Human Resource Management in Business - Case Study Example

 Introduction A number of companies have started to outsource different tasks of the human resource department. According to survey conducted by Buck Consultants in 2000, since 1996, the percentage of businesses that are outsourcing their human resource functions has increased by 23 percent. These tasks include recruitment, selection and training etc. However, some argue that this approach hinders strategic human resource management. This paper will investigate into this issue. It will start off by explaining the concept of strategic human resource. Next, it will move on and describe the key functions of the human resource department of a selected organization. These tasks will then be separately analyzed and towards the end and argument will be presented whether or not these tasks can be outsourced or not. In conclusion, the relationship between strategic human resource management and outsourcing human resource tasks will be studied. Strategic Human Resource Management Strategic human resource management is a very complicated process which has not yet fully been developed. It is still being studied and we witness continuous improvements in it at all times. This is the reason why there is no one definition or explanation for what it is. However, in order to understand what strategic human resource planning is, we need to first understand the term strategic planning. Strategic planning is when an organization links all its planned decisions with the intended objective of the organization. This helps it improve its overall performance. An individual or organization sets their broad goals, describes a strategy or strategies to achieve them and identifies how it can improve from previous experiences. A strategy is developed while planning which deeply studies and analyses how this particular strategy that is devised will affect the future of the organization and attainment of organizational goals. Every detail of the strategy is given a lot of concentration and this is done by using techniques like resource allocation, cost-benefit analysis, SWOT analysis etc. It helps an organization decide how it is going to function in the future. Therefore, Strategic Human Resource Planning is linking the human resource function with the strategic objectives of the organization in order to improve performance (Bratton, J). Schular in 1992 describes strategic human resource management as ‘all those behaviors of individuals in their efforts to formulate and implement strategic needs of a business’. Another definition will help understand the term even better; this definition was given by Wright and Mcmahan in 1992. According to this, strategic human resource management is ‘the pattern of planned human resource deployments and activities intended to enable the firm to achieve its goals. (Armstrong, M). It involves handling an organization’s human resource with a strategy which allows an organization to enjoy higher overall efficiency, effectiveness and good decision-making. It is an approach used by organization to strategically manage their human resource while keeping in mind how the organization will be acting in future and to what extent it will achieve its goals. It basically concentrates on how a particular decision taken regarding the human resource planning will affect the future of the organization (CIPD). As the name suggests, strategic human resource management concentrates on the relationship and connection between human resource management and strategic management of a particular organization. It is focuses on maintaining the overall direction of an organization through its human resource. The question remains why human resource? The answer to this is simple. Human resource is one of the most important parts of an organization and this is the reason a strategy is needed to manage this vital part in order to achieve organizational goals. Strategic human resource management is concerned with managing the human capital of an organization and also its effectiveness (Armstrong, M). There are many strategies that are used by firms in order to manage their human resource in a way which will help the organization, at large, in achieving its goals. These strategies have to be planned out while keeping in mind what the management of a business wants from it. They need to keep in mind the organizational goals because then only they can develop a way of achieving those goals. For example, if the organization’s productivity is very low, they can use their human resource capital to increase it. However they would need a strategy in order to do this. A possible strategy could be investigating and finding out what motivates their employees. Then using these findings and motivating their employees. This motivation will increase their efficient which in turn will increase the company’s productivity. This is only a very simple example of what strategic human resource management is. In reality and practice, strategic human resource management is a very complex process. A lot of effort and time has to be put into this in order to implement the strategy successfully. Key functions of HR Department of a Chosen Organization The organization that I will be using as my case study is Smithsonian Astrophysical Observatory. Smithsonian Astrophysical Observatory is a research institute of the Smithsonian Institute (Smithsonian Astrophysical Observatory). The human resource department of Smithsonian Astrophysical Observatory plays a very important role of managing one of the most important assets of the organization, its human resource. The functions that are carried out by the human resource department of my chosen organization are not very different from the regular key functions of any other organization. These functions can be divided into eight broad categories namely planning, selection and recruitment, performance appraisal, training and development, maintaining an effective workforce, relocation, supporting and assisting employees, policy development and interpretation, and redundancies and layoffs. We will start of by discussing planning. Planning The first function of the human resource department of Smithsonian Astrophysical Observatory is human resource planning (Smithsonian Astrophysical Observatory). The human resource department has to constantly plan regarding all the issues that would possibly affect the human resource of their organization These issues range from the employee turn over rate to how new technology will affect their workforce (Daft, R.L). This function also includes going over all the human resource details and deciding on the number and types of vacancies available to them. Once this is done, the human resource must document certain characteristics about the job and the person required for the job. These documents are called job description and job specification. Job