The Human Resources Function in an Organization - Research Paper Example

Labor Force Shortages in different labor markets have become apparent globally. Conventionally the role of the human resources department in an organization consisted of recruiting labor, which would add value to the organization. They had the luxury to choose from a large pool of talents but today the scenario differs. The labor market has undergone drastic change over the years. Diversity and skill deficiencies in the labor force have greatly affected the labor trends. A wide variety of demographic factors affects the labor force. Diversity in labor arises due to age, gender, and immigration population. Labor force globally is aging. In Canada, the average age of labor force was 32 in 1972, which has arisen to 39 in 2000 (Career Sense). The age pattern of the population affects the education level, which in return directly affects the labor market. With baby-boomers due to retire soon, there will be a dramatic shift in the work force. Richard Freeman of the National Bureau of Economic Research, Washington states that changes in the global job market for science and engineering workers will diminish the comparative advantage of the United States in high-tech production (AllBusiness, 2005). Gender too plays a contributory role. About two-thirds of the total labour force growth resulted from increased participation from women. Women prefer part-time jobs and they contribute to increase in absenteeism depending on individual family culture. Immigration is another critical area due to which the culture and education level of the labor makes the role of human resource management challenging. IBM’s diversity strategy includes creating a work/life balance, advancement of women and integration of people with disability (Nicolson, 2006). Organizations today recognize the need to attract the right brains to thrive in the competitive market and retain the employees as work force is ageing and skilled force is in short supply. Changing composition in the global work force brings a shift in the human resource management. Canada used to have highly skilled migrants mainly from European countries but now has to rely heavily on those who do not possess language proficiency or the technical skills. Science and American graduates in America is gradually dropping, which signals a warning to the sourcing of work force. Compensation One of the key roles of the human resource management is to find new ways to motivate and reward the employees. Employee productivity and organization performance is directly linked with the compensation schemes that an organization follows. Compensation decisions can be micro (individual) or macro (organization) focused (ERI, 2006). Compensation level decisions cannot be separated from job-mix, hiring standards, personal decisions, and internal labor markets/relationships. Traditionally compensation would include salary, annual bonus, long-term incentives, pension and other benefits, and perquisites. Toady compensation can include payment by results, piecework and bonuses, work measurement (including measured day work) and appraisal and performance related pay. Periodic pay rises are linked to performance review but such methods of compensation can actually reduce employee performance and lower morale, believes Alfie Kohn (cited by Jeffords). Today labor force would prefer lower salary against job security (Patrice, 2005). Duke Energy provided annual cash incentives to their executives (DukeEnergy, 2006). Many companies offer long-term incentive schemes with a view to increase stock ownership. Duke Energy awarded these in the form of performance shares. Reward may also be an additional sum of money paid in the form of bonus. Compensation schemes help to improve business performance, focus employees’ efforts on key objectives, increase employee motivation. Additionally it allows employees to share in the success of the firm, and creates workplace by culture of recognizing and rewarding performance. This has proved to very successful in most organizations. Many companies like Marks & Spencer insist on 96% attendance irrespective of sales targets in order to receive bonus schemes (Ashworth, 2005). Most companies link compensation to minimum targets. To provide motivation and incentive to all, companies should set realistic targets. Very high targets may de-motivate employees and ultimately lead to high rate of attrition. Skilled labor force is difficult and hence various schemes for effective retention should be introduced. Incentives and compensation are also given in the form of family holidays. Travel incentives are increasingly becoming popular. A dollar spent on travel incentive generates more return than a dollar spent on cash incentive, according to Chris Gaia, Vice-President of Maritz Inc. (Anderson, 2006). This way they motivate not just the smartest and the brightest but can bring in more employees to benefit from such strategies. Role of HR consultants In a rapidly changing business scenario, the HR department converts strategies for recruitment, retention, and development of workforce into action. They react to the needs and pressure both internal and external to the organization. Outsourcing in HR is also gaining popularity and various reasons are cited for this. Appointing consultants to handle all issues related to the HR allows the firm