The Importance of Human Resource Management Department in Business Organizations - Assignment Example

Proposal to the CEO The effectiveness of Human Resource Management (HRM) is the key to success of any organization. The role of HR has evolved from functions like recruitment and selection, training and development, employee benefits and compensation, performance appraisal and motivation techniques. Most organizations today have a specialist division in charge of formulating and implementing these policies and procedures. Today human resource is considered not merely as another resource but human capital, which has to be valued and nurtured. The present competitive environment requires new compensation strategies employee compensation. Compensation today has renewed importance. In order to attract the right talent, motivate, and retain the staff, compensation benefits have to be attractive. This proposal to the CEO would suggest how to create compensation benefits with a view to maximizing strategic impact on the organization. Internal and external factors influence the HR function. The internal factors range from the organizational culture, which consists of the core values, beliefs, and assumptions shared by the members, the climate, which implies the atmosphere. External factors include economic factors like labor market conditions, demographic trends, work-force diversity, technology, globalization and the changing trends in work. The HR function must be able to develop strategic insights. It should assist the organization to more effectively source, evaluate, and motivate employees in the turbulent work environment. To recruit, motivate and retain employees, at each stage we should consider compensation benefits. The total compensation benefits would include all forms of cash compensations, shift differentials, overtime, bonuses, commission, health benefits, paid leave, retirement, and life insurance. As far as the salary is concerned, we must follow the system of Internal Salary Allignment, which is fairness criterion and takes into account the proximity of one employee’s salary to the salary of others with comparable training, education, experience, knowledge, performance, skills and abilities. The knowledge, skills, abilities, and competencies also help to evaluate for compensation. Performance includes previous or current work accomplishments and outcomes. At the time of promotion, we must ensure that when the employee is promoted in a higher pay band, we may consider upto 15% increase from the current salary. At the same time, care should be taken so that the new salary does not exceed the maximum of the new assigned salary range. Recruitment and training To integrate recruitment with training-and-development plans, internal forecasts, and external trend analyses are essential to reduce the time needed to staff our organization. Internet is changing the way employers and job-seekers think today. Internet has become the most effective way to broadly disseminate information about the availability of jobs and people (Knowledge@Wharton, 2001). Through new technology, search can be narrowed down to specific skills. It is an extremely valuable source to find the right talent for the right job. Therefore, we could attempt to hunt for and attract the talent, as we need from such sources, which would save us time and cost. Compensation even at recruitment stage is becoming a regular practice in the market. We could adopt it at the early stage to attract the best talent in the industry. We can offer exceptional recruitment and retention incentive options like sign-on bonus and retention bonus (DHRM, 2005). If people agree to accept specific critical positions, or functions, we should offer them a sign-on bonus of upto $5000 to such employees. To encourage them to remain these crucial roles, we should offer an additional retention incentive up to $5000 per year. We can also aim at including Project-based incentives and in this case may go upto $10000 per year. Employee motivation like performance appraisal system must be closely linked to compensation so that it can be associated with firm’s performance (Luthans & Sommer, 2005). Evidence suggests that focus on enhancing human capital increases the productivity in manufacturing plants. Studies have also revealed that organizations with the best human capital management deliver more shareholder value than organizations whose practices are lacking (Fottler et al., 2006). This implies that human resource managers should not merely play an ancillary role but be made a part of the leadership team to have an impact on the organization. We must offer a cash compensation structure that will recognize specific skills and business expertise. We must remember that it is our human capital that allows us to deliver the best of services to our clients. Rewarding good workers is the best way to increase productivity. It has also been observed that when the going is tough, rewards fulfill a promise to the workforce better employee performance results in better compensation (Bates, 2003). Rewarding top performers more than the rest also helps to send signal to those who perform poorly. The compensation structure should reflect individual performance levels. This includes Base Pay, Fixed Bonuses, Allowances, or Other Payments relevant to the local market in whichever country we operate. Performance bonus is a strategic move followed by most companies and we should include that in our plans as well. We should link annual compensation to business results. This would ensure appropriate rewards and recognition to our employees. To make the employees feel a part of the organization, and which would bring out the best in them, we can offer stock purchase plans. This would help us all to grow together. We are already offering health benefits to the staff. To ensure greater peace of mind, we should include the spouse, children, and