description outlines the job details, responsibilities etc related to the job. The job specification on the other hand will outline the experience, qualification, and other things that the organization wants out of the employee they will hire. If there is a vacancy, the organization will have to go through recruitment process. This step will also outline the entire procedure that the human resource department will follow in order to recruit and fill the vacancy. Selection and Recruitment The next function of the human resource department of Smithsonian Astrophysical Observatory is implementing the planned procedure that was finalized in the previous function. This function is called selecting and recruiting and effective and efficient workforce. Recruiting is defined as ‘the characteristics of applicants to whom selection procedures are ultimately applied’ (Boudreau, J.W. & S.L Rynes). This step is very important and the organization must ensure that it carries this out with utmost care. This function is important because without this function, the organization will be deprived of its most important asset, its efficient workforce. Under this function, there are many smaller functions which must be carried out in order to get the end result of an efficient workforce. The human resource department will first search within their organization and will make use of them. This is practice is done by many firms especially when a high level position is vacant (Dumaine, B). However, if no match is available internally, they will have to recruit people from out of the organization. In this case, the next task after planning will be advertising for a vacancy of the job in the appropriate medium of communication. Next, the application forms of all the candidates that will apply for the job as a response to the advertisement will have to be evaluated. The number of candidates will then have to be short listed if too many people hired. This step is necessary in order to control the costs of the recruitment process otherwise the proceeding steps of interviews etc will become very costly. All the candidates that will be rejected and accepted in this process will have to be informed and interviews dates will have to be set. The short listed candidates will be called for an interview. After the interview is properly assessed, the decision of hiring will have to be made. The human resource department will select the candidate who is most promising and suitable for the vacant job. He will be informed and the candidates who have not been selected will also have to be informed (Smithsonian Astrophysical Observatory). Performance Appraisal This function of appraising the performance of the employees in the organization is an all year round function. The human resource department must monitor its employees, old and new. The workforce will be monitored by supervisors while they are working. Their working style, motivational level, results, productivity etc will be observed and measured. Once this is done, each worker is evaluated and the human resource department decides whether or not the employees are working up to the mark. After this, the evaluations will be shared with the employees and feedback will be given to them. This involves telling the employees what areas they need to work in and suggestions how they can improve their work. If an employee is carrying out his tasks as he is supposed to or if he is doing extraordinarily well, he must be given a reward. This reward can be in the shape of a promotion, bonus, job enrichment, delegating more responsibilities etc. On the other hand, if the human resource department feels that there is a need to train and develop a worker, he will be provided with that. Training and Development Another function of the human resource department of Smithsonian Astrophysical Observatory is developing the workforce so that it becomes effective and efficient. This is often planned and is done in order to help employees learn behaviors that are related to their jobs (Keys, B & Joseph Wolfe). This function is very important as it makes sure that the workforce gives its all to the organization. It will increase the productivity, efficient and effectiveness of the organization. The human resource department plans and implements training and development program for employees who need it. It is the responsibility of the human resource department of Smithsonian Astrophysical Observatory to guide the employees of the organization. The worker will either be given on the job training by a senior employee or off the job training program in which a professional teaches the employee after working hours how to carry out a particular task. The human resource department will have to decide which type of training will be most suitable. Maintaining an Effective Workforce The third function of the human resource department of is maintaining an effective workforce (Fisher, C.D). This involves making sure that the employee’s needs are fulfilled in every way possible. Under this function, the human resource department has to ensure that workforce is satisfied in every way possible by compensating them for their work and motivating them for additional effectiveness. Compensation refers to monetary or non monetary rewards that are promised to be given to the employees in exchange of their service (Henderson, R.I.). The salaries and wages will have to be determined. The human resource department keeps a record of the wages and salary that it has to pay its employees. Since in our organization, only time rate is used, the organization has to keep a check of the attendance of the workforce. It will not have to keep a check on the number of pieces produced by the employees because of the nature of business. Besides the regular wages and salaries, it also has to decide when it is time to use various motivational strategies as it will have to ensure that their employees are satisfied with their jobs. The first step is finding out what motivates their employees. After this, they will be rewarded with monetary or non monetary rewards accordingly. Non monetary rewards include free health care, education for children, job enrichment, appreciation etc. Under this function, the human resource department will also have to ensure that all types of health and safety laws are being followed (Smithsonian Astrophysical Observatory). Relocation Relocation is also a function of the human resource department of Smithsonian Astrophysical Observatory. (Smithsonian Astrophysical Observatory) This involves relocating an employee from one geographical region to another or from one office to another. This could be done for many reasons. An employee could be relocated to another region or place because probably the quality or nature of service that he has to offer is needed in that region or in order to overcome skills shortages (CIPD). Supporting