite HR presence, so good manager-employee relations are vital. The task force also found that managers were unaware of the high costs associated with turnover and didn't understand their roles and responsibilities during the orientation process. With the help of a consultancy firm the company devised a new orientation program, which made the new incumbent as well as the manager aware about the importance of good interpersonal interaction. The new orientation toolkit was well-received by both managers and employees. Performance appraisal - A tool working both ways: Performance appraisal is an important component of HRM. The objectives of performance appraisal could be either for evaluation (i.e. judgmental) or developmental (helping). The evaluation objectives include; Provision of feedback to subordinates to know where they stand Developing valid data for personnel decisions concerning placement, pay, promotion, punishment etc. While the developmental objectives include: Diagnosing individual and organizational strengths and weaknesses; Counseling, coaching, career planning and motivation of subordinates; and Developing positive interpersonal relationship. It depends on the HRM how it uses this tool towards realizing the mutually expected goals. HRM can use performance appraisal towards; Systematic efforts to tone up the performance parameters Inputs for placement, transfer, promotion etc. Identifying individuals with high potential Developing career and succession planning Analyzing training and developmental needs Long term Human Resource Planning Diagnosing individual and organizational problems Validating selection and recruitment tests and procedures and if required taking corrective measures. Improving productivity Promoting internal control through timely detection and feedback on actual performance Creating a positive work environment Stimulating, recognizing and rewarding achievements Furnishing information for other human resource sub-systems If performance appraisal is used to settle scores or with an aim of 'teaching a lesson' then certainly it works as a de-motivating tool not only for the individual but for others as well. This results in setting up of chain of fear psychosis amongst the workforce, resulting in a loss making proposition for the organization. This emphasis on adopting a more strategic approach to HR reflects a developing consensus that human resources are the key source of competitive advantage because it is the skills, behavior and values of staff that are paramount in sustaining high performance. This insight has been associated with the resource-based view of the firm in which it is suggested that successful firms are those that systematically identify, use develop and renew their core competencies. The recent phenomenon of outsourcing some part of the work, at times, gives an impression that HRM practices need to have a thorough revision, as the outsider is not as emotionally and aesthetically attached to the organization as a regular member would be. Yet a deeper look inside reveals that outsourcing too is being done in such areas, which do not affect the basic character of the organization. In fact, in each outsourcing exercise the organization strategists emphasize importance of developing an effective HRM strategy, linked to the overall corporate strategy. Career and succession planning: A systematic Career and succession planning of employees provide valuable information on the extent of current and potential utilization of human resources and is an important input to manpower planning process. The ability of an organization to ensure optimum utilization of its human resources depends on the extent to which it is able to meet the multiplicity of needs and aspirations of its employees. Measuring HRM Effectiveness: It needs be emphasized here that no set rule can work uniformly on all the organizations or all the workers within an organization. The right approach is the one which delivers. Organizations can adopt any approach to manage the human resources, but it is equally important to measure and audit the effectiveness of such policies and if required take appropriate corrective steps. There are three broad approaches to measure the effectiveness: i. Quantitative or Hard Measures: This involves numerical measures of inputs, outputs and outcomes. ii. Qualitative or soft measures: This provides information on staff and line managers' attitude towards the organization, and colleagues. iii. Process analysis: This can trace a process through its various stages right from the process of recruitment, selection etc. An effective HRM approach is considered to be the one, which treats employees as the most important resource in an organization. Like any other resource, a human being can be an asset or liability depending upon how they are utilized and developed. It is through this approach that HRM can contribute towards increasing the productivity and performance of an individual in the organization. Resources: 1. John J. Lawler, Feb. 1999, Human Resource Management in International Settings, http://www.ips.uiuc.edu/gap/pdf/Human.pdf (23/07/06) 2. United Nations Publication, Human resource management and government performance, http://unpan1.un.org/intradoc/groups/public/documents/UN/UNPAN021621.pdf (23/07/06) 3. John J. Lawler, Shyh-jer Chen & Johngseok Bae, Scale of Operations, Human Resource Systems and Firm Performance in East and Southeast Asia, http://rphrm.curtin.edu.au/2000/issue1/scale.html (23/07/06) 4. Magdalena Andralojc, Cross-cultural research in the field of Human Resource Management - in search of the methodology, http://www.business.aau.dk/ivo/research/seminars/recent%20seminars/MA-Cross-cultural%20research%20in%20the%20field%20of%20Human%20Resource%20Man..pdf (23/07/06) 5. Jon Erland Lervik, Rolv Petter Amdam, Randi Lunnan and Laura Mercer Traavik, Organizational recipes and Management Practice in Multinational Corporations, http://web.bi.no/forskning/papers.nsf/dc1faa5090e7f026c1256e5c0044a137/66ca186015bf6800c12569ac004f4ad4/$FILE/dp2000-06.PDF (23/07/06) 6. Wayne Cascio, Elaine Bailey , International Hrm: The State Of Research And Practice, http://www.cba.hawaii.edu/elaine/ihrmoded.htm (23/07/06) 7. Livia Markoczy, 2000, National culture and strategic change in belief formation, http://www.goldmark.org/livia/papers/stratint/stratint.pdf (23/07/06) 8. Randall S. Schuler, Nikolai Rogovsky, Understanding compensation practice variations across firms: The impact of national culture, http://copenhagen.jibs.net/Archive/1998/29_1_98_159.pdf (23/07/06) 9. M Warner WP/2000, University of Cambridge, The Future Of China's Human Resource Management In Its Asia Pacific Context: A Critical Perspective, http://www.jbs.cam.ac.uk/research/working_papers/2000/wp0029.pdf (23/07/06) 10. World Business Council for Sustainable Development, a report, From Challenge to Opportunity: The role of business in tomorrow's society, http://www.wbcsd.org/DocRoot/C77uYrHIIJcti1FWAn1s/tomorrows-leaders.pdf (23/07/06) 11. Patrick McGovern, London and New York, HRM, Technical Workers And The Multinational Corporation, http://www.questia.com/PM.qsta=o&d=103002222 (24/07/06) 12. Bernard, C.I. (1962), Functions of Executives, Cambridge, Mass, Harvard University Press 13. Dr. Stephen Bach, HR and New Approaches to Public Sector Management: Improving HRM Capacity, http://www.who.int/hrh/en/Improving_hrm_capacity.pdf (24/07/06) 14. HRM Guide, Canadian Human Resources, http://www.hrmguide.net/canada/jobmarket/labour_shortage.htm (28/07/2006) Read More