HRM Practices at SPARQ - Admission/Application Essay Example

 HRM Practices at SPARQ EXECUTIVE SUMMARY This is a report on the HRM practices at SPARQ that cover motivation, development, recognition and rewarding of employees with the objective of reviewing the current practice and recommending policy improvements. The paper has introduced the general concept of the topic alongside the highlights of the SPARQ programme. It then goes on to make a comprehensive literature review on various aspects of employee motivation and performance measurements. The paper concludes that performance has to be viewed as an overall organisational concept and not limited to person evaluation as a measure of success or failure. It goes on to recommend empowerment as the most important tool that will help SPARQ as a service oriented organisation to excel. As a good measure a live example of the outstanding success of the empowerment programme at SEMCO has been cited to reinforce the recommendation. TABLE OF CONTENTS 1.0 Introduction 3 2.0 Performance Management at SPARQ 4 3.0 Literature Review 5 3.1 Performance Measures and their Critique 7 3.3 Human Relation Theories 8 3.4 Motivation 9 3.5 Empowerment 10 4.0 Analysis 11 5.0 Conclusions 12 6.0 Recommendations 13 7.0 References 17 1.0 Introduction Employees form the human capital of an organisation and it is their productivity that provides it the competitive advantage over rivals. Productivity is a function of knowledge and skill. When engaging or evaluating an employee a combination of knowledge, skill and ability is judged. The level of productivity of a worker is determined by the current level of knowledge embedded in workers’ skills, management techniques, tools, equipment, and software used across business models. However growth in productivity depends on person performance as well as system performance. For achieving competitive advantage (Porter 1980) organisations adopt Performance Management techniques to realize efficiency and effectiveness. Performance management is therefore considered as a tool for measuring corporate objectives and is calculable in tangible form in terms of outputs and deliverables to customers. In order to get the best out of employees companies devise a system of recognition and reward to motivate and develop their employees’ skills. The objective is to build a strong organisation and improve its bottom line. The problem arises when Human Resource Management (HRM) process is chosen for performance management. In such a scenario the total emphasis will be on the worker, his performance and his output; thus the assessment will be worker centric only. This is due to the fact that HRM focus is on selection, performance appraisal, and training only. There is also the assumption by HRM is that differences in worker skills and attitudes have a bearing on performance. They tend to ignore the affects of system factors during such appraisals. However there is a larger canvas where performance management becomes the focal point of all kinds of organisational activities and not of just the skills of the worker. It is short-sighted to presume that the performance measures are through HRM practices only as HRM focuses on worker performance oblivious of the pressures exerted by the system. This narrow focus overlooks the role played by other factors that can and do affect performance. 2.0 Performance Management at SPARQ At SPARQ, a software company offering solutions to a variety of clients in several domains a comprehensive the Performance Management programme exists with the objective of motivating, recognition and rewarding of its employees. The focus of the programme is to create professionalism, teamwork, improvements and innovations. SPARQ Solutions supports and promotes the principle that all employees are able to work, train and build careers in a workplace that is safe, equitable and free from unlawful discrimination, harassment, sexual harassment, workplace bullying, vilification and victimisation. This means development of an organisational culture to sustain this effort. SPARQ employees comprise of Database Specialists, Computer Programmer/Analysts, Computer Support Specialists, Computer Repair & Support Technicians and others. They are divided into teams as required by the project requirement and have managerial staff supervising such teams. Both managers and co-workers nominate the employee bi-annually for recognition and the management decides on the reward that is limited to 20% of his/her remuneration and depending on the financial health of the company. This is a report about the credibility and effectiveness of this programme. This will be done after reviewing current literature on the subject with the aim of validating the SPARQ initiative and for recommendation of any suggestions to strengthen the same. 3.0 Literature Review HRM assumes that performance is largely due to the worker (Dobbins et al 1991). A vital feature of performance management is the appraisal, whether by superiors or peers and appraisals are fundamental in deciding capability and judging performance. According to Zairi and Youssef (1998) in the global context today competition cannot be met with cost efficiency alone. Quality plays an equally important role in assessing competitiveness. Quality is a function of Total Quality Management (TQM) and Performance Management should be a process under TQM and as part of the TQM initiative. But Performance management under TQM has brought into consideration system factors that effect performance apart from person factors. It was Deming (1986) who pointed out that 85% of performance variance is due to the system factors and only 15% is due to person factors. These system factors in the context of SPARQ will consist of the quality of information, domain expertise, awareness level of the customer and co-worker support. Even proper training and guidance by managers is part of the system factors and they are generally beyond the control of the worker. Consequently the worker is usually at a disadvantage in appraisal where everything is assessed to be his personal performance. Deming (1986) argues vehemently against performance appraisals calling them a deadly disease. He compares it to a cruel lottery since, from a TQM standpoint, most of the variance in performance by workers is actually due to system factors. This situation has made managers realise that the person performance is indeed highly dependant on system support. The quality of co-workers and supervision, the availability and training on technology, the quality and timely availability of inputs, the layout and ambience of the workplace and above all the organisational culture all play vital roles in determining the person performance. O’Connor and Eulberg (1985) have developed an eleven factor categorisation of constraints that can put restrict performance; whereas Bernadin (1989) has enumerated twenty two limiting factors. Even constraints like clerical support and managers own performance have been found to be affecting performance results. Other variables in the shape of opportunity, motivation and ability have also been identified as important factors by Blumberg and Pringle (1982). Waldman (1994) has designed a performance evaluation model that covers both person and system factors on job performance. Basically, this model combines the traditional HRM focus on the individual with the TQM leaning on system factors. Both person and system factors directly influence job performance. In fact system factors dominate the situation and are capable of both restricting and enhancing personal performance factors. He does accept that vice versa can also happen but the influence of person factors is comparatively weak. Waldman’s structure goes on to suggest that more than workers it is the managers who should be held accountable for performances as they decide the work process. He uses bureaucracy as a moderator between persons and system. Binning & Barrett, (1989) also confirm that individual performance measures are a function of the two domains of performance, either job-related behaviours (Campbell 1990) or work outcomes in the shape of products or services. The performance results therefore are inter-dependant on both aspects and each influences the other at least in some parts In addition, the measures may be differentiated as to the extent to which they are objective or judgmental in nature. 3.1 Performance Measures and their Critique Appraisals are heavily oriented towards outcomes measured on the basis of either project profitability or return on investments made by the company. A variety of methods are used to measure performance. Among them Outcome Oriented measures are most common. These are sales figures, production units and profitability. They are direct measures and all of them are heavily dependent on the system rather than the person. They reflect less on the character or the job relevant behaviour of the person and more on the systems adopted by the company. However performance measurement is not just an outcome like the annual sales volume. Amaratunga and Baldry (2003) state that it is a process of ascertaining and assessing progress and achievement of pre-determined goals and includes information on the efficiency that has been shown in conversion of resources into goods and services. The quality of these outputs and outcomes has a great bearing on the organisation’s effectiveness and its objectives. Management by Objectives (MBO) finds that the Outcome oriented judgmental criteria is a useful tool because of its objectivity (Gatewood and Field 1990). MBO is said to be a management practice which combines tools like goal setting, participative decision making, and feedback of goal attainment in determining performance outcomes. But it must be pointed out that MBO is evaluation of individual performance (Bernardin & Beatty, 1984; Bretz & Milkovich, 1989). Nevertheless the redeeming feature is that it is basically a subjective judgment through appraisal and a study of work outcomes measured against selected criteria. This characteristic sets it apart from merely being a HRM tool. The real measure of performance according to Evans and Lindsay (1999) is found in five key categories; customer satisfaction; financial and market performance measures; human resource measure; supplier and partner performance; company strategy measures. Each of these segments plays a vital role in determining the actual value of performance in the context of performance measurements. 3.3 Human Relation Theories The most valuable assets of any business are its people. This is one fact that is singularly recognised as a winner. Through effective utilisation of a person’s talent the firm will achieve concrete results and build up a highly productive labour force (Harrington 2003). On the above basis various HR theories have attempted to explain why employees perform their duties the way they do. Maslow (1954) described this in a hierarchy, starting with human psychology, safety and security, belongingness, self esteem and finally self-actualisation. According to Maslow, employees have a basic human need and a right to strive for self-actualisation, just as much as the corporate directors and owners do and, by this fulfilment, the organisation becomes stronger, more competitive and profitable. Herzberg (1959) propounds that there are indeed only two factors that motivate a person to work and they are hygiene and motivators like self actualisation. Hygiene does not motivate but its absence will reduce motivation and a good hygienic environment enhances motivating factors like achievements, responsibility and advancement. 