Human Resource Management: Strategies and Processes - Example

Performance Management of the of the Executive Summary Strategic human resource management is one of the most important concepts that are dominating the literature of human resource management. The main idea behind SHRM is that it integrates the human resource management system in the strategic planning of the organization. This purpose of this paper was to find shortcomings in the human resource management of a chosen organization and suggesting ways in which it can be improved. From analyzing the case of the organization it has been revealed that the main problems lie in the area of recruitment and performance management. Recruitment strategies are dominated by nepotism and favoritism which is impacting organizational performance. There is also a lack of diversity in the workforce. The second problem is lies in terms of the performance management of the organization. Lack of goal setting, poor employee motivation and dearth of rewards are the main problems in this regard. In order to improve the existing situation the company needs to improve its recruitment strategy by taking into consideration the factor of diversity. Additionally, steps must also be taken to improve goal setting and monitoring standards of employees. This should be followed by improving non-financial awards. Contents Executive Summary 2 Strategic human resource management is one of the most important concepts that are dominating the literature of human resource management. The main idea behind SHRM is that it integrates the human resource management system in the strategic planning of the organization. This purpose of this paper was to find shortcomings in the human resource management of a chosen organization and suggesting ways in which it can be improved. From analyzing the case of the organization it has been revealed that the main problems lie in the area of recruitment and performance management. Recruitment strategies are dominated by nepotism and favoritism which is impacting organizational performance. There is also a lack of diversity in the workforce. The second problem is lies in terms of the performance management of the organization. Lack of goal setting, poor employee motivation and dearth of rewards are the main problems in this regard. 2 In order to improve the existing situation the company needs to improve its recruitment strategy by taking into consideration the factor of diversity. Additionally, steps must also be taken to improve goal setting and monitoring standards of employees. This should be followed by improving non-financial awards. 2 Contents 3 Introduction 4 Explanation of the issue: The case for change 4 Recruitment 4 Performance Management 5 Discussion 6 Conclusion 9 Recommendations 9 References 11 Introduction Strategic human resource management (SHRM) is a relatively new concept that has become quite common among existing researchers. SHRM integrates the human resource management practices with strategic management of an organization. SHRM predicts that the human resource strategies of an organization must be planned in such a way so that it reflects changes in society, industrial relations, legislation and global and technological issues. Researchers have found out that organizations can attain competitive advantage by following SHRM. The rationale behind SHRM can be explained with the help of following example (Nankervis, Compton & Baird, 2008). For instance, an organization wants to emerge as a low cost leader in the market by offering products at the lowest possible price. It is imperative that the organization incorporates this strategy in its human resource management practices by following necessary steps to reduce the overall cost of operations. There are four major characteristics of SHRM namely long-term focus, link between human resource management (HRM) and strategic planning, link between HRM and organizational performance and involvement of line managers in the decision-making process. Empirical studies have been conducted by researchers in the U.S., U.K. and Asian countries to prove the importance of SHRM and there is a growing convergence in the opinion of researchers regarding the benefits that can be derived from SHRM (Jackson, Schuler and Jiang, 2014). The purpose of this paper is to reflect the system of recruitment and performance management of the organization in which I have worked. The idea is to find the underlying challenges in the system so that they can be rectified for improvement of organizational performance in the future. Explanation of the issue: The case for change The present system of recruitment of the organization in which I work at present is marked with certain challenges. I intend to focus on the challenges of recruitment and performance management. Recruitment The biggest challenge is that of nepotism which refers to the process of hiring relatives of employees in the work place. The new employees who are hired are often incompetent and the performance of the team suffers as a whole. Majority of the employees in the company are selected on the basis of some family relations without the basis of a proper interview. They are selected on the basis of kinship and as a result the resource pool has become highly incompetent. There is no formal process of screening candidates are selected only on the basis of good relations. Use of nepotism in the process of selection has the probability of reducing fair chances of promotion of remaining employees which in turn affects their individual performance. Promotion of incompetent candidates based on nepotism can also bear negative consequences for an organization. Employees are often found to be de-motivated in their work as managers often tend to show favouritism for the employees hired on the basis of nepotism. The second challenge in the process of recruitment arises from the lack of diversity in the workplace. The organization have a transparent policy for recruitment and abides by the discrimination law of the state which states that no candidates must be discriminated on the grounds of age, colour, sex, religion or diversity. Despite the policies in paper it has been found that there are considerable differences in practice. There is a dearth of female representation in the workforce. Additionally the people of black and Hispanic origins are underrepresented in the workforce. Lack of diversity in the workplace is not a desirous state according to researchers. Due to the lack of diversity in the workplace there are no inputs of fresh ideas in the decision-making. The employees often ignore the minor employee groups which in turn make them feel less valued in the organization. The