Managing and Developing the Human Resources - Research Paper Example

Employee Development Introduction Effectively managing the Human Resources and developing this resource into a competitive advantage forms the core component of globalisation. Today we are in the midst of an intense competition in almost all fields of business and economy. Be it a telecom service provider, a retailer, a beverages company, an airliner, a bank or financial institution, everywhere the company is in the process of consolidating its hold on the maximum number of customers or consumers in order to ascertain good business prospects for themselves. Globalisation has also brought in wide range of variations in the profile of the workforce. The IT field in particular is witness to a workforce which comes from diverse national and cultural backgrounds. Therefore, in order to plan out effective development strategies for the workforce, such diversity is also required to be taken into account. Dickens (1994) contends that the business case for managing diversity offers a way to operate equal opportunities as a strategic issue, a core value linked to organisational competitiveness. In order to improve quality and remain competitive a number of organisations have started offering qualification levels required for better acceptability in the industry. For example, McDonald's has been given the authorisation to award their own qualifications equivalent to GCSEs, A levels and degrees, in subjects like fast-food restaurant management (BBC, 2008). Network Rail and Flybe are the other companies which have been granted such permission by Qualifications and Curriculum Authority (QCA), to confer degrees and diplomas for preparing the workforce for a competitive tomorrow (Woolcock and Elliott, 2008). These are some of the pointers towards the increasing realisation that acquiring and upgrading the skills is not only very important for competitive strength of the company, but it is equally crucial for the individual to remain relevant to the industry. This study is therefore an effort to analyse the HR scenario in general and how UK is preparing the human resources for a better and competitive tomorrow. HR-The Core Component Irrespective of the nature and specialisation of company, it can be said for sure that, 'people' form the core of its activities and therefore, the behaviour and character of these very 'people' will affect the overall character of the organisation. The performance level of this workforce depends upon the types of motivations provided by the organisation. It is therefore quite logical to say that Human Resource Management is a very crucial and an integral part of any organization. Today, in view of the competition, profit margins have become quite thin, which sometimes forces the management towards taking cost-cutting initiatives, that includes outsourcing, retrenchments, relocation of employees, pressure on employee benefits etc. The HR scene in UK too is affected by the phenomenon of outsourcing and availability of skilled workforce at cheaper rates from places like India, China, Philippines, Malaysia etc. This cheaper yet quality workforce has also resulted in widespread apprehensions amongst the UK workforce, because companies are now increasingly finding it more convenient to pass on the work to their offshore counterparts, with lesser costs of production of goods and services. There are some apprehensions on the desired results of outsourcing, but the trend has not seen a slowdown since the time it started off. Hindle (2005) cites a survey conducted by the Yankee group on 2004, which came out with a finding that 'only 48 percent of key decision makers agreed that HR outsourcing had delivered the promised return on investment they expected'. Notwithstanding such doubts about the success of outsourcing, there are reports suggesting that UK is bound to see radical changes on the IT horizon in particular. (Telegraph, 2006). Such studies point out that '40 percent of the UK IT services sector by revenue, and 60 percent by staff numbers' will be delivered offshore by 2020. The concept of 'knowledge driven economy' is the key driving factor behind such a scenario. The Silicon Valley experience in US could prove to be an indicator towards the emerging scenario in UK as well. This trend has also resulted in an aggressive stance on the part of outsourcing nations like India. In order to squeeze costs out of the supply chains many companies are resorting to outsourcing of a number of support functions, like information services, software development, process technologies, distribution etc. The Asia pacific region in general and the South Asian region in particular is being discussed and debated at almost all international forums for the huge size of their markets, IT sector competencies, quality manufacturing at cheaper labour costs, impressive GDP growth figures and of course the growing influence in international affairs. These are some of the factors attracting investors from all over the world. The huge pool of English language speaking people in India and the strength of its IT-ITES sector in particular, are the factors which have made India a much desired destinations for BPO and IT related services. India and China are the two countries taking lead in providing quality services for MNCs. Growing reliance on automated and computer systems is also a factor which results in giving out the job with better IT skills and automated systems in place. This trend is also visible in the rising employment in services sector while the job opportunities in manufacturing are shrinking. This trend is not new, because it started in early 1980s and continues unabated. As per the Labour Force Survey 63 per cent of people worked in the service sector in 1984 but by 1999 the share of services sector became 72 per cent (TUC, 2000). Outsourcing the services to different nations and organization appears comparatively smoother process. This outsourcing trend sharply bring into focus, the issue of managing diverse workforce, which makes the task of HR professional much more challenging. In fact Indian IT industry has come out with quite optimistic figures for its IT industry. In view of revalidation of the Indian Information Technology - Business Process Outsourcing (IT-BPO) growth story, driven by a maturing appreciation of India's role and growing importance in global services trade, the