The Impact of Human Resource Management on Organizational Effectiveness - Coursework Example

Human Resource Management Problem Contents Contents 2 Introduction 3 Identification of HRM problem 4 Current situation analysis with theoretical evidence 7 Impact of organizational change, conflict and culture on HRM problem 11 How the problem has been managed in Toyota Motor Corporation 13 Conclusion 15 Recommendations 16 Action Plan 18 References 21 Introduction This study would critically examine the impact of human resource management on organizational effectiveness. It has been observed that employees are most valuable asset of an organization, driving overall success. Human resource management strategies are designed to enhance skill set and motivational level of employees. Corporate strategy can be successfully executed only when there is an alignment between HRM practices and employee needs. The concept of strategic HRM evolved in order to provide firms with a competitive advantage. In the last three decades, HRM practices have been treated as an integrated system that upgrades level of organizational productivity. There is a link between employees and organizational effectiveness, since team members play a vital role in accomplishing set goals. However, organizations are often subjected to wide array of HRM related problems that eventually degrades performance standard. Organizational effectiveness is highly dependent on employee productivity. There are various approaches which are adopted by an organization to improve employee productivity. For instance, continuous training and development, compensation strategies, etc., are common HRM strategies to keep employees motivated. It can be stated that highly motivated employees contribute maximum towards organizational productivity. Toyota Motor Corporation is one of the recognized players in the automotive industry. The company lacks continuous training and succession planning, which de-motivates employees and leads to increased rate of employee turnover. There is a need for continuous training because it enables employees to acquire skills or knowledge required for strategy execution. On the other hand, Toyota Motor Corporation operates in an industry, where there is consistent technology diffusion. The company recruits talented individuals, but lack of continuous training and succession plans, negatively influences team members. This HRM problem has been persistent since last few years. There are multiple reasons behind such problem – lump sum investment in other business activities; rapid change in organizational culture, management is relatively more inclined towards conflict resolution, etc. These issues keep HRM team busy and sufficient time cannot be allocated for designing training programs. However, certain training programs are structured for new recruits, which would not be beneficial if it is not followed consistently. Training and development is often considered to be ancillary activities that are closely knitted with organizational outcome. Employee performance is bound to improve if they continuously acquire job related skills. In large firms basically, there are various resources which change over a certain time period. Hence it is essential for such firms to update their employees on any kind of change taking place within workplace. Identification of HRM problem Human resource management comprises of various elements that are somewhere associated with employee productivity. In general context, there are wide array of HRM problems such as inappropriate compensation strategy, diverse workforce, employee loyalty, ambiguous job descriptions, etc. It can be stated that employees need to possess a sense of ownership so as to deliver desirable outcomes. This study shall reflect upon a critical issue which is commonly observed in large-scale firms. In large enterprises like Toyota Motor Corporation, management is more concerned about developing effective business strategies in order to achieve competitive advantage. Employees form the basis of retaining competitiveness in the market place. Lack of continuous training and succession planning is often considered as a minor issue, which can be resolved in later time period. However this issue can be the cause behind reduced organizational productivity, high rate of employee turnover, unwillingness towards adopting any form of organizational change, etc. The two aspects – training and succession planning are inter-related. This is because continuous training would make employees capable enough to opt for higher job positions within the system. It is clearly evident that team members do not wish to remain stagnated in a particular position, but they wish to succeed towards a better future. When organizations offer such growth scope, they eventually motivate employees to perform well and deliver productive results. Top management fails to analyze the return on investment in relation to human assets. In Toyota Motor Corporation, there is lack of continuous training because focus has shifted towards short-term payback. The reward strategy has been well implemented by the firm, since HRM department is inclined towards retaining star performers. There are less possible efforts undertaken for those team members who are loyal and attempts to accomplish set goals. Leaders are not nurturing team members; neither rewarding qualities of low performing employees. Job responsibility can be increased only when the top authority believes in refreshing necessary skills within employees. Toyota Motor Corporation provides limited education to employees and then allocates job responsibilities, assuming that employees would gain knowledge while executing tasks. This approach has not proved beneficial and employees are reluctant towards undertaking challenging tasks. The decrease in employee productivity has adversely affected organizational effectiveness. Lack of continuous education made employees incapable in terms of contributing ideas towards business growth. Creativity in team members is observed only when they possess sufficient knowledge on job responsibilities. There are few employees who exhibit creative skills, whereas others are observed to spend maximum time on analyzing business scenario, their job role, changes taking place in organizational system, etc. The lack of continuous training and succession planning results into an incompetent workforce. There is intense competition in the automotive industry, which requires workers to develop