Contemporary issues in managing human resources - Essay Example

? Contemporary Issues in Managing Human Resources Contents Introduction 2 Definition of Terms 2 Rationale for Downsizing 4 The Effects of Downsizing 5 Implications of Downsizing to Future HRM Trends 6 Recommendations 8 Conclusion 9 Reference List 9 Introduction The scope of human resources management (HRM) becomes more extensive as management endeavors to meet the needs and goals of its people in the organization. The evolution of human resources management in terms of theoretical frameworks, research and diversity in applications has been increasingly significant in the last century. As averred by Ferris, et al. (1999), “driven by a number of significant internal and external environmental forces, HRM has progressed from a largely maintenance function, with little if any bottom line impact, to what many scholars and practitioners today regard as the source of sustained competitive advantage for organizations operating in a global economy” (p. 385). Further, contemporary HRM issues include the more qualified term using strategic HRM as establishing the link towards monitoring the quality of employee performance. Another pervading concern of global organizations is the option for downsizing, specifically when external environmental pressures and competitive factors impinge on the decision-making process, to ensure survival and continued production and operation. In this regard, the current research aims to proffer issues in contemporary HRM, particularly focusing on downsizing. The objective is planned to be attained by initially defining relevant terms, such as HRM, strategic HRM, and downsizing. A concluding portion would highlight the significant issues discussed as supported by various authoritative sources from academic journals on the subject of HRM. Definition of Terms An examination of various definitions of HRM by authors, academicians, and management practitioners, shows more common elements than disparate concepts. After synthesizing these elements, the following definition is arrived at: HRM is the art and science of acquiring, motivating, maintaining, and developing people in their jobs in light of their personal, professional and technical knowledge, skills, potentials, needs and values and in synchronization with the achievement of individual, organization and society’s goals. HRM deals only with people so that they can manage the other resources within their domain of responsibilities more effectively. On the other hand, strategic human resources management (SHRM) is defined by Boxall and Purcell (2003) as “concerned with explaining how HRM influences organisational performance. They also point out that strategy is not the same as strategic plans. Strategic planning is the formal process that takes place, usually in larger organisations, defining how things will be done. However strategy exists in all organisations even though it may not be written down and articulated. It defines the organisation’s behaviour and how it tries to cope with its environment.” Authors Boxall and Purcell examined the interrelationships and extent by which organizational goals are achieved and influenced by HRM. They differentiated HRM from SHRM by indicating that “HRM was defined as including “anything and everything associated with management of employment relations in the firm” (Boxall & Purcell, 2000, p. 184). The theoretical basis for the inclusion of the word strategic to HRM was detailed using a review of various literatures from scholars on the subject. Boxall and Purcell finally averred at this definition of SHRM as “concerned with the strategic choices associated with the use of labour in firms and with explaining why some firms manage them more effectively than others” (2000, p. 185). According to Miller (2001), “HRM could not be conceptualized as a stand-alone corporate issue” (p. 348). The inclusion of strategy was regarded as a necessary addition to incorporate marketing efforts to gain competitive advantage with effective use of the organizations’ resources. However, despite the effective design of an organization’s strategic HRM to ensure that all human resources are capable and competent to do their respective responsibilities, there are instances when external factors, like the recent global financial crisis, that requires organizations to streamline their operations in order to survive. Most contemporary organizations have chosen the path of downsizing. Cascio (1993) defined downsizing as “the planned elimination of positions or jobs, is a phenomenon that has affected hundreds of companies and millions of workers since the late 1980s” (p. 95). In another research, Freeman and Cameron (1993) expounded on the concept of downsizing as constituting “a set of activities undertaken on the part of management of an organization designed to improve organizational efficiency, productivity and competitiveness. It represents a strategy implemented by managers that affects the size of the firm’s workforce and the work processes used” (p. 10). The research conducted by Sahdev and Vinnicombe (1998) sought to determine crucial issues surrounding downsizing, such as reasons for downsizing, the reactions and attitudes, as well as performance and expectations of survivors. The authors also examined the role of HR during the downsizing process and determined its effect on the organization, as a whole. Rationale for Downsizing Diverse researches have indicated that the rationale for downsizing is ultimately for increased economic benefits (Sahdev and Vinnicombe, 1998, p. 4). Other studies contend that downsizing is resorted to by organizations with the objective of reducing overhead costs, increasing a perceived shareholder