Approaches to HRM in Improvement of Organizational Performance - Research Paper Example

Introduction Employees form one of the most valuable assets of a company as they hugely determine its success in achieving the set strategic objectives. A company’s main objective in any sector is to try and be the market leader and make maximum returns for its shareholders and employees are given the task of achieving this mandate. The advent of globalisation has brought a new wave of competitiveness compelling executives to establish sustainable strategies in order to have market advantage (Mess 2004). Therefore, a company’s Human Resource Management department has an integral role in facilitating this main objective of the company. With this fact in mind, this paper is written with a view of delving into HRM policies and reviewing them with the aim of finding out which ones are suitable for a multinational in tackling organisational performance and job satisfaction. This paper will try and analyse both the best practice theory and the best fit theory. To help in getting a better understanding of this research, a multinational company was chosen to assist in getting a clearer understanding of the topic. In this case Google Inc. (or just Google) was chosen to identify the method they have adopted to improve its performance and ensure its workforce is satisfied. A review of the numerous books on HRM shows that there are many points on what can be classified as best practices (Wood 1995). However, in writing this paper, importance has been given to a few namely; employment security, sharing information and communication, training and development, team working and self-managed teams, compensation contingent on performance and selective hiring and how these have been adapted by a multinational; Google. Employment security Marchington and Wilkinson (2005) in their book describe best practices as being human resource (HR) styles meant to develop and further a company’s performance. One of this is in-job security. Maximum employee output will be derived from a work environment where employees feel secure in their job stations. It would be unfathomable for an employee not to expect job security and future prospects in their work after having contributed to the development of the company in form of ideas, hard work and commitment (Pleffer 1998). Temporary employees are not covered by this principle; Purcell (1999) is of the opinion that only the permanent employees are to enjoy job security. It is important to note that even permanent employees should not expect unfettered job security. As Marchington and Wilkinson (2005) point out, dismissal due to incompetency, change of jobs and change in job circumstances like pulling out of a product can be expected. They add that what this principle has set out to achieve is to instil a sense of safety in a company. HR managers should always bear in mind that the future success of a company is hinged on utilisation of company assets and employees form a huge part of these assets (Marchington and Wilkinson 2005). As earlier stated, executives in a company have the role to grow corporate profits every financial year therefore this ideal of worker security should not interfere with this especially during downturn times. Introducing shorter working hours, cutting wages, recruitment freeze and transferring workers to generate more revenue are means which should be explored by executives of a company in order to preserve the principle of job security instead of instituting redundancy measures (Pfeffer 1998). In the case of Google, job security is captured by employees entering into contracts with Google which spell out instances when one can be dismissed. This serves to assure employees that save for what is provided for in the agreement, their jobs will be intact. Employees are now left to concentrate on their productivity. Extensive training, learning and development In ensuring performance and job satisfaction, it is imperative that training, learning and development are established and carried out in order to maintain the expertise and knowhow needed. Training equips employees with the required skills and knowledge for them to carry out the company’s objectives (Johnson 2000). In their works, Marchington et al. (2002) point out that organisations have realised that for them to have a competitive edge, they must continuously provide training for their employees. They add that performance in a company will be seen to rise if employees are continuously trained. However, in this model of best practice approach, some problems seem to arise e.g. how the training was beneficial to the output of the employee (Marchington et al. 2002). These are situations where training is provided with no apparent aim to further the skills of employees. In looking at Google’s HRM strategy, a great deal of emphasis is placed on training. To meet its skills level requirement, Google has adopted a best fit practice where it has a centre for training its workers to be relevant. Google has a great deal of engineers therefore to keep their skill level relevant, they have contracted an engineering training group which offers tailor-made training to cover their area of operation. Google makes it mandatory for workers to undergo training and development. The result is that their employees are able to keep in touch with technological advancements in their respective fields. This fact has contributed to good performance for the company. Sharing of information and communication According to Pfeffer (1998) sharing of information is important and points out two reasons; firstly, by communicating in an open manner on matters to do with financial performance, strategy and operational measures with employees, it will indicate that they are trusted. Open communication also negates the use of the grapevine. Secondly, communication assists when employees have to engage in processes like teamwork. Marchington et al. (2002) take a contrary opinion where they view employee involvement as a downward flow of news stating that news only flows from management to workers. Employee’s input is mostly non-existent. As an example, they point out a concept such as team briefing as an exercise where a leader will break down information only for a given purpose. Apart from being given the chance to participate in issue raised by the management, employees should also be given the opportunity to, without fear, air any grievances they may have. According to Marchington et al (2002) trade union representation, dispute procedures, speak-up schemes and collective bargaining are some of the channels which should be available to