skills for retaining clients. The absence of continuous training programs make employees unaware about current market trends and suitable approach for dealing with clients. In global environment, there is wide array of players who are equally good. A firm can remain competitive in such scenario, only by reflecting upon human assets. To remain successful, individuals and businesses needs to acquire knowledge, so as to deliver value-added services and goods. A large-scale enterprise like Toyota Motor Corporation cannot be globally competitive by cutting costs or wages. It is observed that some firms prefer proper execution of allocated tasks, in comparison to building a creative platform. Organizational effectiveness can be correlated with creative skills, since these skills enable employees to gain a sense of ownership. Employee behavior can be regulated when management develops career succession plans. These plans are not only entitled to ensure job security but also motivate employees to raise their performance standard. It is observed that creative companies encompass team spirit, less stress and more fun. Training programs are not only utilized for incorporating skills in team members but they gradually encourage employees to contribute their valuable opinions towards business growth. Talent acquisition plays a vital role in companies such as Toyota Motor Corporation, which has already reached maturity stage of industry life-cycle. In current scenario, applicants are able to explore wide set of career opportunities. An organization effectively attracts talent through structuring well proved career advancement plan. In case of Toyota Motor Corporation, managers need to perform complex tasks since employees lack self-confidence. This study would be based on secondary information since management avoids such HRM problem, which has a direct impact on brand image. Theoretical frameworks would be used to understand various issues, associated with selected HRM problem. This deficit of training and succession plans is mainly due to lump sum investment in R&D and compensation strategies. Current situation analysis with theoretical evidence The organization is currently witnessing an issue of employee turnover. Toyota Motor Corporation is investing more in talent acquisition, due to widespread organizational units. There are less effort made towards re-designing training and development programs. The current situation is such that job responsibilities are diverse, but more than employees, managers or team leaders undertake responsibility of accomplishing goals. To be more precise, employee turnover rate has suddenly increased because team members are not being able to well understand allocated tasks, and simultaneously they do not identify any career growth opportunities. Organizational effectiveness is dependent on employee productivity. It is clearly evident that productive employees are usually highly motivated. Hence lack of motivation is somewhere a cause behind degraded organizational effectiveness. As per Schuler and Jackson (2014), motivation is an aspect which can be correlated with human psychology. The two most important theoretical frameworks on motivation are Herzberg’s two-factor theory and Maslow’s hierarchy of needs. Herzberg’s theory clearly indicates impact of two factors on employee satisfaction and motivation. These two factors can be stated as motivator and hygiene factors. Motivators simply influence team members to perform well and work harder. There are different forms of motivators which are implemented by real-world firms such as recognizing talent, career progression, developing a fun work environment, etc. On the other hand, hygiene factors can be described as those elements which can be a cause for employee dissatisfaction (Schuler and Jackson, 2014). For instance, inappropriate company policies, lack of desirable salary structure, ineffective relationship with colleagues or managers, etc. The hygiene factors and motivators are distinct by nature, since motivators enhance employee satisfaction and absence of hygiene factors results into employee dissatisfaction. Every organization needs to balance motivators and hygiene factors so as to ensure that employees are satisfied. For instance, in case of Toyota Motor Corporation, the firm is actively indulged into framing compensation structure, resolving conflicts, etc., which forms the hygiene factors. However, no such measures are adopted by the company to increase level of employee satisfaction, i.e., there is absence of motivators. This can be stated as one of the causes behind current issue faced by Toyota Motor Corporation. Organizational effectiveness is being adversely affected because the firm is only focusing on talent acquisition, which is eventually increasing its operational costs. Compensation system is able to prevent employee dissatisfaction, but it does not ensure enhanced motivational level. Maslow’s hierarchy of needs portrays the basic requirements for every individual. This framework shall highlight those elements which are not being addressed by the company. Figure 1 elaborates Maslow’s hierarchy of needs. Figure 1: Maslows Hierarchy of Needs As per this model, there are five basic needs such as physiological, safety, belongingness or love, esteem and self-actualization. According to Saks, Haccoun and Belcourt (2010), physiological needs mainly resemble shelter, food and water. Safety needs encompasses financial and personal security, along with wellbeing and health. Love or belongingness stands for family, relationships and friendships. Self-esteem needs can be stated as being respected or feeling confident. The ultimate need of every individual is self-actualization. This is a hidden desire for achieving everything possible in this world. The company reflects upon conflict resolution mechanism, so as to facilitate love or belongingness within the system. This strategy has been beneficial for the company since team conflict often disrupts workplace environment. The high quality of products delivered by Toyota Motor Corporation is only because of active collaboration between team members. In overall context, measures are taken by the company to maintain peaceful environment and in turn enhance employee productivity. However, productivity is closely knitted with self-esteem needs. An individual needs to feel confident before opting for any challenging task. The absence of continuous training program and career advancement options prevent team members