Analysis of HR Function in a Technological Firm - Case Study Example

Analysis of HR Function in a Technological Firm

Introduction

In the 21st century, the function of HR has received considerable attention owing to the challenges brought about by globalization. The increased migration of people around the world and the internationalization of firms have presented challenges such as diversity in the workplace and the need to understand and maneuver the multicultural environment. Also, managers have realized that the people resource in the firm can be used as a strategic approach to enhance competitiveness and improve operations (Armstrong, 2012). Recent decades have seen the advent of strategic HRM that is devoted to present issues in the organization. Strategic HRM identifies that HR can play a detrimental role in the firm's performance and seeks to integrate the functions of HR to the organization's objectives thus facilitating the organization to achieve its goals (Armstrong, 2012). HRM focuses on factors such as people resourcing and talent planning. It is an integral approach to employment, development and well-being of an organization whose functions include creating a positive relationship between management and its employees, ensuring the organization obtains the right or talented personnel and aiding the organization to realize its objectives (Armstrong, 2012). In spite of criticism citing that HR function is dead, HR is very much alive and integral for an organization to achieve success.

HR involves people, and people are central to the success of the business. There is a plethora of research stating that ‘intangible assets’ of a firm play an important role in defining the value of a firm in the capital markets (Effron, Gandossy & Goldsmith, 2003). Intangibles such as brands, worker skills, organization routines, customer relationships can account for approximately two-thirds of marketplace value (Effron, Gandossy & Goldsmith, 2003). Intangible assets rest on human and organizational capabilities to innovate, share and maintain values, manage relationships, learn and utilize skills. There are professionals who see HR as endangered as they view it as being vulnerable to outsourcing to consultants or replacement by technology. However, in a study by Collins and Clark (2003) researchers identify that HR functions contribute to higher performance and sustained competitive advantage as the HR approaches are often difficult to imitate, causally ambiguous and unique. The resource-based view of HR argues that HR involves the human resources of an organization thus providing the organization with a unique character while enhancing its competitiveness.

Organization HR Function

HR seeks to deploy the knowledge, skills and abilities of its people resource to become successful. The functions of HR involve providing the organization with structure and frameworks to meet its objectives. The department focuses on recruitment, employee relations, training and development and employee retention. The principle objective of HR is to enable management to integrate organization and employee needs (Alan, 2007). HRM is an elastic term without a general definition. However, theories such as the resource-based theory of the firm and the learning organization have contributed to the development of the characteristics of the HR practice.

The HR function involves developing of the people resource to ensure that they can meet the organization's objectives. Western scholars largely influenced traditional approaches to the function of HR, for example, Michailova et al. (2009), who identified HR as management of employee welfare and the control of employee absence (Thill et al., 2014). Karen Legge (1978; 1975) identified personnel managers are problem-solvers and their roles varied as conformists’ innovator or a deviant innovator. The conformist innovator accepts the objectives of the organization and strives to achieve them. Contrarily, the deviant innovator makes an effort to change the organization by creating acceptance for another concept of organization success (Thill et al., 2014).

HR functions are concerned with management and development of people. They focus on the development and implementation of HR strategies and policies in areas such as organizational development, HR planning, talent and knowledge management, welfare and other people management activities (Armstrong, 2006). More sophisticated HR functions seek to achieve strategic integration and coherence in the development and operation of HRM policies and employment practices. Strategic integration can take on a vertical approach which involves ensuring that HR strategies ‘fit’ or are integrated with the business strategy (Armstrong, 2006). There is also a horizontal integration approach in which management incorporates a set of interrelated HR employment and development policies and practices, and mutually reinforces them into the organization.

There are usually hard and soft approaches to HRM in which the ‘hard’ HRM focuses on the resource side of the human resource (Alan, 2007). In this approach, the HR focuses on costs in the form of ‘head counts’ and ensures control is in the hands of management for the purpose of managing numbers and keeping the workforce closely matched with organization requirements. Soft HRM stresses on the human aspects of HRM. This approach includes leading the people rather than managing them and entails communication and motivation (Alan, 2007). The softer approach to HR identifies the people resource is an integral factor in determining and realizing strategic objectives. In this approach, managers become enablers who aid in structuring an organization to enable employees to achieve objectives. Managers become the ones to empower as they devolve decision-making to the lowest levels (Alan, 2007). Also, managers become facilitators as they engage and assist employees. From this perspective, managers no longer function as supervisors but rather as facilitators as the organization moves away from rigid hierarchies and power distinctions to people taking responsibility for their work (Alan, 2007).