value, rising productivity, improving communication and encouraging greater entrepreneurship (Cascio, 1993; Bailey and Sharman, 1998; Kets de Vries and Balaz, 1996). The research conducted by Sahdev and Vinnicombe (1998) enumerated the following reasons for downsizing opted by organizations: restructuring, delayering, changing organizational culture, technology enhancements, outsourcing, lack of funding, different competencies, global competition, multiskilling, competitive tendering, merger, acquisition, and other reasons ranging from cost control, cost reduction and relocation (p.8). The authors revealed that aside from downsizing, organizations could opt to use any of the following alternatives: contracting out, redeployment, part-time and reduced working hours, and a host of other methods (“recruitment restrictions, non-renewal of fixed-term contracts, reduction in overtime, and termination of temporary contracts”) (Sahdev and Vinnicombe, 1998, p.9). However, for most of the organizations that immediately chose downsizing as the alternative, a total of 48.2% did not use nor consider the abovementioned options (ibid.). The Effects of Downsizing Despite the identified reasons, Sahdev and Vinnicombe (1998) contended that in most organizations that opted to downsize and identified clear objectives of creating positive improvements through increased financial performance, there have been several studies that prove that these organizations do not actually meet the defined goals (Cameron, Freeman, Mishra, 1991; Knox, 1992). Organizations that announce layoffs have posted negative outcomes and worsen their financial positions specifically after two years (De Meuse, Vanderheiden, and Bergman, 1994). With preliminary information validated from abovementioned researches, the effects of downsizing could be presented in terms of determining outcomes from the points of views of the organization, the employees who were laid off and the employees who were retained. Generally, for the organization that opted to downsize, the effects have been revealed to focus on: ‘corporate anorexia’ – making the organization thinner but not healthier (Hamel and Prahalad, 1994); loss of creativity and overwork (Kennedy, 1996); loss of employee morale (Kettley, 1995); and retained employees manifesting ‘survivor syndrome’, defined by Noer (1993) as a “generic term that describes a set of attitudes, feelings and perceptions that occur in employees who remain in organizational systems following involuntary employee reductions. Words commonly used to describe layoff survivor sickness are anger, depression, fear, distrust and hurt” (p. 45). The explanation and justification for these effects stem from the need for the survivors to assume tasks and responsibilities left by other employees but need to be learned and done. For victims of downsizing, the effects were revealed by O’Neill and Lenn (1995) as suffering from loss of income, prestige and security over the need to change careers and subject their families to anxieties and lack of financial support. The authors likewise validated the fact the organizations do not actually improve after downsizing (O’Neill and Lenn, 1995, p. 23). From the perspectives of the survivors, there were perceived increases in stress levels as they tried “to cope with conflicting demands and expectations from employers operating in customer driven and competitive environments. The net result is that survivors have had to take on increased workloads leading to an increase in stress levels” (Sahdev and Vinnicombe, 1998, p. 13). Implications of Downsizing to Future HRM Trends The role that HRM plays during the downsizing process has been evaluated by Sahdev and Vinnicombe (1998) where results indicate that the functions expected from HR were deemed most crucial during the process. The results of their study indicate that retained employees have acknowledged that their presence and expertise responded to the needs of the employees at this time when they are needed most. The authors revealed that “HR’s role in facilitating the change process was perceived to be most effective during downsizing. It is interesting to note that even after downsizing, HR Directors/Managers see themselves as having an increased input in this area” (Sahdev and Vinnicombe, 1998, p. 17). According to Kuczynski (1999), “the earlier HR is involved in the planning process, the more likely a downsizing will be successful. Even an HR department that has previously been limited to a compliance role can help smooth the downsizing process. That's because downsizing is a chaotic, emotional and uncertain experience. To survive it, companies must rely on skills that are at the heart of the HR profession: workforce planning, training and skills assessment, and communication” (p. 1). The relevant issue is that how much leverage would senior management delegate to the HR department in steering the options for downsizing or exploring other alternatives that might be more beneficial for the organization. As suggested by Kuczynski (1999), “if supported by management, HR can help managers redesign the flow of work in their departments and assess the skills needed to get the work done after a downsizing. The first step is to understand the business, advises Brenda VanderMeulen, SPHR, of River Hills Consulting, an HR consulting firm in Holland, Mich. Human resource professionals cannot expect managers to take them seriously in a business discussion if they do not understand the products, marketing, technology and finances of the business, she says” (p. 2). In this regard, HR must be competent and equipped to evaluate diverse options and strategies that contemporary global organizations could select from to attain the goal of achieving increased