from exploring unknown areas (Saks, Haccoun and Belcourt, 2010). In practical scenario, good salary structure is not the key requisite for triggering confidence in employees. Recognition is an essential component in today’s world. Employees would become productive when they see their hard work being recognized by management. Reward strategies implemented by the company are a step towards employee recognition, but it has been restricted to few star performers. This act gradually de-motivates other employees since they are unaware about their skill deficit. Self-esteem needs are often wrongly interpreted, for instance, it is linked with offering high incentives or monetary rewards. In the given case scenario, more than rewards there is a need to build diverse skills in team members and provide them with growth opportunities. The management as well as HRM department fails to analyze the fact that career growth options would motivate employees to perform well and succeed towards common goal. This misinterpretation of hidden wants has led to an ineffective organizational system. It is assumed that employee productivity can be increased when there is significant change made within a system. This form of assumption was proved wrong by Henry A. Landsberger through series of social experiments conducted in 1950. As per Thang, Quang and Buyens (2010), the Hawthorne Effect outlined that employees would work harder when they receive desirable attention, rather than exhibiting any physical changes. On the basis of this theoretical evidence, it can be concluded, consistent observation tends to make individuals more productive. A constant review of employee performance develops a competitive workplace environment. On the contrary, performance review without feedback is not beneficial for mediocre team members. The company lacks such feedback process, therefore, employees at times feel unattended. When team leaders contribute their feedback, then it ultimately influences employees to suggest areas of improvement. As described, the company is currently witnessing a major challenge in context of increased employee turnover rate. To certain extent, this issue is because of employee dissatisfaction, lack of appropriate strategies for addressing hidden needs of team members, no feedback, and rewards for top performers only, absence of recognition, etc. Apart from these root causes, communication can also be stated as a reason behind degrading organizational effectiveness (Thang, Quang and Buyens, 2010). Training and development sessions are not only structured for providing knowledge but it also serves as a communication platform. These sessions enable team members to discuss their problems with industry experts as well as management. Communication plays a vital role in reducing team conflict and motivates employees to set high performance standards. The absence of continuous training in Toyota Motor Corporation has not only disrupted self-confidence level in employees but also negatively influenced their communication skills. Since employees are not being able to communicate their issues, it is leading to workplace stress and ultimately flyaway. The company has always kept employees at the centre of overall business strategy, but it has failed to implement productive strategies which ensure high employee motivation. Impact of organizational change, conflict and culture on HRM problem Succession planning and training activities are highly dependent on the existing culture and overall organizational environment within an organization. While a supportive and collaborative organizational environment and culture can act as positive and supportive forces for developing suitable succession planning and employee training systems, the presence of a non harmonious organizational environment and conflicts of interest among different entities within the organization can have significant derogatory impacts on the formulation, implementation as well as the short term and long term outcomes of the succession planning and employee development and training programs. The succession planning system within Toyota Motor Corporation is likely to be supported by the existing organizational environment and organizational culture. The company is rich in terms of physical, tangible as well as financial and human resource base which makes it clear that the company is in a quite favorable position to implement advanced succession planning and employee development and training programs. From the perspective of the employees of an organization, it can be identified that company leadership acts as the key contributing force for developing job satisfaction, ensuring employee retention, engagement, involvement and commitment, especially with respect to nurtured and developed talent base in the organization. The presence of a supportive and positive organizational environment helps to develop the feelings of motivation, employee empowerment and engagement, thereby fostering a positive, contributive and collaborative organizational culture. Thus, steering the organizational actions towards the development of a relatable, effective and mutually beneficial succession planning system can only be possible if the most situation specific and relevant company leadership mechanisms are present within the organization. The leadership and managerial qualities of honesty, integrity and transparency are deemed to be the most significant drivers of a positive and impactful leadership structure with respect to succession planning system implementation within a company. Succession planning calls for planned future development of the organization through the identification of the most able human resource entities who can take up leadership positions and ancillary responsible positions in the future years of the business. This work of the human resource managers have to carried out in a proactive , flexible, renewed , organized and aligned manner which is not possible without the presence of a coherent and robustly designed organizational hierarchy and management structure. Succession planning is mainly important in cases where the workface is aging, the turnover rates are increasing, the need for a diverse and heterogeneous employee group is recognized and fast paced changes are identified in the organizational environment. All the changes come with associated challenges of management and leadership abilities which can be successfully implemented only when the overall organizational environment is