country aspires to attain an export target of USD 60 billion 2010 (NASSCOM, 2007). UK has a big role to play in this run-up, by way of providing business to Indian companies or by working with diverse workforce within the boundaries of the country. Gordon Brown too underlined1 the need for training and development of the workforce in UK for effectively tackling the 'threat' from India and China, during his pre-budget speech in 2006. The Telegraph (2006) also reported the statement of Lord Leitch, in which he emphasised that "We have to invest more in higher education. Without increased skills, we would condemn ourselves to a bleaker future for all." The Department for Education also lunched a 6bn ambitious program called 'Skills for Life scheme' in 2001, to be fully implemented by the year 2010. But while examining the progress of this programme, the Commons Public Accounts Committee came out with the conclusion that the first few years have not been able to produce the desired outcome (Smithers, 2006). While underlining the need for more allocation towards this programme the committee also highlights the lack of better quality provisions teachers for successful implementation of this program. UK has a very big diversity as far as composition of society is concerned, which requires to be factored while preparing effective strategies for HR management. Migrant workers form considerable percentage of this diversity. But industry experts have echoed their displeasure at UK not being able to take fullest advantage of the potential of these workers. A study commissioned by TUC has come down heavily on the wide gap between the potential of migrant workers and their actual contribution to UK economy. The report2 criticises UK industries and the flawed HR management for not being able to efficiently utilise the potential of highly skilled migrant workers. TUC General Secretary Brendan Barber also realises the importance of better skills managements and the constructive role unions can play in this when he said3, "For too long the skills and qualifications of migrant workers have been desperately undervalued." He further adds that, "Unions are working hard to develop learning and training strategies to persuade employers to recognise the qualifications of migrant workers, and employers need to wake up to the skills and potential these workers can offer". Though unions are finding it really hard to keep pace with the changes under the globalisation regime, while handling the pressures of lower memberships, government's pro-industry attitude etc. yet it is commendable that Unions have realised the importance of better skills and pursuing the cause of trained migrant workers coming to the UK for fulfilling the gaps in UK labour market. Such a role will go a long way in making unions more popular amongst the migrant workers as well, which has hitherto preferred to maintain a distance from unions in general. Unions have the potential to act as a catalyst in skills improvement, training and development of the existing workers as well, which has become a necessity in view of the fast changing technologies. The technological aspect seems to have taken centre stage in preparing the workforce for a better tomorrow. Acquiring enough skills to be competitive in performance and target delivery of the product forms one of the key strengths of the workforce to make their company competitive enough. But for UK, there are alarming signals, as far as enough employability criteria of the workforce is concerned. The British Chambers of Commerce (BCC) has also echoed such sentiments in a report titled 'UK Skills: Making the Grade'. This report4 based on a survey of over 300 employers has come out with the finding that 55% of the employers are finding it more difficult to recruit skilled workers now compared to five years ago. That perhaps explains the reason to go for outsourcing. Besides outsourcing, the increasing demand for migrant workers from developing countries like China, Philippines, India etc. for working in UK is also an indicator towards the challenge the HR scene might face in times to come. According to projections5, the UK population is expected from 59.6 million in 2003 to 65.7 million by 2031. Similar trends were projected in a report in 2001 which predicted a rise of 10% to 65 million in UK population over the next 25 years. What is perhaps a cause for alarm is the expected increase in migrant population. The report states that majority of the population rise will be in the form of migrant influx. The net number of immigrants coming into UK are projected to be 135,000 a year by 2025, with immigrants accounting for about two-thirds of the rise while natural increase accounts for the rest6. Major share of these migrants will of course be in the form of working professionals for different companies. The trend towards increasing number of part-time workers and decreasing number of full time workers is also a pointer toward the competitiveness of the job market in general and industry's growing reliance on more part-time workers. As per the Labour Force Survey put forward by TUC (2000), over a period of about fifteen years from 1984 to 1999, this share of part time workers has considerably increased in UK. Rise in Share of Part Time Work 1984-1999 Share of total employment in part time work 1984 1999 Share of men working part time 4% 9% Share of women working part time 44% 45% Share of all employees/self-employed 21% 25% In fact these figures are from a period when globalisation was still in nascent stage and Margret Thatcher too had not yet initiated her anti-trade union measures and unions were considerably stronger. But the later years proved more crucial for the numbers of permanent jobs. Though, the surveys and estimates point out towards a thaw in further increases on the trend towards part-timers and self-employment, while predicting stability in permanent jobs, but at the same time, these estimates point towards the increased emphasis on qualifications and skills becoming key factors for securing a permanent job (TUC, 2000). This perhaps is a pointer towards the need for preparing the indigenous workforce with better training and development. Lowering the production costs is indeed one of the tried and tested formula for achieving break even and promising profitability for any organisation. But under the globalization regime costs is not the prime