to concentrate on core competencies. HR consultants use their expertise and skills to advise and recommend solutions to an organization. Besides, the firm may lack the necessary expertise; it also improves accuracy in handling issues while keeping costs low. In fact, cost efficiency has been the main concern over outsourcing HR functions. By contracting HR functions, the HR team can connect between recruitment sources and the performance of the recently hired employees. Employee exit data can be compiled and evaluated (Management-Hub). While outsourcing the expectations should be realistic, otherwise the results will be disappointing. The contract must be structured to match the company’s expectations. In 2005, many organizations contracted their human resources operations to a third party. PepsiCo and Duke Energy have both outsourced their human resources operations to Hewitt on long-term contracts. In 2002, a leading telecom and ISP in the United States contracted out their human resource operations. A review couple of years later revealed they were satisfied with the qualitative and quantitative service, which resulted in double digit savings for the firm. This was a realistic expectation but care should be taken so that outsourcing does not have a negative impact on employee satisfaction and overall organization performance Before outsourcing the firm must assess its current service levels and the costs it incurs with its in-house HR department. At times, the organizations may have modest budget, hence outsourcing may not fetch them the desired results. Some only concentrate on direct administrative expenses while others are concerned with gaining strategic and sustainable competitive advantage. The HR department should transform from a cost center to a strategic resource. US expects the human resources functions contracting to reach $42 billion by 2008 which demonstrates the positive results that contracting such services is fetching. Consultants even facilitate identifying changes within an organization to enhance productivity, efficiency, communication, and employee morale. Layoffs Down sizing, re-organization and shifts in strategy are resulting in layoffs and consequently unemployment in the highly competitive labor market today. An organization may want to reduce the total workforce but there are strategies to avoid layoffs or terminate employment. These strategies have to be planned and hence in case of urgency or a fast decision, these may not be feasible (Phillips, 2006). If the right incentives were offered, many would be willing to take premature retirement. Such options provide added benefits, which facilitate reduction in workforce levels. The disadvantage is that these offers attract the best workers as they have second career options. The second option is to introduce part-time work schedules. Many are interested in reduced working hours due to family lifestyle. This saves the company compensation costs. Offering leaves of absence helps in avoiding the need to involuntarily lay off employees. Curb should be made on hiring fresh recruits. Many employees opt for voluntary retirement and a small bonus is sufficient to motivate them. Two strategies can minimize the impact that layoffs can have. Many organizations offer severance pay so that former employees have continued income in case of involuntary termination. It may be in the form of one-time lump sum payment or a temporary continuation of salary. This strategy serves as humanitarian and public relations purpose. Outplacement services help the terminated employees to find new placement. This service includes employment counseling, assistance with resume preparation, training in job search skills, training to improve interviewing skills, and job referral assistance. McDonald attempted the ‘slash and burn’ strategy for fast, short-term results. This forces a change quickly but it is superficial. It is based on the use of economic incentives, drastic layoffs, downsizing and restructuring (Carlopio, 2004). This strategy leaves a company weak in talent, resources, and direction. They may even have to re-employ people whom they had downsized six months ago. Successful quick change is result driven. McDonald has opted for this but it managed to regroup and regain its health. It managed to grow to its full potential. When TechRepublic laid off members, they paid a severance package, offered job services and additional compensation. Apart from other placement services, one unemployed project manager was also given the use of an executive suite with access to a fax machine, phones, and e-mail. References: AllBusinss (2005), Global work force signals change, 07 June 2006 Anderson T (2006), How Travel Incentives Fill Other Benefit Gaps , Career Journal, 07 June 2006 Ashworth (2005), Employee Bonus Schemes, 07 June 2006 Carlopio J R (2004), Making Organisational Change Quickly, 07 June 2006 Career Sense (N.d.), Shaping Labour Market Trends, 07 June 2006 Duke Energy (2006), Components of Compensation, 07 June 2006 ERI (2006), Compensation and Benefit Level Strategies, 07 June 2006 Jeffords R (1999), Getting the Best From Staff, 07 June 2006 Management-Hub.com (n.d.), Measuring the True Benefit of Human Resources Outsourcing, 07 June 2006 Nicolson K (2006), Cultural diversity, IBM style, 07 June 2006 Phillips L (2006), Senior Professional in Human Resources, 07 June 2006 Read More