dependents under the compensation scheme. The workplace culture and environment should be such that the people feel a balance in work-life or in professional and personal priorities. To achieve, this we can consider staggered working hours, so that people have flexibility to meet personal needs and emergencies. We should also provide for retirement benefits depending upon the years worked and the earnings. We can follow an equity based compensation program where the main equity instrument is the performance shares. We can also offer stock option to a selected few and the restricted shares can be used for those who accept specific critical positions or functions (Nokia, 2006). The performance share plan can be linked to an average annual sales growth of minimum 5% and upto a maximum of 20%. If the company performance exceeds the maximum criteria, the performance shares will not increase. Assigning responsibilities According to Mintzberg (1979), every organized human activity gives rise to these two fundamental and opposing requirements: the division of labour into the various tasks to be performed and the co-ordination of these tasks to accomplish the activity (cited by Cordeiro & Filipe). Work can thus be coordinated through mutual adjustment, standardization or direct supervision. Most companies do not make rational choices but merely guess how best to assign employees to jobs (Richards et al., 2003). Today people come with diverse skills but they are treated as undifferentiated resource. If our organization were to do that, we would lose the opportunity to make substantial gains in productivity, profitability, and personnel development. We need to anticipate the workforce requirements and provide tailored training. We must adopt a systematic and continuous approach to fit the right person to the right job at the right time. Real-time deployment tools can help us adjust staffing according to the changing customer demands. Succession-planning tools and workforce management software can help us organize the workforce. HR has to continue to provide administrative services in a cost-effective and reliable manner. In today’s environment, HR has to perform all functions equally efficiently. Our organization must learn from the insights shared by more than 25 senior executives in March 2006 (Lesser, 2006). Changing business conditions, demographics, and globalization necessitate managing the dynamics of talent and resource management. We need to move away from the traditional role of answering questions and resolving disputes. The organizational structure needs to be changed. We need to overcome the traditional bureaucratic structure and pyramid hierarchy. Flatter structures are the norm today with which we can have fewer managers. Close supervision being difficult, workers will be empowered to take independent decisions (Dessler). We must ensure that we spend less time managing routine transactions and interactions. Merely formulating policies and procedures are not enough. We must ensure that they are easily understood and applicable. Regular improvements may be considered as the situation changes. HR function should contribute to the work climate, performance, and overall effectiveness of the organization and these criteria should be used for evaluation (Becker et al., 2001 cited by Luthans & Sommer). We may also consider outsourcing functions like payroll and benefits administration, recruiting, compensation administration and HR data management. Many MNCs have already outsourced these functions, which enables them to use their resources for strategic functions. We also need to consider if we can enhance our capabilities by bringing in skilled talent in the HR department. We could consider people from outside the company or attract people from within to shift to HR. We may even educate our existing HR professionals so that they are better equipped to bring about an impact on the organization. We need to adopt a more strategic perspective on our services and capabilities. So far, HR professionals are barred from holding a seat at the strategic table. Management guru Tom Peters says, "HR people are a classic example of staffers who are looked upon with suspicion ... as the ultimate paper-pushing, form-demanding, just say no bureaucrats." This befits the description as it stands today but this perception has to change even though it may be difficult to do so (Fottler et al.,). To sum it, we should view employees as an investment. The function of HR has evolved to a great extent today but compensation packages is the core strategic role. We can thus see that compensation at every stage is essential for the overall benefit of the organization. Right from salary, to promotion, recruitment, retention, performance linked compensation, motivation, compensation can help improve overall performance of the our company. We can work at the same level as other departments and contribute equally towards the improvement of the organization. We need to recognize the scope and potential of granting adequate compensation. It is highly recommended to consider these changes. With these changes, we can definitely create a Human Resource Function Aimed at Maximizing Strategic Impact on the Organization. References: Bates S (2003), Pay for Performance, 29 July 2003 Cordeiro J AM & Filipe J (n.d.), Application of the Theory of Organized Activity to the Coordination of Social Information Systems, 14 July 2006 DHRM (2005), Policies and Procedures Manual, Compensation, Plicy no. 3.05, rev date 04/25/05 Dessler G (n.d.), Human Resources Management in Perspective, Part 1, Chapter 1 Fottler M D., Erickson E, & Rivers P A, (2006), "Bringing human resources to the table: utilization of an HR balanced scorecard at Mayo Clinic.(human resources)." Health Care Management Review 31.1 (Jan-March 2006): 64(9). British Council Journals Database. 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