3.4 Motivation The social exchange theory states that the contracts between the company and its workers work on the simple mechanism of reciprocity (Aselage and Eisenberger, 2003). The ensuing fulfilment and the rewards display the justice and confirm the trust placed by the worker in the contract and motivates him further to outperform himself. This is his self-actualization which he cares and values above all else. But this is way above the justice and reward system of the yester years. The difference is that he now needs to be involved and to participate in some decision making to make this self actualization meaningful and valued for him. This is not really a new role but the revival of an old one. While the inducements provide material and psychological support, a sense of trust and justice generated or emanating from the organization bring about the self-actualisation and self-esteem. However the level of performance of employees is not just a result of their skills but also the result of motivation each person exhibits. There are two sources of motivation, intrinsic and extrinsic. Since it is not always possible to have external rewards all the time for all activities the management has to promote intrinsic motivation that is the outcome of internal factors like self satisfaction or the pleasure of satisfactory performance (Hagedoorn and Van Yperen 2003). The intrinsic motivation is also preferable as in this environment the employee develops affinity with the organisation and considers the welfare of the organisation to be his wellbeing. This improves his productivity and performance since it will go along with his personal satisfaction. Such employees are also loyal to the company’s cause. In contrast the employee who looks for extrinsic motivation becomes greedy in anticipation and looks for alternatives to promote his own wellbeing. 3.5 Empowerment People management has always fascinated everyone and various theories have been expounded to explain how people act and react in different situations. The primary image of an organisation is akin to family, clan or tribe where relationships, needs, feelings and skills are the characteristics of its members. The objectives are empowerment, liberation, fulfilment and self actualisation of both the individual and the group and the challenge is how to develop attitude to achieve this goal. The perception of empowerment becomes meaningful only when it is perceived as an enabler by the worker. The psychological advantage is phenomenal as he perceives it as power, self-control, efficacy and competence (Psoinos & Smithson, 2002). The four dimensions explained by Lee and Koh (2001) elucidate this concept further; and they are meaningfulness, competence, self determination and impact. The results of these can bee seen as powerful measures to improve performance. This is also the height of the fulfilment under the psychological contract. 4.0 Analysis When there is an external reward like money or bonus attached to performance the motivation is extrinsic. The importance of extrinsic incentives cannot be ruled out as apart from intrinsic incentive the emoluments are required to fulfil material needs. The questions that arises here is that are incentives, rewards and benefits the right road to better performances or is empowerment the answer to this need. In the larger canvas, there is an increasing demand for cultural change in enterprises. This is an unstructured perception, which in fact is a call to secure ideological changes that will usher in new work systems. It aims at empowerment, but its supporters often use it without any real understanding of what power really means and of how difficult it is to assign or redistribute power. The fact is that often it does not result in a redistribution of power at all, but ‘all that happens is that employees assume higher levels of accountability and responsibility’ (Marchington, 1995:61). The perception of empowerment becomes meaningful only when it is perceived as an enabler by the worker. If it is limited then its value diminishes and is eventually ignored. Participation in control of events is psychologically very important and induces exceptional behaviour just as in a family where every member feels responsible in some way for the overall outcome and results. 5.0 Conclusions Strategic management revolves around objectives that need contributions from all stakeholders; hence underperformance from any quarter will affect the overall result. Excellence is achieved when it covers the total transaction and not just a part of it. Thus if the service is of the desired quality, but is either too costly due to inadequate information or excess utilisation of assets; or at the other end of the spectrum, there is non-availability of after sales service or maintenance, then the performance alone will have failed to achieve its target. On evaluation the performance managed will have to be called poor and unacceptable and the organisation’s objectives will not be met. However this cannot be attributed to the worker alone as the system factors will have to be supportive for its success. Performance management has been used to determine the efficiency of the employees and in turn it offers means to check the effectiveness of the company. The question arises that in view of the diversity in approach and ambiguity in performance measures, is the reporting on corporate efficiency and effectiveness reliable. The answer obviously lies partly in performance evaluation and partly elsewhere. While it is true that performance measurements based on persons and systems provide an insight into efficiency levels and quality consciousness and are both relevant and important in the context of competitive advantage, the real measure of the effective organisation is in its ability to be innovative in its performance evaluations. Motivation is a great factor in productivity and when performance measures accurately value a person’s role in the organisation then this evaluation turns into a motivator instead of plain rewarding or punishing tool. The need is to convert these performance evaluations into motivating tools. Self actualisation is considered the ultimate goal of the worker and unless there is some level of empowerment this cannot be achieved. It is therefore concluded that empowerment is the single largest factor for motivation and improved performances. Recognition and rewards alone cannot bring in the desired results. 