The Subject of Human Capital Management - Essay Example

Strategic Management a) In their dis about the changing nature of the modern business environment, Hitt Keats and DeMarie underscore the crucial role that human capital plays in creating the all-important competitive edge that an organization requires to out-perform competitors and be able to stay afloat in the increasingly competitive environment. According to them the maximum utilization of human capital is one of the areas that organizations can use to achieve strategic flexibility. These authors observed that the concept of developing human capital emanates from the realization that it contributes significantly to the development of the organization’s dynamic core competencies. Human capital development according to them entails such activities as hiring contingency workers and outsourcing of labor in non-core areas so as to focus the regular human capital to the most important areas (core competencies). This serves two purposes namely: Reducing costs. This is so because the salaries for contingency workers are lower than the average industries’ not to mention the almost non-existing welfare benefits. Reduce response time due to “reconfiguring resource deployment” Contingency workers and outsourcing can provide certain technical and professional skills at very reduced costs. However the authors also highlight the several shortcomings that come with outsourcing. These include: Lost opportunity to develop and nurture skills in the organization’s employee that the employee can use to advance the organizations objectives. Temporary employees have a reduced sense of loyalty to the company and also to the customer. The authors conclude that outsourcing, as a strategy must be used with great care, failure to which less beneficial static flexibility may result. Another area outlined in the development of human capital is training and other forms of skill development. Better-trained employee are usually highly motivated as well as empowered to play an even more important role when it comes to innovativeness. 1(b). The discussion is largely relevant today since the trends identified in their day continue to this day. This is not to say that the environment has not changed, Indeed it has and many organizations are now focusing on more strategic training which is basically acquiring knowledge, skills, and approaches needed to initially do a job or to perk up upon the performance of a particular task. Today’s management authorities are eager to measure the impacts of these strategies and to design programs of continually advancing this knowledge. Today’s executives clearly understand the relationship between results and the people in the organization. They more often than not seek to recruit the most talented, individuals developing and deploying them in the most crucial areas in the organization. Progress is analyzed and challenges constantly evaluated with the view of coming up with strategies that best match the core values of the organization. 1(c) The subject of human capital management has elicited much interest from different authors. Bossidy, Charan and Collins, J. observed that organizational strategy is deeply rooted in the processes, people and definitely the abilities of such an organization to implement the necessary changes. It is therefore imperative to look into ways to empower the people in an organization to play a key role as companies reposition themselves in light of the new competitive landscape. 1(d) One of the companies that have that develop human capital is Intel. It has gone out of its way to empower its employees by developing their skill in such programs as language training and technical skill training. This is offered to all on voluntary basis. This has come in handy when employees have to be deployed in other areas. They use these skills wherever they are. Another company is Nortel. This is a global organization involved in data and telecommunications supply and manufacturing. It has over 80,000 employees and markets in all continents. It depends on its employees to deliver services on all these markets. Challenging though it was, Nortel adopted a computer based training program. The decentralized system offered instructions through virtual class learning. This approach achieved cost saving and improved efficiency. The programs were aimed at developing the necessary skills that would in turn boost their bottom line. The focus of the training was on human capital development, performance appraisal and continual growth. The result was increased organizational effectiveness resulting in awarding of large-scale government contracts to mention but a few. 2. The authors suggest that leaders should be involved in control in ways that enhance strategic objectives and the insights and information to add value to the organization. Care should be taken to ensure that control is balanced as too much of it will inhibit motivation and innovation, such that employees’ performance is undermined as well as causing wastage of resources. Too little of resources can either cause uncertainty or induce false sense of security causing a naïve approach to risk. The authors recommend competency as a new approach to strategic control. According to Prahalard and Havel (1990), competency is a strong pillar to sustainable competitive advantage. They define competency as a strong pillar to sustainable competitive advantage. They define competence as the characteristic that allows an organization to lead to innovation, shape consumer demand or enter and conquer new markets successfully. They thus suggest that firms should first protect and enhance core competencies before utilizing these competencies to seek new opportunities. Maintaining competencies requires acquiring, developing and allocating human resource to a maximum. This entails strategic approaches to performance management. Culture is also mentioned as a powerful control measure because of its influence on motivation and behavior culture and can be used to promote competencies in an organization 2.1 Differences with traditional notions of control While the traditional approach is based on simple logic which is in accordance to the acceptable management standards and is structural and procedural. This approach follows a series of discrete steps namely: a) Developing measurable performance standards, b). Measuring performance against standards, c). Evaluating performance information and, d). Taking corrective action. The recommended approach focuses on assessing risks to performance then gathering information that helps in designing a strategic control system that ensures maintainability of the key competences while at the same time insuring against adverse effects from contingencies. 