positive, contributive and supportive for the establishment of new human resource management systems and mechanisms. The company has adopted newer employee management strategies like open door policy implementation, 360 degree feedback mechanisms, employee feedback systems, managerial performance monitoring, reviewing and rating techniques and setting up of employee grievance addressing departments within the company. All these mechanisms have been employed with the aim of developing a positive organizational environment, reducing conflicts within the peer employees or between different levels of employees and for the purpose of maintaining a diversified, culturally heterogeneous but at the same time cooperating and motivated groups motivate groups of human resources. How the problem has been managed in Toyota Motor Corporation Toyota Motor Corporation has been facing the problems related to the succession planning aspect of Human Resource Management since a long period of time. Since, the company operates in the automotive sector; therefore, it is largely dependent on technology, research and development, large scale capital expenditures and innovation. Toyota Motor Corporation has always remained at an advantageous position in terms of research and development, product design and differentiation and use of the latest technologies in the product design and manufacturing systems. However, the company has been facing major problems in the strategic human resource management aspects including leadership management and succession planning systems, especially due to the lack of suitably formulated succession planning methods. The lack of a leadership pipeline in the company is identified to be a major drawback which has led to the loss of many talented human resource groups developed in the business to the rival companies of Toyota Motors Corporation functioning in the automotive sector. The absence of a suitable succession planning system has also reduced the competitive advantage of the business in the fast progressing, intensely competitive and dynamic automotive sector. The company has been concentrating its resources, capabilities and competencies on the research and development and technology adoption processes while the contemporary aspects of human resource management like leadership development, strategies HRM and succession planning and training and development of the employee groups have been somewhat neglected over the last few years of the operations of Toyota Motors Corporation. The lack of development of potential leaders for the company has many times led to dwindling situations of the automotive business because in case some important leadership position is left vacant, the management of the business in times of crisis becomes a major issue. Of late, the management of Toyota Motor Corporation has started focusing on the arenas of leadership management, succession planning and training and development of the employees so that the future leaders of the company can be prepared and chosen, leadership positions are not left vacant for a long time and skilled and developed employees can be retained within the organization as intangible intellectual assets. These succession planning and employee development strategies are identified to be highly significant in the contemporary corporate environment marked by aggressive competition, high chances of absolution, lack of competitive advantage and need for recruiting, maintaining , developing and retaining the most skilled groups of human resources available in the sector or region of operations for the company. It can be said that though the company has started employing some measures and techniques of succession planning, yet in order to compete effectively and survive in the competitive automobile manufacturing segment, Toyota Motors Corporation has to focus extensively on the weaker aspects of the human resource management system including the succession planning mechanisms and employee development and retention techniques. Conclusion As per the study, human resource management problem can lead to decreased organizational performance. There is a strong relationship between employee productivity and firm’s performance. In intensely competitive business world, workforce is considered to be most valuable asset for an organization. Toyota Motor Corporation operates in a competitive industry segment, where talent retention is comparatively more important than talent acquisition. In last few years, the company is spending tremendously on recruitment policies because of increased rate of employee turnover. There are various reasons which can be held accountable for this employee turnover issue. However, the most prominent one is lack of training and succession planning. It cannot be stated that the company completely avoids employee recognition, but strategies designed are not effective enough to drive employee motivation. There is a need for implementing continuous training sessions irrespective of investment made in other business areas. These sessions also would include career growth opportunities for team members. Employee motivation is the most important component when it comes to increasing organizational productivity. Lack of continuous training and succession plans have made employees dissatisfied and reduced their confidence level to opt for challenging tasks. It can be inferred from the discussion that the exiting organizational environment, work culture, employee relationships and organization system have far reaching impacts on the design, implementation and outcomes of the succession loaning systems in the specific organization. Since, succession planning is a crucial human resource management activity that is dependent on the external and internal factors related to the organization, therefore, implementing and establishing a robust succession planning system within an organization can be a challenging task for the human resource management group of a contemporary organization like the Toyota Motor Corporation. Additionally, it should be kept in mind that succession planning is a challenging HRM task that calls for high levels of physical and financial resources and capabilities in the organization. Suitable HRM professionals should be employed for the purpose of developing and implementing the most relevant, robust and feasible succession planning system that would cater to the existing as well as the potential requirements of leadership positions for the company. Thus, in case