and Assisting Employees This function of Smithsonian Astrophysical Observatory’s human resource department is giving support to the employees. This is very important because the human resource department is the link between the organization and the workforce. It must encourage the workforce to bring their problems at work, queries, etc to the human resource department. Once the workforce starts to bring its issues to the human resource department, it has to ensure that these issues are resolved with minimum damage. In short, this function involves acting like a counselor to the organization’s workforce and consulting them with their issues and problems (Smithsonian Astrophysical Observatory). Policy Development and Interpretation This is also the function of the human resource department of Smithsonian Astrophysical Observatory. If there is any policy that is implemented by the higher level of management of the organization that will influence the employees, it is the responsibility of the human resources department to interpret and develop this to the employees and when appropriate, implementing it. For example, if technology is introduced, this new policy will affect the employees therefore, it is the responsibility to develop, interpret and implement the new technology related policy (Smithsonian Astrophysical Observatory). Redundancies and Terminations Making unwanted employees redundant is the last function of the human resource department. No matter how much the company wants or tries, there comes a time when it loses its employees (Daft, R.L). There could be many reasons that could result in the organization losing them. They could either be made redundant of fired. This is done for a variety of reasons as well. First of all, if the organization is downsizing, it will have to let go a number of its employees because they are no longer needed. Or if a new technology is introduced which has reduced the need for labor, the workforce will have to be made redundant. Besides this, an employee would have to be fired if there is a breach of a contract. This function involves keeping a check of which employees are no longer needed and follow an ethical process of making them redundant and arranging some other kind of job if possible. Also, if it is observed in performance appraisal that an employee is not up to the mark and his work his not improving. It is then the function of the human resource department to fire him and carry out the whole recruitment process to hire another employee to fill this place. Outsourcing Outsourcing is a method used by companies in which an external party is hired to carry out tasks for them. Any organization may benefit a lot by outsourcing. Firstly, outsourcing will allow the company to concentrate on other tasks which are more necessary for the business. The external company to whom the task is outsourced specializes in that task therefore it would carry it out better. Secondly, outsourcing will allow businesses to enjoy economies of scale. This means that their average cost will decrease as the production level increases. Outsourcing offers these services at lower costs because of specialization. Lastly, outsourcing will also allow these companies to be more efficient in response to changes in demand. These companies would be more elastic in terms of meeting fluctuations in demand (Irani, B). According to a survey carried out by the Outsourcing Institute, companies outsource for a variety of financial and non financial reasons. The top 10 reasons ranged from reengineering benefits to freeing up resources for other uses (Stroh, L.K). However there are also drawbacks to such an approach. This is the reason why organizations must think before outsourcing their functions to external companies. My chosen organization, Smithsonian Astrophysical Observatory, may also enjoy the benefits of outsourcing a number of its tasks to external companies. However, there are certain tasks that cannot be outsourced because of many reasons. It must ensure that all the aspects are considered before a particular function is outsourced to an external company. As it is with everything else, everything has its advantages and disadvantages. The organization may outsource a number of functions mention above though. They are explained in detail separately below. In my opinion, the first function of planning cannot be outsourced because planning is one of the four core management functions therefore outsourcing this means handing over one fourth of the management’s core functions to an external company. Besides this, only the management knows and understands the organization enough to plan how it will carry out such an important procedure. In addition to this, in this planning function the organization will decide whether or not to outsource the rest of the human resource tasks to an external company therefore it is crucial that the human resource department makes this decision itself. If this function is outsourced, there is a chance that it will lose control and the outsourcer may plan the recruitment process against the values and culture of the organization. The second function of the human resource of selecting and recruiting a workforce to external companies can be outsourced. All the human resource department has to do is inform the external companies about its vacancies. It can also tell the outsourcer what kind of employee they are looking for and what will be expected from him by providing them with job description and job specifications. The external company specializes in this task therefore, their procedure of selecting and recruiting will be much more cost and time effective. This approach will also allow my organization to use these resources and concentrate on other core issues. This task can be outsourced because this does not need any deep involvement with other main functions and procedures of the company. It must outsource its recruiting function because this function is very critical. If a poor decision is made while recruited, even the best kind of training will not help improve it. Therefore, this function should be left with companies that specialize in it. It will save both time and money if it decides to outsource this function to a company which is involved in this process routinely (Stroh, L.K). Performance appraisal which is the third function of the human resource department of Smithsonian Astrophysical Observatory, in my opinion should not be outsourced. This is because this function involves monitoring the employee performance and comparing this with benchmarks and goals set by the organization. An external figure cannot come into the organization and decide whether or not the performance of an organization is satisfactory or not because he will not know what the organization is looking for in that particular employee. The fourth function of training and development can be