According to Ulrich’s HR model, managers have four main roles that cover dimensions such as strategic/operational focus and people/processes oriented (Borough et al., 2012). Ulrich argues that organizations should shift the HR function from focusing on what the department does, that is recruiting, training and development, to how it delivers. Ulrich identifies four key areas of activity that can support HR position and ability to deliver. The activities include become a strategic partner, administrative agent, employee champion and an agent of change (Borough et al., 2012). In becoming a strategic partner, HR is involved in the management of strategic resources and should, therefore, align HR strategy to the overall business strategy. As an administrative assistant, HR should engage in the re-engineering process to build an infrastructure that supports HR. As an employee champion, HR should engage in the management of employee contribution and should therefore listen and respond to employees (Borough et al., 2012). HR is a change agent and therefore should be able to meet the challenges of the changing business environment and positioning the business to execute a strategy. Each role in the Ulrich model combines to focus on delivering improvement on the HR function and within the organization.

The HR function according to Ulrich, focuses on its administrative role. As an administrative expert, HR should ensure processes such as recruiting, rewarding and disciplining as well as training amongst others is optimized to ensure organization success. The HR functions must track, monitor and continuously improve basic processes concerning people management to give credibility to its existence (Price, 2007). According to the CBK approach, the HR function should provide an organization with direction towards achieving its objectives and missions through effective human capital management. Furthermore, the HR function should educate the management team on key HR issues and ensure alignment of key HR policies with organization values, strategies, and goals.

The Ulrich Model (Borough et al., 2012)

Strategic HR Approach in a Technological Firm

Technology companies face environments that are fast-paced. The short product life cycle and stiff competition require a firm whose organization culture and structure facilitate change. In this research, the HR function of a technological firm is analyzed. The firm consists of over 115,000 employees and consists of annual revenue of $233.7 billion. The operations of the firm involve manufacturing, marketing, and designing of mobile communications, various software, media devices and personal computers. Located in the U.S, the firm faces local and international pressures owing to the stiff competition from foreign and domestic firms. As a leading company in the local and international market, the technological firm in this study faces three environmental trends. The trends include industry regulations, change in consumer demographics and consumer preference coupled with the increasing demand for value-based products (Armstrong, 2010). However, the firm identified some flaws in their organization that included poor working conditions, long working hours and the need for innovation. According to the theory of best fit, an organization should match its HR function with the context and circumstances of the organization (Armstrong, 2006).

According to Porter (1985), organizations that seek to have a competitive advantage should develop strategies that focus on innovation, quality and cost leadership. Researchers contend that to achieve the maximum effect of the strategies; it is necessary to match the role characteristics of people in the organization with the preferred strategy (Armstrong, 2010). Organizations can be more effective if they adopt a policy of strategic configuration, which involves matching the firm’s strategy to one or more ideal types depending on the organization. For example, some organizations are defenders, meaning that they operate in a more stable environment. Defenders can engage in long-term planning as their environment is fairly stable. However, the technology firm can be identified as a prospector as it is located in an environment characteristic of rapid and unpredictable changes (Armstrong, 2010). According to Miles and Snow (1978), prospectors have few hierarchy levels as they are decentralized. Resultantly, I-Tech needs a ‘best fit’ strategy to deal with issues such as employee stress.

In the technological firm, the functions of HR aim to facilitate employee development thus enhancing their performance. The functions are related to the firm’s strategic initiatives that include enhancing the consumer’s experience through innovative products such as hardware and software. The company constantly focuses on innovation and requires deep collaboration and teamwork from its employees to ensure that the products manufactured are unique and consist of latest technologies. The firm also focuses on resources to ensure efficient use of the limited resources. Through powerful HR practices, management can support strategic initiatives and processes thus preparing the organization and its talent to contribute to the broader strategy (Ramona & Anca, 2013). For example, if the firm seeks to improve its customer service then management can translate this strategy to discrete human resource strategies that entail the use of training plans or performance improvement plans (Ramona & Anca, 2013). In this case, the purpose of human resource department is to become an active partner for the organization in the development of strategy initiatives.

Recruitment

In a technological firm, HR is used strategically thereby facilitating the achievement of the organization's goals. For example in recruitment, the company requires highly skilled and talented individuals who will contribute to their innovative goals. HR practices are therefore linked to the firm’s strategic aims, for example, recruitment is linked to the firm’s strategic initiatives to ensure that the right candidates are selected to achieve the firm’s goals. A proactive approach to recruitment that focuses on the proactive targeting of candidates leads to a richer pool of applicants and enables companies to reach better candidates faster (Cunningham, 2016). Traditional corporate recruiting has prioritized HR practices such as targeting campuses, use of head-hunters and massive executive search processes. While these approaches are still relevant in today’s environment, the internet has become a key driver in recruitment strategies. Other sources that are utilized in the recruitment process include sourcing key candidates from other companies, internet marketing through corporate websites and social media recruiting (Cunningham, 2016). In the technology firm, the HR looks for the best fit for the organization through targeting campus graduates, utilizing online recruiting tactics and offering internship opportunities.

