The Critical Elements of Human Resource Management - Essay Example

What are the critical elements of Human Resource Management and how do they contribute to an organisations performance? Introduction Human resource management (HRM) practice has growing significance in the corporate world as it has been identified as one of the central contributing factors of organisational success. Human resource management or simply HR can be defined as the management of workforce or the human resources of an organisation. According to one perspective, human resource management is “a strategic and coherent approach to the management of an organisation’s most valued assets- the people working there who individually and collectively contribute to the achievement of its objectives” (Armstrong 2006, p.3). HR manager is the head of the HR department. An HR manager is considered as a person responsible for administrating and co-ordinating all activities across the functional areas of the HR department. As per the general views of different scholars found in textbooks and journals, the key elements of HRM may include HRD systems, manpower planning, career planning and succession planning, recruitment and selection, training and development, performance appraisal, merit rating, and compensations systems. An HR manager can play great role in achieving long term objectives of the organisation regardless of the size of workforce or other resources of the firm. Although the functions of an HR manager vary depending on the size, nature, and structure of the organisation, certain skills, competencies, and knowledge required for HR managers are of same characteristics. They include but not limited to leadership skills, human relations building skills, integrity and effectiveness, professional knowledge, negotiating skills, communication skills, effective training, influential power, Job knowledge, qualified recruitment, strategic thinking etc. This paper will analyze a real case scenario to discuss how HRM contributes to an organisation’s overall success. Case scenario For this assignment, the paper will discuss a real case example of HRM from Bangladesh. Square Pharmaceuticals Ltd. (SPL) is a Bangladesh based public limited pharmaceutical company. The company was founded in 1958 and currently it is one of the top rated conglomerates in Bangladesh. The company has been continuously keeping the first position in the country among all other domestic and multinational corporations since 1985. SPL is the manufacturer and marketer of pharmaceutical products including tablets, capsules, ointment, injections, drops, liquids, suppositories, inhalers, meter dose inhalers, cream and powder, and oral dry powder (Ahmed et al 2005-06). The organisation went public in 1991 and is presently listed on the Dhaka Stock Exchange. The firm is continuously improving its market status despite the severe pressures associated with the recent global recession. To illustrate, SPL achieved sales turnover of US$ 163.71 million with a growth rate of nearly 16.72% for the period 2009-2010. During this period, the company’s market share was 16.43% (SPL, n. d.). The company has extended its operations to global level over the years. The company strives to produce top quality health care products at costs that are affordable to even lower income groups. SPL’s supply chain department is responsible for the procurement of all requirements including raw materials, machinery and furniture, office equipments, food, and vehicles for other departments. The department also maintains suppliers outside the organisation on behalf of SPL. When different departments are in need of some necessary supplies, they send a purchase requisition to the supply chain department. After collecting quotations from a number of suppliers, the department identifies potential suppliers and purchases the goods from them. The firm’s supply chain department is specifically linked to its human resource department. SPL daily receives a number of new job applications. On the basis of qualifications, the company invites potential candidates to compete in the further steps of selection process comprising of written exams and interviews. While providing the job description to newly recruited employees, the supply chain department often makes changes to job description in order to make it par with the unique skills and abilities of the employee. The company gives on the job training as well as off the job training to its fresher employees. Mainly, SPL’s fresher employees learn more about their job from training programmes and managers. Employee promotions are rewarded by the SPL management at the end of the years based on employees’ performance. In addition, the supply chain department has developed a sound compensation system for its employees. Although the company remains to be the leader of Bangladesh pharmaceutical industry, it is facing many problems with its HR system. Some key elements of SPL’s HRM are evaluated below Manpower planning While evaluating the HR operations of the supply chain department, it seems that SPL does not have effective manpower planning programs for its supply chain department. The organisation does not maintain any effective labour demand forecast mechanism and has not taken any initiative to manage the labour supply properly. In the supply chain department of SPL, employee needs are merely predicted by the departmental head at the end of every year. As a result, the organisation fails to accurately identify whether there is excess or inadequate labour supply. Evidently, this weakness reduces SPL’s operational efficiency and causes financial losses. To illustrate, when the organisation employs less employees than what actually needed, it would face difficulties in performing its supply chain functions efficiently. Referring to the view of Wiersema (2006, p. 21.28), the organisation may incur additional expenses in salaries when it is overstaffed and the situation in turn would reduce the firm’s net profitability. However, evidences suggest that SPL’s supply chain department has not faced any labour surplus issue yet. In the highly competitive modern business environment, it is advisable for the firm’s HR department to develop some formal strategic planning techniques so as to meet employee needs appropriately. Recruitment and selection For the supply chain department, the large pool of CVs becomes a challenge to sort them properly and to identify potential candidates. As mentioned above, SPL’s job selection process mainly comprises of interviews and written tests. It seems that the organisation does not use any job related problem/scenario to evaluate the skills and efficiency of the candidate. HR experts opine that a candidate who performs well in written exams and interviews may not necessarily be a good contributor to organisational productivity. Under this recruitment and selection system, the SPL’s management cannot clearly understand whether a candidate is able to handle a real life job situation flawlessly. In today’s business environment, manpower is an inevitable component in maintaining and improving the firm’s market competitiveness (Geet et al 2009, p.3.10). Therefore, the wrong selection of employees would adversely affect SPL’s competitiveness and eventually the organisation may lose its market share to its competitors. Therefore, it is advisable for the SPL’s HR management to design more comprehensive mechanisms for employee recruitment and selection even though such a change can be more expensive and time-consuming. HRD systems Similarly, it is found that the human resource development systems in SPL are not so effective. Lack of inter-departmental communication significantly reduces