2.2 Band and Scanlon approach is better in my view in that it complements some of the strengths of the traditional approaches and endeavors to integrate other gains. It allows leaders to plan with their eyes on the core purposes of the organization. This ensures continuity in case of change of leadership. It also eliminates the temptation to focus control on single measures of performance. This temptation can be especially strong in this day of demanding shareholders looking at profits and rates of return. Focusing on competencies allows for strategic targeting and reduces the risks associated with assessment processes. 2.3 Other strategic management concepts include Developing human capital through training, better terms, empowering employees to make decisions, Encouraging creativity, and Interactions that permeate multiple levels Effective use of new technologies. This can reduce time of production, increase accuracy, reduce costs and allow mass customization. Exploiting Global markets and Developing new organizational cultures and use of other Non-Explicit Strategies. 2.4.1 One of the companies that have done a good job of controlling is Toyota. It has purposely sought to strength, Improve, diversify and communicate its key competencies, which lie in quality, innovativeness and low development times. By concentrating on these, Toyota has managed to stay on top of their game. 2.4.2 Gillette on the other hand did a poor job since it allowed itself to lose sight of its core competencies that included marketing (Advertising and distribution) and also research and development. Instead, Gillette focused on product, profit, and cost control. This caused a slump in Gillette’s performance. However this lesson was learnt and Gillette has improved greatly. 3. Many companies are facing quite a lot of changes in their environment. This change in the company’s environment affects the growth of the company. However several management strategies have been put in place to deal with these changes in the environment of a company. For instance, many companies have been faced with uncertain changes in innovation. This change can be better addressed through encouragement of risk taking and struggling to adapt knowledge domains like marketing, research and manufacturing. That will enable the company to solve complex problems and remain relevant and competitive. It is only through achieving an ability to overcome most challenges within the company that success and attainment of the company’s objectives can be realized. Many companies are also being faced with problems arising from the workers. Some workers are not motivated enough to give back to the company’s progress. Strategies should be laid down to overcome its problem. The companies must contend with remuneration issues about its workers. Use of incentives rewards and reinforcements should be highly practiced it is only through them that motivation will be built among the workers, something that will definitely improve the work performance and consequently output of the company. Uninformed staff is a problem that is facing many companies today. This has been worthy due to poor recruitment methods, which are not based on merit grounds. This problem can be addressed through providing in- raining services to the workers in order to standardize their knowledge as well as behavior. This leads to improved skilled labor in the company coupled with many advances such as in technology and research. The company growth hence is easily realized. Many company environments today are facing stiff change in the services of the management team as well as the executives. poor services that most of the times lead to the fall of the company have been evident. This problem can be addressed through recruiting star performers who should make up the management team. Programs based career-progression that should be long-term should be provided to the managers not excluding managers, not excluding apprenticeships. This creates highly skilled managers who are able to run the company’s activities well and drive the company to success. This will be achieved from the fact that the company will be able adopt e-commerce whereby its products will easily availed in the market. Networking has been a threat to many companies today. This refers to the ability of a company to associate freely with other companies, something that facilitates adoption of new motivations technologies as well as ideas within the company. It is the way a company networks which speeds up growth and development of the company. Therefore to facilitate this conducive networking environment should be established. Establishment of good relationships and adoption of technology especially e-communication should be encouraged. Work Cited Bossidy, Charan and Burck, C. (2000). Building a strategic HR function Band, D.C. & Scanlan, G. Strategic control through core competencies. P.d.f. Lorenz, C. & Shapiro, A. The Infectious Spread of Change at Nortel Networks. P.d.f. Hitt, M.A. Keats, B. & DeMarie, S.M.(1998). Navigating in the new competitive landscape, Building strategic flexibility and Competitive Advantage in the 21st Century (vol12 issue 4) Prahalad, C.K. &Hanel, G (1990). The core competence of a corporation. Harvard Business Review 90, no. 3 Read More