Strategy and Human Resource Management - Essay Example

Running Head: HUMAN RESOURCE MANAGEMENT Human Resource Management of Human Resources Management Human resources management (HRM) involves the establishment and execution of policies, programs, and procedures that influence the performance, capabilities, and loyalty of the employees of an organization. Through these policies and procedures, individuals are attracted, retained, motivated, and developed to perform the work of the organization. It is through these policies and procedures that the organization seeks to mold and shape the actions of its employees to operate successfully, comply with various public policies, provide satisfactory quality of employment, and improve its position in the marketplace through strengthened ability to compete and serve. The HRM function is of particular importance in the post-industrial economy (Harris, 2003) In this emerging system, the critical factor in production has shifted from machines and equipment to the "knowledge" worker (Marchington, 2002). That is, service has replaced production as the driving force in the economy, and the prominent way value is added is through the expertise of knowledge workers and the ministrations of service providers. In systems like this, it becomes even more important to obtain and use the full talents of all employees in the organization. Thus, the skilful adoption and use of HRM policies becomes a significant lever through which to move and direct the performance of the organization. As Gibb (2000) noted, HRM is really a series of policy choices about how employees are to be treated, paid, and worked. These policies will in turn impact and condition the nature of the employment relationship. Different policies lead to different outcomes in employee commitment, competence, and congruence with organizational goals. Likewise, each policy choice presents the decision maker with a distinctive cost and benefit alternative. For example, compensation policy choices to pay either at the low, average, or high end of the labour market have rather dramatic implications for employee commitment to the organization and for costs to the employer. The fundamental rationale for effective management of human resources should be to identify and implement those policies, programs, and procedures that will yield the desired levels of loyalty, skill, and direction in the most cost-effective manner possible. In this sense, HRM offers to organizational decision makers a set of people investment opportunities. Managing human resources effectively has never been as important as it is today and will be tomorrow. In today's service economy of knowledge-based, high-discretion jobs, the commitment and competence of employees can spell the difference between those organizations that win and those that are merely in the race. Establishing policies, programs, and practices that produce these results on a cost-effective basis and comply with laws and regulations is a complex undertaking. HRM can and should play a strategic role in the management of the organization. According to Chandy (2001), a large number of organizations have encountered severe difficulties finding personnel in recent years. We have little knowledge about how organizations are coping with these difficulties and are going about hiring staff. Considering the supply/demand trends of the last few decades - when the labour market used to be a buyers' market and a considerable pool of unemployed formed a buffer that could absorb cyclic fluctuations in labour demand - it is almost not astounding that most studies focused on employees' job seeking activities. (Chandy, 2001, pp 403-405) Research on the theoretical and empirical facet of organizations' behaviour to find appropriate staff, has studied first and foremost the selection behaviour: how to select personnel from a group of applicants. Nearly all vacancies are filled from a group of applicants that is created soon after posting the vacancy. On account of the economic expansion of the first half of the 2000s, organizations were faced with a scenario in which on many occasions only very few applicants responded to vacancies. The number of vacancies nearly surpassed the number of unemployed people, following decades of surplus in labour supply. Behaviour of organizations became more and more focused about filling a pool of applicants instead of selecting from the vacant pool. Hence organizations do not only look at more conventional search methods, such as posting an ad, but also at the importance of the internet in finding staff. Another difficulty faced to organization regarding recruitment is that most of the firms do not carry out any form of job analysis, and less than a quarter overtly questions whether or not the vacancy needed filling or drew up a person specification. Job descriptions are, however, used in 60 per cent of the firms. (Breaugh, 2000, p-411) In terms of the methods which were used, all 40 firms used recommendations from existing staff, and at least two-thirds used Jobcentres, local newspapers, internal labour markets, and the employment of former employees and registers of interested applicants. Irrespective of the chosen method, it tended to massively depend on tried and trusted techniques/methods; for instance, internal recruitment and Jobcentres were used by all the hotel and catering establishments, former employees were recruited by all but one of the road haulage firms, local press advertisements were used by all the nursing homes, registers of interested applicants were universal at the printing firms, while all the solicitors used registers and Jobcentres for at least some grades of staff. While this may be potentially difficulty for a number of reasons, not least in terms of social exclusion and the strengthening of imbalances in the workforce, it does have some advantages for these small