of Toyota Motor Corporation, a feasible and intricate action plan should be developed by the HRM of the company for the succession plan implementation process. Also, the recruitment of skilled HRM professionals, use of latest training methods and the employment of sufficient levels of resources and capabilities should be done in the succession planning process to achieve the desired outcomes at the organizational level. Recommendations The company is currently at a financially stable position, and hence, implementation of certain change strategies would not be difficult. Training and development sessions have been designed by the company to educate new recruits. These sessions provide clarity on job responsibilities and roles. On the contrary, lack of continuous training prevents employees from understanding any organizational change, future job responsibilities, etc. It is recommended that the company should design training and development sessions separately for new recruits and existing employees. This would enable the firm to analyze diverse requirements possessed by team members. Training and development program would comprise of industry experts and members of HRM department. These programs shall be designed in such manner that it provides knowledge on job requirements as well as encourage employees to come forward with their creative ideas and complaints. It would be a form of an open platform, where team members share their problems and ask for solution from respective leaders. This recommended strategy will eradicate negative attitudes which prevent employees from exploring creative ideas. Diversity of thinking can be encouraged through making team members knowledgeable about market trends, changes in company offering, ways of dealing with clients, etc. Experience develops confidence within team members. However, such work experience can be developed only when employees are retained. The HRM problem identified can also be resolved through giving responsibility to departmental leaders in context of arranging training sessions. It can be stated that succession plans are designed by HRM department and the top authority, which is later communicated across other departments. In such large enterprises, HRM department is expected to perform wide set of operations. Hence, transferring few responsibilities to respective departmental members would resolve identified problem. This recommended strategy is feasible because the company already comprises of talented professionals, who can provide required training to juniors. These sessions with departmental leaders would be held once in a week, so as to identify key loopholes in every team member. Employee satisfaction would subsequently increase, because they shall feel more comfortable with departmental heads, while discussing their key problems. HRM departmental members basically do not possess sufficient knowledge about functioning of every business units. Therefore, HRM team might not be able to come forward with appropriate strategies or solutions. The major aim of Toyota Motor Corporation in current scenario is to retain employees and increase overall productivity. This aim can be accomplished by cross-cultural training sessions. In general context, companies avoid investment in training programs because it does not ensure a valuable return. This innovative strategy is being recommended because the company possesses sufficient funds to manage such cross-cultural training sessions, and also comprise of talented employees across the globe to conduct these sessions. The concept of cross-culture refers to understanding diverse cultural components and then utilizing it for future productivity. Employee motivation can be correlated with such sessions, because when team members are aware about varying cultural entities, they can view future career scope within the organization. This recommended strategy can also be considered as a part of succession planning, where management does not set any rules but provides an opportunity where employees of global business units can interact and determine future growth potential. A broader view on global business environment would encourage employees to remain competitive. Action Plan The proposed action plan for implementing the recommend succession planning, training and development strategies in the Toyota Motor Corporation is given as follows Objectives Action or activity Necessary resources Possible challenges Imparting suitable levels of training, development and support to the new recruits Training and development session for new employees Training personnel, Training materials, existing employees who can train the new recruits Lack of suitable resources and methodologies to impact proper training to the new recruits Retaining employees and increasing the employee as well as the overall organizational productivity Cross cultural training sessions, diversity based employee induction systems. Skilled professional for imparting training, employees who have the leadership talent to conduct formal and informal cross cultural training programs. Lack of interest and motivation among the employees to participate in the training programs as voluntary trainers or trainees. Conflicts of interest and peer rivalry among the individual employees or employee groups. Developing and retaining a talented base of employees within the organization. Focusing on supporting the development of the employees and extending appropriate support systems and training and development programs to cater to their personal objectives and goals along with the organizational objectives. Trainers, profession HRM practitioners, in house and external training and HRM personnel. Job dissatisfaction prevailing among the employees working in the organization, high level of attrition in the automotive sector (Conger and Fulmer, 2003). References Conger, J. A. and Fulmer, R. M., 2003. Developing your leadership pipeline. Harvard Business Review, 81, 12, 76-84. Saks, A. M., Haccoun, R. R. and Belcourt, M., 2010. Managing performance through training and development. London: Cengage Learning. Schuler, R. and Jackson, S. E., 2014. Human resource management and organizational effectiveness: yesterday and today. Journal of Organizational Effectiveness: People and Performance, 1 (1), pp. 35 – 55. Thang, N. N., Quang, T. and Buyens, D., 2010. The relationship between training and firm performance: a literature review. Research and practice in human resource management, 18(1), pp. 28-45. Read More