economic benefits without resorting to drastic employee layoffs. With the negative outcomes that have been reported to besiege organizations that opted to downsize, present global organizations must explore other possibilities through the assistance of HRM, who are most qualified to determine the effects and impacts of the decision to the work force. The relevance of communication have been emphasized by Kuzcynski (1998) as she averred that “HR must use honest communication to prepare its workforce for the realities of the competitive marketplace. Such straightforward responses can help prepare employees for the possibility of future workforce cuts. This is critical because the downsizing trend is here” (p. 3). Recommendations Based on the foregoing discussions, it can be deduced that there despite the positive objectives and rationale for downsizing, the validations provided by various researches revealing its negative outcomes have clearly indicated that downsizing should be an option of last resort. The research conducted by Sahdev and Vinnicombe (1998) revealed that majority of the organizations opted for downsizing without evaluating the possibilities for other alternatives. Therefore, the best option for contemporary organizations is to evoke the evaluative expertise of the HRM in laying out all possible options, including the costs and benefits analyses of each option prior to selecting the appropriate course of action. Organizations must acknowledge the diversity and gravity of effects of downsizing to employees who were laid off, as well as to the organization in general. At the same token, the survivors of downsizing must be reoriented and monitored in terms of their actual performance and motivating drives after the process of downsizing. The costs for training, reorienting and addressing the increased anxieties and low morale could be more detrimental for the organization, in the short run and in the long term. As the role of HR is seen to be crucial at the downsizing process, management must apply strategic HRM and be vigilant in ensuring that all HR personnel are competent and qualified to address the concept, in case all possible options have been exhausted. At most, the plans for downsizing could initially be relayed to the employees and a participative and collaborative approach to solve organizational problems could be solicited prior to implementation. Conclusion The current research has achieved its aim of proffering issues in contemporary HRM, which focused on downsizing. By expounding on the definitions of relevant terms, such as HRM, strategic HRM, and downsizing, the discourse clarified subsequent discussions the delved into the concept of downsizing, its rationale and effects on the organization, for the employees who were laid off and for those who survived the organizational experience. The crucial role that HR plays in the downsizing process has been acknowledged and relayed to be most supportive when senior management would believe and seek HR’s recommendations to seek other options and alternatives, prior to deciding on downsizing. After all, as Sahdev and Vinnicombe (1998) contended “as a result of downsizing, managers have begun to appreciate the value of addressing the ‘softer’ issues and have tended to rely on HR for providing the necessary support” (p. 18). Reference List Bailey, G. and Sharman, D. 1988. “The Downside of Downsizing.” Management Review, Volume 77, Number 4, Pages 54 – 55. Boxall, P. and Purcell, J. 2000. ”Strategic Human Resource Management: Where have we come from and where should we be going?” International Journal of Management Reviews, Volume 2, Issue 2, Pages 183 – 203. Cameron, K.S., Freeman, S.J. and Mishra,A.K. 1991. “Best Practices in White Collar Downsizing – Managing Contradictions.” Academy of Management Executives, Volume 5, Number 3. Cascio, W.F. 1993. “Downsizing: What Do We Know? What Have We Learned?” The Executive, Volume 7, Number 1, Pages 95 – 104. De Meuse, K.P., Vanderheiden, P.A. and Bergman, T.J. 1994. “Announced Layoffs: the effect on corporate financial performance.” Human Resource Management, Volume 33, Number 3, Pages 509 – 530. Ferris, G.R., Hochwarter, W.A., Buckley, M.R., Harrell-Cook, G. and Frink, D.D. 1992. “Human resource management: some new directions.” Journal of Management, Volume 23, Issue 3, Pages 385 – 415. Freeman, S.J. and Cameron, K.S. 1993. “Organizational downsizing: A Consequence and Reorientation Framework.” Organizational Science, Volume 4, Pages 10 – 29. Hamel, G. and Prahalad, C.K. 1994.”Competing for the Future.” Harvard Business School Press. Kettley, P. 1995. “Employee Morale During Downsizing.” Institute for Employment Studies. Kets de Vries, M. and Balazs, K. 1996. “The Human Side of Downsizing.” European Management Journal, Volume 14, Number 2, Pages 111 – 120. Knox, A. 1992. “By Downsizing do Firms Axe Themselves on the Foot.” The Philadelphia Inquirer, February 17. Kuczynski, S. 1999. “Help! I shrunk the company! - role of human resources in downsizing - Cover Story.” HR Magazine, Pages 1 – 4. Miller, P. 1987. “Strategic Industrial Relations and Human Resources Management – Distinction, Definition and Recognition.” Journal of Management Studies, Volume 24, Number 4, Pages 347 – 361. Noer, D. 1993. Healing the Wounds – Overcoming the Trauma of Layoffs and Revitalizing Downsized Organizations. Jossey Bass Publishers, San Francisco. O’Neill, H.M. and Lenn, D.J. 1995. “Voices of survivors: Words that downsizing CEOs should hear.” Academy of Management Executive, Volume 9, Number 4, Pages 23 – 33. Sahdev, K. and Vinnicombe, S. 1998. “Downsizing and Survivor Syndrome: A Study of HR’s Perception of Survivors’ Responses.” Cranfield Collection of E-Research, Pages 1 – 29. Read More