The technology firm has an established recruitment policy that guides them in attracting the highest level of staff. First, the company conducts strategic planning to identify the ‘gaps’ existing in its workforce. Strategic planning involves the establishment of the goals and objectives that the firm intends to achieve (Cunningham, 2016). The second step involves human resource planning in which the HR conducts an internal analysis to determine whether there is a shortage or a surplus in the workforce. If there is a shortage, then the firm utilizes recruitment methods such as outsourcing. The recruitment policies set up is in line with the HR strategy. The policy reflects the organization’s code of conduct is this line of activity. The policy determines whether the firm will recruit internally or externally (Cunningham, 2016). The technological firm utilizes a multi-channel approach that incorporates various recruitment processes and methods to attract talent.

In the recruitment process, the purpose of HR is to match HR resources to the strategic and operational requirement of the firm. The approach ensures full utilization of the organization’s resources as it focuses on selecting people who ‘fit’ the strategic objectives and organization culture. The approach is based on the resource-based view that argues that firms can achieve competitive advantage through recruitment, retention, and development of a more capable workforce compared to its competitors (Armstrong, 2010). Strategic recruitment approach involves matching the candidates and the organization beyond the traditional approach. In strategic HRM, management places emphasis on finding people whose attitudes and behavior can support the business in achieving its goals. Screening and selection of candidates are based relevant knowledge, skills and abilities as well as personal factors that are necessary to ensure the job is performed optimally.

Talent Management and Training

In the highly competitive environment, talent management is important as it enables the firm to enhance its competitive advantage. The approach involves identifying people with the best talent as a strategy of transforming the organization to achieve its objectives. Talent management is closely aligned with HR strategy in the technological firm as it enables the company to develop ‘pools of talent’ that can be utilized to enhance its competitiveness (Price, 2007). The organization has a talent policy that guides in the management of talent. The criteria of the talent management framework involve extensive, new employee orientation, use of selection and rewards to align employees with the integral values of the firm, careful succession planning and leadership selection and investment in human capabilities through recruiting, training and development (Silzer & Dowell). Having a strong talent in the company has a positive impact on the business outcome. Studies indicate that integrating talent management into the organization can raise productivity by over 40% and can lead to measurable financial business results (Silzer & Dowell). In the case of the technological firm, the company’s core business strategy involves being “the most innovative company in the world.” Therefore, it should come as no surprise that talent acquisition, training, and development represent a critical component to the firm’s success. The company’s framework has four distinct categories that include:

• Talent acquisition: Finding the right talent and enhancing the candidates experience across attraction, recruitment, hiring and onboarding process
• Talent management and development: Developing and delivering opportunities for development for the employees
• Training: Involves developing skills and knowledge capabilities in latest technologies to enhance performance and facilitate career advancement
• Inclusive Culture: Shaping the culture and reinforcing behaviors that support talent not only of the present but also of the future.

In the company, talent management, and development entails how management conceptualizes building and developing broad-based talent capabilities versus acquisition, training, and development of leadership or cultural factors. The approach takes place either formally, through tools, training, and people planning and informally in the fabric of the organization’s culture (Silzer & Dowell, 2010). Every location of the firm provides regular training and the culture within the firm reinforces the need to get ready for “The next big thing” (Sullivan, 2011). The real key to the firm’s success occurs after onboarding, where the cultural expectation is that after succeeding in one task, the employee immediately moves to something completely different. The fast-paced nature of operations requires constant training and learning compulsory. Resultantly, the expectation of radical change creates little resistance from the employees concerning the need to constantly enhance their skills and expertise.

A lean talent management approach significantly contributes to the firm’s productivity. One of the ways to measure the company’s workforce productivity is through revenue per employee. In the technological company, the revenue per employee is approximate $2 million (Sullivan, 2011). The lean talent management approach follows the philosophy of purposefully limiting the number of staff and cost control thus making the workforce more productive and innovative (Sullivan, 2011). The approach involves proper planning, good implementation and the incorporation of effective change management practices and leadership. Also, the approach included stress management interventions and implementation of an effective change culture so that every employee adopts a lean approach. The purpose of lean management is to eliminate the need to re-do a project which is time-consuming and costly. The approach also eliminates the build-up of wastes thus enabling the firm to get things done quickly.