culturally concentrated workforce often makes the minority groups feel threatened and less preferred in the work place. Additionally, this adversely affects their motivation and job satisfaction. Performance Management There are two pressing issues of performance management that requires immediate attention of the senior management. The first one relates to the problem of effective goal setting by the management. Firstly, there is no key performance indicator which is supposed to measure the performance of the employees. The goals set at the beginning of the year are vague and there is no appropriate monitoring tool that helps to measure the performance. Owing to these problems employees are confused about their responsibilities and are unable to achieve the organizational goals. There are no formal feedback sessions for the employees which can help them to rectify their mistakes in the next financial year. Lack of proper goals does not provide any type of motivation for the employees to do their jobs. They perform poorly and are heavily criticized for their poor performance. Additionally, they are never motivated to do their jobs. The second issue in relation to performance management of organization is embedded in the fact that the performance management of the workplace is not related to the concept of reward. Though there is financial compensation for employees based on their performance in a given year yet the system is marked with inefficiency. This is because the financial compensation is not adequate and the company makes no effort to improve the non-monetary measures of compensation like merit awards, public acknowledgement and motivation of employees. Absence of these practices affects the morale of the employees and their performance. Employees are not acknowledged for their work for which they face low morale value. Low morale reduces the self-confidence of the employees and they perform poorly. Discussion The issues mentioned in the above section are creating certain conflicts in the workplace which is in turn impacting both the performance of the employees and organization. This section of the report discusses some of the practices of SHRM that can be adopted in order to address the issues relating to the system of recruitment and performance management in the organization. Researchers like Nankervis, Compton & Baird (2008) have pointed out that the process of recruitment and selection is one of the earliest process involved in SHRM and it is closely related to the type of talent pool that is chosen by the organization. According to Holbeche (2001 cited in Mankin, 2001) an integral part of the SHRM is that recruitment in human resource management should not be solely concerned with filling the gaps in the organization. It should be rather focused on bringing skills and experience in organizations that is not present in the current state. Nepotism in the workplace is essentially bad when it leads to selection of candidates who are not good or skilful. It has been found that nepotism is one of the forms of favouritism that is related to preferential treatment of individuals in the workplace. Researchers have found out that nepotism is an unprofessional form of behaviour that discourages commitment among employees. The research conducted by Laker and Williams (2004 cited in Arasli & Tumer, 2008) had focused on studying nepotism in the workplace. Though nepotism has certain benefits in terms of reduction of recruitment costs, training costs and enhancement in terms of increase of the loyalty towards organization, there are formidable negative impacts that overshadow the benefits. For instance, majority of empirical research conducted on nepotism in the workplace have revealed that it is related to favouritism, problems of discipline, breach of confidentiality and frauds. Researchers like Arasli & Tumer (2008) have found out nepotism are directly related to negative perceptions of employees about equity, employee morale, commitment and job satisfaction. There is widespread evidence in the existing literature that point out that diversity in the workforce is related to improved organizational performance. Researchers argue that cultural diversity in an organization promotes the level of functional efficiency. Organizational legitimacy also improves due to higher level of cultural diversity in the workforce. The works of Cox & Blake (1991) has shown that companies can obtain a competitive advantage over its rivals by creating a diverse workforce. He explained that diversity in the workforce allows overcoming cultural barriers when dealing with customers of various ethnic origins. The research conducted by Tipper (2004) had shown that when workplace of an organization reflects the interests of customers it results in greater sales of company’s products. Diversity recruitment programs have been found to have direct link to introduction of innovation in the work culture. However, it has also been pointed out in the existing research works that benefits from a diversified workforce in the organization is largely dependent on the effective management of the workforce by the management. Managers have the responsibility to combat challenges arising in the communication of the employees, managing resistance to change and promoting integration in the workforce. Though the component of gender diversity in the workplace is a debated among researchers yet there are evidences which has shown that gender diversity in workplace is related to superior work performance. For instance, the research conducted by Siciliano (1996) had shown that gender performance and organizational performance. Other researchers who have conducted research in the related field have shown that high gender diversity in an organization is related to the greater competitive advantage and moderate gender diversity is related to competitive disadvantage. Performance management of an organization is integral for achieving organizational goals. According to the research conducted by Nankervis, Compton & Baird (2008) it has been found that the effective performance management in an organization is related to better financial performance of an organization. The research conducted by Lawler (1994) had shown that effective performance management allows organizations to plan HRM practices in a coordinated manner. Setting proper goals for employees is an essential part of achieving performance. Setting realistic and achievable goals in line with the long-term development strategic goals of an organization enhances the probability of achieving these goals. Pre determined goals set for the employee’s acts as a source of motivation for employees. Researchers have observed that setting