factor for the long term survival of the business prospects. Small (1998) contends that, "Over the past two decades there has been a shift in the basis of competition in manufactured product markets. Firms that previously focused almost exclusively on lower costs have adjusted to a focus that places just as high and often higher premiums on quality and flexibility." Therefore managing the operations of an organisation requires it to adjust to these changes. Advanced Manufacturing Technologies (AMT) is the name given by industry experts to the technological advancements being implanted in the production sector. These technologies are meant to come out with the best possible quality at affordable prices. Quality is not easy to define because it means different things to different people under different sets of circumstances. It is the customer receiving the goods or services who decides whether or not the promised quality of goods or services are being provided by the organization, regardless of what the organization thinks of itself. Therefore, to offer quality to the customer, the organisation is required to train and develop its human resource in such a manner that at every step the workforce is able to show the sincerity. Quite often the training and development in diverse work culture also acquires unique and challenging dimensions, because it requires moulding the training course, the content, the language in such a manner that it uniformly appeals to all the segments in the organisation. Considering these factors, the underlying philosophy of managing diversity tends to imply that an organisation can gain massive competitive advantage, resulting in enhanced performance with the help of a satisfied human capital. It rests on the premise that the organisation will be able to serve increasingly diverse customers, meet increasingly complex business and management problems by actively seeking and managing a diverse workforce (Stephenson and Lewis, 1996). In general 'quality consciousness' requires to take care of dimensions like performance, features, reliability, conformance, durability, serviceability and aesthetics. Therefore in order to come out with a quality product or service, all these aspects and people around them have to be trained in quality adaptation. HRM 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. It is no more a mere "staff" function in the organizations. Participation of employees in the management is one such aspect of HRM, which believes in making use of the brainstorming sessions amongst the employees to encourage them for coming out with ideas and suggestions in resolving issues and problems in the company. Now a days, Multi-National Companies, many of them from western origin, have adopted measures towards taking good care of their employees or, that is the kind of impression they wish to circulate around. Part of the reason for this increased emphasis in HR issues is an attempt to avoid bad publicity in local media, which could show them as non-caring and irresponsible company. But successive researchers have indeed pointed out the need to align the targets. Buyens and De Vos (2001), for example contend that, "strategic HRM is the linking of the HR function with strategic goals and objectives of the organisation in order to improve business performance and develop organisational cultures that foster innovation and flexibility". Formalising strategic partnership with unions and adhering to collective bargaining agreements are some of the steps which help in creating a better working environment, as the workforce feels being valued by the management. UK has seen several amendments to the employment related acts during the last couple of decades, which has resulted in the weakening of the strengths of the Unions in general. Machin (2000) pointed out that as against 53% membership strength in 1979 only about 28% remained in union fold by 1999. This in turn resulted in a decrease in the applicability of collective barraging agreements. From 70% in 1980 to around 45% employees in mid-1990s remained in the fold of collective bargaining agreements. This effectively meant that companies could recruit the workforce on their own way, get the work done from anywhere or outsource it to some other nation. These developments points towards the need for having well qualified and trained workforce in UK itself, which can deliver the goods within competitive costs, so that the companies do not have to look towards the migrant population or outsourcing destinations. Though UK had suffered in the past on account of frequent industrial actions on the part of the unionised workers, which resulted in successive governments bringing in legislations to contain unionism. This resulted in some positive indicators as well in the beginning, but from the perspective of developing a pool of human resources, such legislative measures seem to have backfired. A new realisation in the form of participative form of management is giving new hope to the HR professionals now a days. Successive studies have pointed out that employee participation has indeed proven its power towards promoting continuous improvement (Hickey and Casner-Lotto, 1998). As a result more and more companies are jumping towards this experiment. This participative form of management too varies depending upon the legislations in different countries. Germany for example has been promoting workers participation in the form of works councils. Such councils though restrict the authority of management, yet the co-operations between managers and work councillors help in making a smooth sailing for matters concerning workers interests (Rohlfer, 2004). This definitely augurs well for the local populace, as the worker community get to lap up the employment which might otherwise have gone to outsiders. The percentage of migrant workers though is on an increase in the entire European Union, but the extent of unemployment is the major cause of worry for most of the nations in the region. During the Lisbon summit in March 2000, leaders of EU agreed to a programme of economic and social reforms, in which maximum priority was given to raise the employment rate. This was to be achieved with the help of a combination of measures like reform of tax and benefits to reduce financial disincentives to work; schemes to help the unemployed back into a job; and better training and education (Hain, 