The talent management strategy in the firm does not just co-exist with other organizational programs but also supports and integrates them. It is driven by strategies and seeks to achieve results. As illustrated in the figure below, business results, which are the outcomes for measuring whether the firm is effective, influence talent and business strategies. Through the talent management approaches such as attracting and selecting talent, HR can ensure talent is available to achieve the organization's goals (Silzer & Dowell, 2010). HR practices such talent management are integrated and connected thus allowing a smooth flow into the organization.

Talent Management Framework (Silzer & Dowell, 2010)

Risk Management

Strategic HR approach to risk management involves the identification of the risks that an organization faces and how best to manage those risks. The risk management process involves identifying risks, assessment and taking steps to ensure that the risk is reduced to acceptable levels. In the technological firm, the risks the company faces include supply chain issues, short product lifecycles, and risk of obsolescence along with high consumer expectations. The risks an organization encounters can either be classified as preventable or strategic risks (Kaplan & Mikes, 2012). Preventable risks majorly include internal complications, for example, illegal, unethical or inappropriate behavior from the workforce. Strategic risks, on the other hand, involve those that a company voluntarily accepts to achieve a certain objective. For example, a bank assumes a credit risk with the sole aim of realizing returns. Firms also face external risks which are beyond its influence and control, such as the short product lifecycle (Kaplan & Mikes, 2012). External risks cannot be managed in a similar manner as managing strategic or internal risks. External risks require a different analytic approach since managers find it difficult to forecast them and also because of the low probability of occurrence.

The role of HR in risk management is detrimental to preparing a firm for catastrophes. The HR function focuses on human capital or people risk, HR operational risks which refer to the risks created by operational management, HR professional risks and HR personal risks. The effective application of legislation and the need for an organization-specific HR risk management processes are crucial for the technological organization. In the organization, HR needs to be ideally placed to influence appropriate management system developments and creation of a pro-active internal environment for the purpose of risk identification and resolution (Stevens et al., 2006). Also, the HR must seek to ensure that the organization incorporates a concept of risk management within its normal management of businesses. The HR proactively leads the organization in the creation of a framework and culture that centers the management of risk to prevent the firm from becoming reactive when a crisis occurs (Stevens et al., 2006). HR professionals utilize their skills in relationship building and facilitation to ensure that the organization supports its open culture and consists of a challenging corporate “mind” that are prepared to work together to contribute to the overall strategic objectives.

When it comes to risk management, HR seeks to identify the risks that it is managing, create mechanisms for control and ensure that the business managers have the ability to manage the risks on an on-going basis. Risk management is a process and support from the senior management can significantly enhance the implementations of the frameworks set up by the HR. First, HR needs to analyze the internal and external environment to identify the risks that the firm can face (Stevens et al., 2006). After identifying the risks, then management should prepare a range of solutions for almost every case. Through satisfaction and frustration surveys, HR can also identify what works for the organization and what does not. Senior management commitment ensures that the HR obtains support in developing a positive risk-management culture thus enhancing the effectiveness of risk-management strategies, active involvement and accountability from all management positions.

How HR Activities are Related to CBK

In the technology firm, there is the ‘e-HRM’ software that aids in the HR functions. This is related to the CBK Management Information Systems (MIS). The influence of IS (Information Systems) on organization control, innovation, organization change and project management practices has been well documented. IS are described as a disciplinary technology that is designed to regulate the action of workers. Also, this technology enables managers to produce information that improves the management’s ability for surveillance of the outcomes of HR practices. In the technology firm, management has successfully integrated e-HRM into the organization’s life. E-HRM reduces the routine transaction and complex human resource activities that organizations traditionally deal with. The system is designed to acquire, store, manipulate, analyze and distribute relevant information regarding an organization's human resource (Bondarouk, Ruel & Looise, 2011). E-HRM applications include administrative and workforce management applications such as the core HR, payroll, and record keeping. Other applications include service delivery applications, strategic HR applications such as e-learning and business intelligence applications (Bondarouk, Ruel & Looise, 2011). E-HRM is a good way for implementing strategies, policies and practices and assists in decision-making, monitoring changes, and management of the workforce.