outsourced because the outsourcer will be a company which specializes in that particular field of training. The training that this company will give to the organization will indeed be better than what the company would have arranged for itself. Also, the costs and hassle of arranging a special training program or facility customized according to the need of the employee will be too much. If outsourced, the human resource department can avoid this. Besides all this, training is the first thing that the company lets go off when it is downsizing or when it’s financial condition is tight. Therefore the employees suffer when they do not get the facilities. If the company outsourcers this function, it can make use of cost effective strategies use by them which will greatly reduce their training and development cost and when the time comes to downsize, training of the employees would not suffer. In addition to this, training may be outsourced because there are a variety of vendors out there to choose from, training practices are changing constantly and because it is uncertain about its training needs as they are irregular (Stroh, L.K). The fifth function of maintaining the employees cannot be outsourced because this function involves awarding and compensating the employees according to what is suitable for the organization. An external company cannot set the wage or salary rate that will be most suitable for the organization because it does not know what rate would be profitable for the organization. Secondly, in order to effectively select a motivational strategy for the employees, the human resource department has to fully understand its employees and accordingly award them. An external figure will not be around the employees long enough to fully understand their behavior and motivational factors. The sixth function is relocation. This may be outsourced because an outsourcing agency would have more knowledge about this than the company itself. Relocating an employee to a new place is a very complicated process and it requires a lot of things to be considered. Accommodation for the employee must be arranged is one of the things to be considered. This becomes a hassle for the human resource department and it can make its operations simple and cheaper if it hires an outsourcing agency to do this for them (Stroh, L.K). The seventh function of supporting and assisting employees cannot also be outsourced because this function involves solving issues of the employees. These issues are usually from within the organization and can be a result of other departments or parts of the organization. An external group or individual will not know the company policies and issues and will not be aware how to suitably solve a particular issue. This is the reason this function cannot be outsourced. Similarly, the policy interpretation, development and implementation cannot be outsourced to an external company because implementation of policies the management’s functions. Giving this function away is like asking someone you do not know to run your house for you. The external company would not know the most effective way to implement a particular policy. The management who understands the employees and its values and culture will know a more suitable approach for interpreting, developing and implementing a policy. The last function of redundancies and lay offs cannot be outsourced because again, the management of the organization will know best how and when to make employees redundant. The external company would need to be involved in the company’s operation in order to know which employees are no longer needed. Otherwise, they will not know which and how many employees to make redundant and why. Now that all the basics have been established, it will be much easier answering the question of whether or not strategic human resource management can work effectively if the human resource functions are outsourced. I believe that the strategic human resource management cannot work effectively if the human resource functions are outsourced. This is because strategic human resource management is using human resource to strategically achieve your organizational goals. However, if the human resource functions are outsourced to an external company who does not understand the organizational goals because it is not a part of the organization, the human resource functions would not assist in achieving the organization goals in anyway. No group or company can understand and develop a more effective strategy of achieving the organizational goals better than the organization itself. This is because these goals are set by the management of the organization it self. Besides this, achieving these goals would not mean to anyone who would not benefit from them directly. Anyone is this case is the company to which the functions are outsource. This outsourcer would not benefit in any way if the company achieves it organizational goals. Therefore, it has no reason to develop a strategy for carrying out the human resource functions in such a way which will ensure that these goals are achieved for them. Conclusion In conclusion, I would once again like to emphasize on the fact that outsourcing may have its benefits but there are certain functions that must not be implemented. If a firm wishes to implement strategic human resource management, it must not outsource its human resource functions to outsourcing agencies. There are a number of reasons for this. These include the agency not realizing the importance of achieving organization goals, agency not being aware of the goals, agency considering these goals as unimportant and many more. All these reasons result in the organization not being able to achieve their long term goals because it had outsourced its human resource function. However, despite this an organization must not also forget and ignore the great benefits of outsourcing. These include increase in efficiency in terms of cost, time and the results of the function. If it believes it can implement strategic human resource management along with outsourcing a few of their human resource functions, it must make use of this. References CIPD. “Relocation.” Chartered Institute of Personnel and Development. 2008. 14 August 2008. Daft, R.L. Management. The Dryden Press, 1997. Henderson, R.I. Compensation Management: Rewarding Performance 4th edition. Reston, 1985. Keys, B & Joseph Wolfe. “Management education and development current issues and emerging trends.” Journal of Management. (1988) 205-229. Boudreau, J.W. & S.L Rynes. “Role of recruitment in staffing utility analysis.” Journal of Applied Psychology. (1985) 354-366. Bratton, J. “Strategic Human Resource Management.” Palgrave. 2008. 14 August 2008. CIPD. “Strategic human resource management” Chartered Institute of Personnel and Development. 2008. 14 August 2008. 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