employees to voice their grievances. Luthans and Peterson (2003), state that big firms need a good communication system. Following this, Google has adopted both the best practice approach and best fit approach in terms of sharing information and communication. The organisation holds sessions every financial quarter with the aim of reviewing the ending quarter’s performance. In these sessions, employees are encouraged to ask questions about the organisations performance and future growth direction. This method has allowed employees to know what their performance objective will be and how to achieve it. With regard to communication, Google executives are aware that not all employees are comfortable with such open sharing of information. It is also not possible for all employees to communicate with senior executives as Google has offices all over the world and time difference may hamper communication efforts. Thus they have devised means where any employee can post any question to a senior executive for response. Team working and self managed teams Manz (1992) points out that one of the responses Human Resource executives have formulated with the growing competition is to require from recruits the ability to work in a team and the capability of being self-managed. Pfeffer (1998) lauds the use of team work where he states that it encourages creativity and better results are usually achieved. Pfeffer and Veiga (1999) also add that use of teams by an organisation gives some sense of control to employees. In taking a critical look into teamwork, Goleman, Boyatzis and Mckee (2002) have a contrary view towards teams; on a study they conducted they concluded that a great deal of acrimony develops in such groupings to the extent that some members sought to interfere with results on projects they were working on. Marchington et al. (2002) point out some factors which can make it difficult for an organisation to start an effective team working. He explains that safety, legal or technical reasons may make the whole concept of team working ineffective. David, Pearce and Randolph (1989) have shown a disadvantage of teams being that independent initiative does not result from teams as members when doing tasks rely on one another a great deal for a task to be accomplished thereby removing independence from employees. In Google, teamwork is encouraged because it fosters unity. At Google, it is recognised that when employees work together, fewer problems are encountered since they will collaborate as a team to find a solution. High compensation contingent on performance An organisation seeking to be competitive must have employees who exhibit exceptional talent. In order for a company to attract such a high calibre talent pool, an organisation will need to offer attractive remuneration packages. Huselid (1995) argues that this technique will ensure that an organisation will attract and keep talented and skilled employees. To complement this, reward schemes based on performance should also be established in organisations. Marchington et al. (2002) state that rewards should be pegged on contribution toward the overall performance of a company. According to him contribution does not entail only individual effort it also includes effort in a team or department. Pfeffer (1998) advocates for the whole workforce and not just the senior management to benefit when there is increased performance and profits in an organisation. This is because these results were borne from the efforts of all the workers. Following this argument, HR managers have devised plans like employee ownership plans where the entire workforce can enjoy returns when a financial year has been profitable (Lawler 1995). Employees share ownership plans are initiatives that organisations can establish to encourage high performance. Once employees reach a specified period while employed, they are allowed to participate in such a share scheme. It is presumed that if employees own part of the company, they will be motivated to perform for they prosper if the financial position of the company improves. Pfeffer (1998) adds that when such plans are put in place efficiency improves and lazy employees will be stamped out. In Google, they have adopted this best practice model in trying to improve performance and achieving employee satisfaction. Kopytoff (2004) writes that due to the shares employees hold many of them are paper millionaires especially from when the company conducted its initial public offering. Ownership of a company stocks further motivates employees to perform much better as their value rises with better posting of end year results. Oreskovic (2010) writes that Google profits are usually high meaning that its shareholders, who include its employees, will enjoy better value for the shares they possess. Selective hiring and sophisticated hiring Performance is imperative if a company is to always have an edge and be competitive in its field. In order to attain this, having the right employees is important for the organisation to achieve its optimal performance. MacDuffie (1995) stresses this point by stating that due to this fact, HR managers are necessitated to have an excellent employee selection procedure. Johnson (2000) is of the opinion that due to the large size of a multinational expenses associated with selection are high therefore a best practice approach is suitable for them. However, critics are quick to point out that although deemed economical this approach does not address the issue of suitability of unique skills required in a company. The best fit model has a solution for this where companies develop new approaches in order to fill there specific needs. An example is where they do not wait to employ recent graduates, instead they start recruiting potential employees while still in school. Multinationals are establishing partnerships with universities in particular fields in order to attract suitable students. This partnership involves establishing courses that have a combination of both the theoretical side and practical application. This education is tailored to impart on the students’ soft skills which are not usually part of their studies in college. This approach is quite attractive for companies as they can target a particular type of students rather than going to the job market to compete with other organisations. Google in its selection policy has chosen to adopt a best fit policy. In Google apart from the HR management taking part in recruitment, its founders are also involved in this exercise. Nelson and Quick (2005) point out to that their input ensures recruits fit into the company’s culture. Allegrezza (2005) points to