6.0 Recommendations The new age companies also see the importance of values and relationships with stakeholders as a critical part of their ongoing success. They have found convincing answers to the two core questions posed by stakeholder theory, which underscore the moral assumptions of managing. Finally human relationships have also become a purpose of successful business. The separation thesis had so far held that ethics and economics can be neatly and sharply separated. The Stakeholder theory now begins with unequivocal statement that values are necessarily and explicitly a part of doing business, and rejects the separation thesis (Freeman 1994). Even if it is argued that the objective of business is profit then it has to be understood that a successful business is about collaboration under which the customers, workers, communities, managers, and shareholders are all involved as beneficiaries. It has been concluded by Venkataraman (2002) that at some level, stakeholder interests have to be joint, they must be working for the same purpose, otherwise business will come to an end and new collaborations will be formed. Sadly practice does not match the theory. Legge (1995) finds that the focus of the enterprise is still profitability. She finds a gap between what she calls Rhetoric and Reality and fails to find empirical evidence to prove that the soft HR, or the people centric HR, is really being practiced. Indeed Legge (2005) finds that in actuality hard HR is still dominating soft HR which is facing slow diffusion or dispersal. In other words, the reality is that corporates are predominantly profit centric instead of people centric. The fact is that it is true to an extent in manufacturing, where competitive pressures, increased mechanization and advance technology is replacing people or deskilling them under older scientific management practices. But a new kind of industry has come into existence. This is the service industry. These Companies feel that the workplace has to become a second home and have redefined the concept of organisational culture, a soft HR approach. This perception is highly appealing to the working class as now they work alongside the managerial class. HRM now has a new meaning and is considered as the most important resource. Motivation has for long been pegged to self actualization but what motivates the worker of today? Surely intrinsic and extrinsic rewards in the shape of recognition and better emoluments have become passé with the aware and informed workforce. They are hungry for power as much as their superiors. Power sharing is a heady feeling and converts an ordinary worker into a stakeholder. A very delicate situation arises here and opens up a conflict with the agency theory. However if this power sharing is done with diligence and with dissemination of correct information, the workers can and will rise to the occasion and meet the challenge in a healthy fashion. The mental force of the employees cannot and should not be under-rated as psychologically they are equal to their mentors and are prepared to deliver what is required. The stage is now set for SPARQ to take the next big step in empowering the employees to motivate them. An example is cited here to demonstrate how this is possible. SEMCO of Brazil has a unique strategy, that of empowerment. Twenty five years ago Ricardo Semmler, its present chairman, inherited a company that was unable to face competition and that had several layers of hierarchy that could not use the aspirations of its labour force to overcome the difficulties faced by it. He therefore decided to reposition his company and took the enactment route to empower everyone on the rolls. He believed that in the importance of values and relationships with his workers as a critical part of success for his organisation. The biggest stake was that of the employee and it was him/her that needed assurance that their jobs are safe but in return they had to ensure that the company was managed successfully and at a profit. The workers have been empowered to hire managers who they believe will lead them to growth of their company as well as their careers. They have equal say in all appointments, including that of the Chairman of the company, and at any one time as many as thirty five people interview candidates at least four or five times before confirmation. This gives both sides an equal opportunity to assess each other and find a proper fit. The workers also have right to fix their own wages and the salaries of their managers. This could have been a contentious area as each person would then look after his well being but the answer lay in the open access policy of revenue earning and distribution and that sobered up everyone as it was realised that without equitable distribution of wages the company would not make profits nor could face competition. It was the same in case of working hours and output. Groups of workers undertook to be present at specific times in order to see that the assembly lines were kept in motion and targets as well as quality matched each other. Flexibility was the watchword and a Sunday or holiday was equally important like any weekday; the priority in all case was work and productivity. As a result Semco is a truly democratised company with hardly any attrition. This was done over a period of several years in gradual fashion but for the last 15 years this democratisation of the corporate structure has resulted in Semco becoming a billion dollar company with average annual growth of 27.5% over this period. What is required here is enlightened leadership, not just a transformational one. 7.0 References Amaratunga, D and Baldry, D (2003), A conceptual framework to measure facilities management performance, Property Management, Vol. 21, No. 2, pp. 171-189. Aselage, J. and Eisenberger, R. (2003), “Perceived organizational support and psychological contracts: a theoretical integration”, Journal of Organizational Behavior, Vol. 24 No. 5, pp. 491-509. Bernardin, H. J. (1989). Increasing the accuracy of performance measurement: A proposed solution to erroneous attributions. Human Resource Planning, 12, 239-250. Bernardin, H. J., & Beatty, R. W. (1994). Performance appraisal: Assessing human behavior at work. Boston, MA: PWS-Kent. Binning, J. 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