2003). Heyes (2007) also contends that, 'training is commonly regarded as essential to the competitiveness of national economies and individual enterprises'. This affects the employment security potential of workers, which in turn results in motivating the workforce to work with their fullest potential and hence better worker management relations. Heyes (2007) also points out that continuing training may provide fertile ground for the development of social dialogue and joint initiatives by employers and trade unions. Good worker management relations result in training of workers as an integral component of collective bargaining agreements. How the CBAs are implemented is equally important for effective functioning of the relationship. Heidemann et al., (1994) cite some studies suggesting the instances when trade unions managed to negotiate training agreements but they could not successfully get it implemented. It has been pointed out that the EU policy pronouncements concerning continuing training have been mainly responsible for such non-enforcements. The phenomenon of globalisation and opening up economies the world over has indeed given a big boost to the trend of outsourcing. Initially, the works were being given to companies outside UK and EU nations, but now a new trend has started in which the trained manpower from UK and EU nations is opting to work abroad. US is indeed a favourite destination for such workers, but developing nations like China and India are also coming up as hot destinations for the skilled manpower from these nations. This has the imprints of the growth potential of developing nations. Many companies are becoming wealthier in developing nations and the urge of Britons is also on the rise to secure a job which provides them a sense of safety and security as well (CIPD, 2008). Hoguet, (2004) figures out that Chinese economy has shown a growth rate of 9.3% per annum, with a per capita income that is growing at about 10% per annum. Therefore, with cheaper labour costs, access to a vast market of South Asian region many of the production works and service related companies are moving their base towards China. This phenomenon doesn't appear to be reversible with the indications available at the moment, but it can surely be contained to some extent if the affected nations take up the cause with a sense of urgency and with people's welfare in mind. Hain (2003) comments that, to seek full employment, fairness at work, social justice and competitive strength Europe will have accord due priority to the cause. With jobs fleeing to the Far East and dismal rates of growth, the nations' progress and the employment scenario is bound to get adversely affected. To increase the employment rate Hain (2003) suggests that the answer lies in raising the employment rate, which can bring about improved growth and prosperity. CIPD (2008) also points out towards a peculiar phenomenon when the job of HR professionals is being done by non-HR employees and managers with the help of a comprehensive HR information system, that too without a need for any external interventions. For example, the ESS system allows individuals to update their own personal details while the MSS system allows managers to review the records of their staff online. This is a pointer towards the things lined up to come in the not so distant future. What it requires is training of the manpower and developing them into multitasking entities. UK citizens will be able to relish the benefits when they are able to secure their job opportunities, make appropriate legal frameworks, and measure up to the expectations of their companies as well as the governments. Conclusion Information Technology is indeed coming as a big opportunity as well as a challenge, depending upon in what manner the technology is accepted and implanted by the organisations. While IT becomes an asset in handling a large database with almost hundred percent accuracy, the manufacturing capacity become more advanced, the planning & designing become more contemporary provided technology is implemented with the requisite training for the workforce, upgrade of the set-up etc. But on the other hand if the company starts believing in readymade solutions and instead of training and developing its own workforce, solely depends on the outside world for carrying out the technology implementation then it might result in some mismatch related to human resource issues. UK has been a leading nation in carrying out the industrialisation process with some sort of consensual approach by entering into talks with employees unions. These unions used to have a strong presence in UK at some point of time but the process of reforms started in early 1980s dealt a body blow to their relevance and acceptance in the organisation. Initially this appeared to having a positive impact in carrying out the radical changed proposed by Prime Minister Thatcher, and organisations started having better control in running the company and managing the workforce. Subsequently the labour government too did not bring about drastic changes into those policies and it continued to the extent that employees from UK started to be replaced by better trained workers from other nations particularly some developing nations. In many cases the companies started outsourcing many services tasks to overseas locations to save on the costs, thus rendering the related workforce jobless in their country. Employees unions from many developed nations have started taking a stringent view of such developments and they have started demanding that first priority be given to the training and development of inner strength. The last word is yet to be said on the HR issue, and we might be witness to many more related developments in near future. References: 1. BBC (2208). Q&A: What are McDiplomas Available online at http://news.bbc.co.uk/2/hi/uk_news/education/7213781.stm (March 23, 2008) 2. Buyens, D. and De Vos, A. (2001), 'Perceptions of the value of the HR function', Human Resource Management Journal, Vol. 11 No. 3 3. CIPD (2008). HR outsourcing. Available online at http://www.cipd.co.uk/subjects/corpstrtgy/general/hroutsourcng.htm (March 22, 2008) 4. Dickens, L. (1994). 'The business case for women's equality: is the carrot better than the stick Employee Relations 16 (8). 5. Guardian (2001). Immigrants to boost UK population rise. 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