Google holding of many exhibitions which serve to allow employers to interact with potential entrants. Day (2005) adds another fact that Google does not often hire people with work experience. The above facts point to Google having adopted a best fit approach to recruitment. Once they have recruited, Google has policies which ensure that employees have an appropriate balance between their work and home life. According to Colvin (2006) Google employees can therefore choose to work part time, telecommute where possible and arrange for flexible working hours. Google has a donation program which is a unique concept meant to allow employees a chance to help out fellow workers during time of need. In reviewing this research, it can be seen that the universalistic model does not always work. It has limited application when applied to the issue of organisational performance and worker satisfaction when looking at a multinational like Google. Therefore, the idea espoused by Delery and Doty (1996) that all organisations should adopt a common HR practice as they are better than others does not fit. It can be seen that sometimes neither the best practice nor the best fit approach works. A multinational company like Google has in its HR policy chosen in certain cases to adopt a best practice approach alone, in others it has adopted the best fit model and in others it has fused the two to provide a hybrid model to act as their Human Resource policy. However, the best practice approach can be used as a general principle meant for acting as a guiding point to HRM when developing Human Resource principles. As seen here, the best practice approach was applied by Google in matters to do with employee job security where they execute contracts to provide certainty for the employees. In training, learning and development, what can be seen in Google is that they have adopted the best practice model. The training concept is a universal one and for employees to be able to keep abreast with the on goings in their field, they must continuously train. In Google’s case, training is imperative for its engineering workforce, so to address their training needs they have a training school which serves to constantly equip its engineers with the necessary knowhow. In sharing of information and communication, Google has adopted a two tier strategy. It has adopted the best practice method whereby it constantly engages its workforce in order to pass down necessary information to ensure performance is maintained. Google has also taken the best fit approach to fit its unique nature. It has also provided a technological platform for those workers who are reluctant to engage in open discussions or forums. On the issue of compensation and reward scheme offered, the best practice model has been widely utilised. Apart from highly paying its employees, the company has also introduced a share ownership plan which allows for workers to prosper from their efforts. As has been discussed, there is a move by firms especially technological firms to develop innovative ways in their quest to recruit workers. In summary companies should not limit themselves to a solitary method in their HRM practices. Effort should be made to combine both because the end results will prove beneficial for the organisation in terms of profitability and employee satisfaction. References Allegreza, R 2005, ‘Google’s way to lure talent,’ Furniture Today, viewed 2nd December 2010, . Colvin, G 2006, ‘The 100 best companies to work for 2006,’ Fortune Magazine, viewed 2nd December 2010, . David, F, Pearce, J, and Randolph, W 1989, Linking technology and structure to enhance group performance. Journal of Applied Physiology, vol. 74, pp. 233-241. Day, P 2005, ‘Google searches for the future, ‘BBC Business News, viewed 2nd December 2010, . Delery, J, and Doty 1996, Modes of theorizing in strategic human resource management: Tests of universalistic, contingency, and configurationally performance predictions. Academy of Management Journal, vol. 39 no. 4, p. 802. Fink, N 2005, ‘Top 10 web companies to work for,’ Digital Web Magazine, viewed 2nd December 2010, . Goleman, D, Boyatzis, R, and Mckee, A 2002, The emotional reality of teams. Journal of Organisational Excellence, vol. 21, no. 2, p. 55. Google Inc. 2005, ‘Ten reasons to work for Google.’ Viewed 2nd December 2010, . Huselid, M 1995, The impact of human resource management practice on turnover, productivity, and corporate financial performance. Academy of Management Journal, vol. 38, no. 3, pp. 635-72. Johnson, E 2000, The practice of human resource management in New Zealand: Strategic and best practice? Asia Pacific Journal of Human Resources, vol. 38, no. 2, pp 69-83. Kopytoff, V 2004, Google IPO raises $1.2 billion, $85 a share / millionaires in waiting: Hundreds of workers must sit tight to realise payoff. Chronicles, viewed 2nd December 2010, . Lawler, EE 1995, The new pay: A strategic Approach, Compensation and Benefits Review, vol. 27, no.4, pp. 14-22.. Luthans, F, and Peterson, S 2003, 360- Degree feedback with systematic coaching: Empirical analysis suggests a winning combination. Human Resource Management, vol. 42, no. 3. MacDuffie, J 1995, Human resource bundles and manufacturing performance: Organisational logic and flexible production systems in the word auto industry, Industrial and Labour Relations Review, vol. 48, no. 2, pp. 197-221.. Manz, C 1992, Self leading work teams: Moving beyond self management myths. Human Relations, vol. 45, pp. 1119-40. Marchington, M, and Wilkinson, A, 2005, Human resource management at work: people management and development, 3rd edn, CIPD Publishing, London. Marchington, M, Wilkinson, A, Sargeant, M and Chartered Institute of Personnel and Development 2002, People management and development: human resource management at work, 2nd edn, CIPD Publishing, London. Mess, H 2004, ‘HRM best practice’, Otago Management Graduate Review, vol. 2, pp 25-37. Nelson, D and Quick, J 2006, Organisational behaviour: Foundations, reality and challenges 5th edn. South-Western. Oreskovic, A 2010, Google profit rises, revenue misses some forecasts, Reuters, viewed 2nd December 2010, . Pfeffer, J 1998, The Human Equation: Building Profits by putting people first. Harvard Business School Press. Boston. Pfeffer, J and Veiga, J 1999, Putting people first for organisational success. Academy of Management Executive, vol. 13, no. 2, pp. 37-48. Purcell, J. 1999, Best practice and best fit: Chimera or cul-de-sac? Human Resource Management Journal. Vol. 9, no.3, pp. 26-41. Woods, S 1995, The four Pillars of HRM: are they connected. Human Resource Management Journal, vol. 5 no. 5, pp.49-59. Read More