of goals according to key organizational objectives and ensuring they are challenging yet achievable creates a sense of commitment among employees. Time bound goals have been found to improve productivity of employees. Providing constructive criticism to the work of the employees allows them to improve their performance in the future. Employees can learn from previous mistakes and feedback sessions can act as platform of continuous improvement (McDonald and Smith, 1995). Therefore, it can be argued that setting of goals in line with the strategic goals of the organization can indeed improve the overall level of productivity and efficiency of the chosen organization. The link of rewards and performance management has shown that both intrinsic and extrinsic rewards are integral part of employee motivation and performance. According to Armstrong & Murlis (2007) non-financial rewards have a very important role to play in influencing the job commitment and engagement of employees. Non-financial rewards can create better long-lasting relationships between organization and employees rather than financial rewards. The views of Armstorng has also been supported in the works of Locke and Latham (1990) who had concluded that monetary rewards are definitely important for the motivation of employees but non-financial rewards like praise and employee recognition plays an important role in providing intrinsic motivation of employees which in turn improves their loyalty to the organization. Non-financial rewards can be used as an effective tool for providing opportunities for employees to learn and grow in an organization. The policies of providing non-monetary rewards have the capability of improving the work environment of the organization as a whole. Researchers like Kessler and Purcell (1992) have found out that performance management is one of the practices in management literature that can act as panacea to all the organizational problems. It helps the employees of en organization to find the strategic priorities that are expected of them. Prioritizing objectives on the part of employees enhances their accountability to the organization. It has been observed that effective performance management is one of the main ways by which organizations can outperform their competitors. Leaders of the organization play an important role in ensuring that performance management techniques are implemented in a proper manner. Attitudes of leaders and their skills of implementation, commitment and ownership becomes important in ensuring that performance management system put in place will help in obtaining desired outcome. Conclusion Strategic human resource management have evolved as one of the most relevant concepts in management literature that has a direct link with organizational performance. There are multiple aspects in SHRM which ranges from recruitment and selection to training and development. Analysis of the chosen organization has revealed that there are two main human resource problems which should be immediately incorporated in the corporate strategic planning in order to achieve competitive advantage over rivals. The first one is related to the field of present recruitment strategy which is highly influenced by the system of nepotism and favouritism. These practices have been widely associated with the reduction of employee morale and job satisfaction of existing employees. Another big problem of the workforce is that there is a dearth of both cultural and gender diversity. It can be argued that nepotism may have indirectly resulted in a concentrated workforce. Performance management is an elusive concept and the importance of it has been extensively debated. From the present study it can be suggested that performance management of the chosen organization can be challenged mainly on the grounds of poor goal setting and lack of employee motivation of employees. The poor system of rewards is the main reason that has resulted in disgruntled employees. System of non monetary rewards like merits and acknowledgement is almost absent in the system which have severe implications on employee job satisfaction. Recommendations The case study of the present organization has revealed that the recruitment and performance management are the two main areas which require immediate attention from the management. The following recommendations can be suggested: 1. Conducting thorough interview process for recruitment of employees before recruitment. Candidates should be screened on the basis of skills that are presently missing in the organization and selection should be made only on the basis of skills of candidates. Nepotism should be discouraged. 2. The issue of diversity in the workplace can be resolved by broadening the process of recruitment and reserving seats for talented candidates based on their merits. However, care must be taken to avoid biasness to select candidates with lesser merits. Maintaining diversity should be balanced with the objective of selecting employees filling the required talent gap in the pool. 3. The issue of performance management is a sensitive one and requires concerted effort on the part of the management. The first step would be to set challenging, realistic goals for individual employees and integrate these goals with the long-term strategic aims of the organization. This forms the very framework of strategic human resource management. 4. The organization must monitor the progress of the employees and ensure that they are being able to perform according to the pre-determined objectives. Diversion from the goals must be addressed immediately so that it can be corrected in the nascent stage. 5. It is very important for the organization to ensure that the existing system of rewards is modified immediately so as to revise the structure of both financial and non-financial system of rewards. It has been observed that the system of non-financial rewards of the company is very weakly developed. This implies that there is an immediate need to revise the financial rewards of the company based on the performance of the employees. Additionally, care must also be taken to introduce non-performance based rewards as these share positive link with employee motivation and performance. References Arasli, H. & Tumer, M. (2008). Nepotism, favoritism and cronyism: A study of their effects on job stress and job satisfaction in the banking industry of north Cyprus. Social Behavior and Personality: an international journal, 36(9), 1237-1250. Armstrong, M. & Murlis, H. (2007). Reward management: a handbook of remuneration strategy and practice. London: Kogan Page Publishers. Cox, T. H. & Blake, S. 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