In accounting, HR function enables the organization to adopt cost-efficient approaches in operation. HR facilitates strategic control of the firm as they limit the accumulation or error, minimize costs and establish frameworks for coping with organization complexity. The technological firm cuts costs by investing in developing its people within the organization to meet the objectives or the demands of a specific job as opposed to outsourcing. Also, the firm expects its employees to be self-reliant and therefore they are expected to utilize e-learning resources developed by the company for their skills development. This approach minimizes the need to hire institutional trainers or facilitators for training and development. The firm’s HR strategy is a functional strategy that is integrated with marketing, finance, operations as well as other relevant functional strategies (Cunningham, 2016). Through recruitment strategies and talent management, the firm can effectively undertake staffing initiatives which allow them to attract and retain productive employees thus reducing its operational costs (Cunningham, 2016). Since the HR understands the mission and objectives of the firm, the HR can formulate strategies that are cost-effective, for example, reducing customer response time, meant time to repair and reduction of cycle time (CT) for processing goods for the purpose of minimizing costs.

The technological firm has effectively integrated its HR practices with marketing which is related to CBK. Some of the HR activities in the firm that influence the marketing function include talent management. Through the acquisition and retention of talent, the firm ensures its innovative strategies are high which in turn lead to the production of innovative technologies. HR is a socially constructed system and process that can integrate the organization's objectives into the culture and frameworks of the firm. Therefore, through strategic HR, the firm has developed a culture that prioritizes work and innovation which ensures that its products achieve a high market value. The firm dominates through continuous innovation. Through its recruitment strategy, the firm can either internally or externally meet its staffing requirements while ensuring that the obtained staff can successfully meet its branding and other marketing requirements.

In a study by Prajogo and Sohal (2003), the researchers explore the relationship between TQM practices, quality performance and innovative performance in a firm. The study indicates that in organizations, the TQM positively relates to both product quality and innovative performance. The practices incorporated by the TQM framework such as leadership, strategic planning, people and process management positively contribute to innovation performance regarding product and process. TQM contributes to innovation performance thus providing a foundation for the organization to manage quality (Prajogo & Sohal, 2003). In the technological firm, TQM practices have successfully aided the firm to identify talent and to utilize that talent in meeting its innovative strategies regarding product and process.

Economic influence significantly affects HR strategies. For example, changes in the international economy can significantly impact national economies owing to the integration of world economies. In the firm, there are several HR approaches that seek to mitigate the pressures arising from economic challenges. Changes in the economy can directly or indirectly affect the HR practices such as recruitment. As a strategic partner to the organization, the HR can engage in concession bargaining to adjust wage rates. The approach is particularly successful in companies that are open and transparent. Also, the HR can approach economic crisis by undertaking employee adjustment. This approach involves reducing employee numbers or increasing work time flexibility to reduce costs. The firm can re-organize work time to avoid overtime and redundancies.

In the modern world, internationalization of businesses is important as it enables the firm to enjoy the benefits of internationalization, for example, increased revenues. In the technological firm, international business is an important component for the firm as it seeks to become a world market leader. The firm’s international approach is ‘global’ in that there is little product differentiation or customization of the product. HRM practices are based on a divergence approach in which the HR frameworks undergo a process of diffusion and adoption based on the diverse national, cultural and regional contexts (Hayton, 2012). Some of the HR practices in the international business include sending people from its home country to the host country. Second, the firm hires the country’s nationals to participate in the workforce or management. Third, the firm can hire from natives from other home countries. The firm has a holistic approach to HR that seeks to capitalize on diversity and reconcile differences in the workforce.

When it comes to applied decision making, the firm lacks a department that focuses on issues and in coming up with appropriate decisions for those issues. However, the firm has established several tools and techniques to assists it in decision making. First, the firm engages in tactical decision making. This approach involves choosing among alternatives with an immediate or limited end view (Hansen et al., 2007). The tactical decision-making model consists of several steps that include recognizing and defining the problem. The next step involves identifying alternatives that are possible solutions to the problem. At this point, management should eliminate any alternative that is not feasible. The third step involves identification of the predicted costs and benefits associated with each alternative that is deemed feasible (Hansen et al., 2007). In the next step, management compares the relevant costs and benefits for each alternative while relating each alternative to the overall strategic goal of the firm. Lastly, management selects the alternative that will enable the firm the firm to realize the greatest benefit and supports the organization’s strategic objective (Hansen et al., 2007).

In conclusion, the technological firm that has been the subject of this research identifies the need for effective HR strategies in ensuring that it remains competitive. Through the HR functions, management has been able to successfully integrate HR practices into the overall business strategies to facilitate the achievement of its set objectives. Through strategic HR practices such as Talent management, the firm has been to control its staffing and to acquire a pool of talents that will enable the firm to achieve its objectives in marketing, accounting, and other functional frameworks. The success of the firm in the market can be linked to its HR strategies that have enabled the organization to manage the human resource effectively.