firms. (Turban, 2002, pp 734-737) In particular, it makes the recruitment process simpler to conduct given that it relies on existing channels and contacts, so it reduces the risk and uncertainly which is typically associated with hiring new recruits. With many organizations seeking to identify, appoint and retain quality people within their organizations it is not surprising that many would seek to use the services of executive search firms and advertised recruitment agencies in order to locate the most appropriate people. Recruitment and selection are vital and central HRM functions. However, in a labour market where particular skills are eagerly sought and personal commitment to organizational life is apparently decreasing in favour of attention to personal career and life-style needs, recruitment and succeeding selection have become terribly difficult tasks to assume in an efficient and valid manner. The professional firms that claim to be "recruitment and selection experts" in matching the right individual with the organization or role are liable to appear very attractive to employers seeking to acquire the best possible staff, particularly in managerial areas. This becomes even more critical for the smaller firm, not adequately large to rationalize the existence of a professional HR function, and indeed those firms who, for a variety of reasons, seek to outsource this crucial HR function. Christopher Collins and Han (2004) also acknowledged snags with recruitment companies and their consultants. He was keen to know as to how HRM professionals separate the "wheat from the chaff" among recruitment companies and suggests that HRM professionals should address few areas before deciding on a specific provider like are they consulting or selling and how important is the search to this recruiter (Christopher & Han, 2004, pp 689-90) Given the changes facing organizations today, a human resources function that operates as business as usual will quickly lose its value to the organization. The human resources function should be expected to introduce better systems for managing a firm's human resources. In addition, the human resources function should continually look for ways to more closely align human resources systems and procedures with the evolving direction of the organization. Change presents both danger and opportunity. In today's rapidly changing world, the danger is that the human resources function will shroud itself in rules and procedures. The opportunities, though, are exciting: to design and implement human resources systems that best support the organization's pursuit of excellence and the employees' pursuit of an outstanding quality of work life. Employee performance appraisal is a natural and necessary part of organizational life, and forms the cornerstone to many basic human resources management practices. In spite of its central role in the HR drama, the reviews of performance appraisals have been mixed, at best. In particular, problems in ratter accuracy and consistency, negative impacts on employee commitment and motivation, poor administrative choices for system design and operation, and faulty rating scales all work to compromise the potential value that appraisals can provide. The large amount of research in this area does point the way to how appraisals can be improved. Such practices as job analysis, aligning purpose with process, and more frequent feedback are all essential steps forward. In particular, ratter training is yet another piece of the improvement puzzle. Training ratters how to observe and evaluate behaviours reliably can be done by presenting vignettes of performance for common evaluation and discussion in a training setting. (Renwick, 2003) An emerging step in this same direction is self-assessment training. Here, employees learn how to rate themselves more accurately and adjust their expectations accordingly. Performance evaluations are not a perfect process that produces only positive outcomes. Because appraisals are so critical to many of the other HR functions, finding and instituting ways to make the process work as effectively as possible is a major concern of the human resources management function. With the possible exception of layoffs and terminations, compensation and benefits are the most high-profile human resources management activity performed. There are several reasons for the central role played by compensation administration. (Whittaker, 2003) First, compensation and benefits can be significant expenses associated with running the organization. Second, without proper management, poor compensation practices will hurt the organization through turnover, poor performance, or high cost--or all three. Third, compensation plans can exert tremendous pull and push on employee performance and can play an instrumental role in shaping and redefining the culture of an organization. Effective compensation administration must be sensitive to competitive labour market conditions. For this reason, using salary survey information skilfully becomes very important. Beyond grounding pay rates in competitive market conditions, compensation plans should be properly structured and designed to support organizational goals. Such issues as how much money it takes to serve as a lure to more performance, ethical concerns in using incentive plans, and fully aligning incentive plans with organizational requirements are all vital ingredients to effective plan design. Benefits plans and designs are important in their own way. Such plans can consume a sizable portion of total compensation dollars. For that expense, employers would like to receive--but often have trouble obtaining--returns in employee goodwill and performance. For these reasons, effective benefits design is often a silent but important partner in human resources planning and administration. 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