the efficiency of HRD systems. For instance, although the supply chain department alters fresher employees’ job description in order to fit them to job requirements, they do not inform the HR department regarding such changes made. As a result, the HR department is uninformed about a new employee’s roles and responsibilities. In addition, it seems that the supply chain department’s employee information system is not organised well. The department uses an employee database to handle some aspects of record maintenance whereas it employs the file system to record some other information of the employees manually Ahmed, et al 2005-06). Consequently, the HR management finds difficulty in coordinating the employee information and accessing the necessary information on time. Here, it is advisable for the HR manager to use more advanced technologies to improve the department’s HRD systems and hence to develop a potential group of employees for SPL. Career planning and succession planning The supply chain department of SPL does not provide its employees with any job enlargement or career development opportunity. Currently, the employees of the supply chain department obtain limited opportunities to learn more about the job and the worksite environment. Today, people ranging from students to high profile individuals are highly competitive because there are more people competing for fewer opportunities (Europa). And, every employee tends to have a long-term career development plan and he/she drives his/her day to day life in accordance with that plan (Brown 2006, pp. 276-278). Therefore, when SPL’s employees do not obtain enough career development opportunities, this situation would negatively affect their career development objectives. As this situation impedes job satisfaction, this in turn would end up in increased rate of staff turnover. Staff turnover would increase an organisation’s operating costs (Secord 2003, p.450). Lack of succession planning practices identified in the supply chain department is also against the career development objectives of employees. Therefore, it is advisable for SPL’s HR management to take immediate steps to provide its employees with improved career development or job enrichment opportunities. Training and development While evaluating the training and development activities of the SPL, it seems that the organisation provides its employees with classroom training, on the job training and off the job training. Induction training is given by to new employees for a period of first six months in order to help them learn more about job related activities. Induction training is given in the form of classroom training and off the job training. Classroom training is conducted by SPL’s supply chain department in association with the HR department. The supply chain department identifies employees who need training and topics that the training programme should cover. The HR department is responsible for arranging faculties to conduct training classes. A presentation session is arranged at the end of the training to evaluate the outcomes of the programme. If employee presentation is satisfactory, his/her probation period comes to an end. The HR department arranges training programmes for SPL employees in some outside organisations (sometimes companies abroad) in the case of off the job training. In SPL, the Assistant General Manager of the supply chain department conducts yearly on the job training programs for the department’s employees. Under this method, actual work equipments, materials, and documents are used in a normal working situation. In sum, the department’s training and development activities are comprehensive and effective. Performance Appraisal While going through the case scenario, it is clear that the supply chain department’s performance appraisal system is weak. In the organisation, the employees are evaluated by self and supervisors. They do not obtain the opportunity to be evaluated by other parties including suppliers or peers. The supply chain department often fails to provide even feedbacks to the employees properly. The supply chain department’s “appraisal system is not consistent with the industry as now there are more strategic focused performance appraisal systems in practice” (Ahmed 2005-06, p.95). Due to this shortcoming, SPL employees cannot identify their areas of improvement properly and the situation in turn affects the organisation’s overall productivity. Since employee performance is a major element influencing the organisation’s productivity and competitiveness, this management technique will essentially increase the firm’s net profitability as well. An effective performance evaluation system is necessary for the supply chain department to take several crucial decisions regarding employee promotion, training, and termination. In addition, the weak performance appraisal systems would also raise potential challenges to the department’s succession planning efforts. Compensation systems In addition, it appears that the supply chain department does not have any specific reward system for its employees except for promotions. The department’s employees do not obtain any performance-based bonus or increment. Organisational studies indicate that bonuses and increments can have a greater influence on employees than salaries (Werner et al 2011, p.380). In addition, the department does not have any specific non-monetary compensation practices like recognition or praise to foster employees. These problems are likely to affect employee motivation adversely. Undoubtedly, monetary and non-monetary compensations would assist an organisation to increase the level of employee morale and overall organisational productivity (Henderson 2009, p.5). Therefore, it is recommendable for the HR department to frame some potential compensation systems for the employees of the supply chain department. Conclusion From the above discussion, it is clear that SPL’s HR activities are not very effective in spite of the fact that the organisation still dominates the Bangladesh pharmaceutical industry. Although the firm’s HR strategies may be sound enough to lead the domestic market, they would fail in a global context of competition. In the current competitive business era, it would be very difficult for SPL to continue its market dominance unless the firm’s HR department becomes more strategic. Except the training and development activities, all other areas of the HR department need to be improved so as to keep the company’s workforce strong and productive. References Armstrong, M. (2006) A Handbook of Human Resource Management Practice. Kogan Page Publishers. Ahmed, J. U et al. (2005-2006) ‘Human resource mnagment practices: A case study of the supply chain department of Square Pharmasueticals Ltd’. Sri Lankan Journal of Management, 10 (3 & 4).pp. 89-107. Brown, D & Harvey, D. (2006) An Experiential Approach to Organization Development. Pearson Education India. Europa. ‘Participation of young people with fewer opportunities’. [online] available at http://europa.eu/legislation_summaries/employment_and_social_policy/social_inclusion_fight_against_poverty/em0001_en.htm [accessed 26 Jan 2013]. Geet, S. D et al. (2009) Humam Resource Management. Nirali Prakashan. Pune. Henderson, R. I. (2009) Compensation Management in a Knowledge - based World. Pearson Education India. SPL. Official website available at http://www.squarepharma.com.bd/about-us.php [accessed 26 Jan 2013]. Secord, H. (2003) Implementing Best Practices in Human Resources Management. CCH Canadian Limited. Werner, S et al. (2011) Human Resource Management. Cengage Learning. US. Wiersema, W. (2006) Manufacturing, Distribution and Retail Guide. CCH. US. Read More