Human Resource Management in Modern Organizations - Essay Example

HUMAN RESOURCES MANAGEMENT IN MODERN ORGANISATIONS 2007 INTRODUCTION Over the last decades, the way in which personnel is managed, promoted and stimulated has become the key to assessing and improving organizational efficiency and marketability. Human resource management has turned into an important aspect of long-term organizational strategy. Globalisation and growing competitiveness of the market forces modern organizations rely more on skilled and motivated personnel then on technologies and production. As Steve Jobs, legendary CEO of Apple Computers, reasonably notes technologies may be stolen and products may be faked by competitors, and the only way to sustain companies’ competitive advantage in such environment is to invest in its personnel. Skilled, loyal and motivated employees remain perhaps the only reliable asset and competitive advantage of modern corporations. Overwhelming importance of balanced and effective HR management is one of the cornerstones underlying each major organisation. Performance of modern organisations depends not only on hard and attenuating work of the personnel, but also on the “human side” of the employees: their competence, motivation, attitudes, communication and other variables. As Gunnigle et al (2002) observes, “…HRM is the core of company’s general efficiency and the basis for effective management” (p.383). A company’s failure to effectively manage its human resources is likely to result in considerable operational difficulties and may seriously damage the business (Beardwell, 2003: 15). The below overview of the major concepts and theories underlying modern HRM practices demonstrates how effective management of human resources contributes to the development of a stable workforce and a healthy organisation. MAIN DISCUSSION The origins of human resource management as a separate discipline can be traced back to the beginning of the last century. Throughout the last century theorists and practitioners worked intensively to discover the theories explaining human behaviour at workplace in order to raise effectiveness of labour. As Alan Price (2000) states, HRM hasn’t come out of nowhere: there is a long history of “…efforts to improve our understanding of factors that affect human behaviour in the workplace” (p.62). Though many of modern HRM principles had been developed by that time, the year of the discipline’s official birth was 1981, when Harvard Business School introduced a special course that served a blueprint for global spread of human resource planning and management (Price, 2000). The basic principles of modern HRM represent a synthesis of ideas taken from the two major approaches to organisational culture: hard side and soft side. The hard side approach is associated with the American schools of management, particularly with F. Taylor’s school of ‘scientific management’ and E. Mayo’s school of ‘human relations’. Frederick Taylor was among the first practitioners to underlay business practice with significant theoretical findings. Taylor assumed that material side is not the foremost motivation of the employees and that personnel should be properly managed in order to improve effectiveness of labour. Consequently, he proposed the policy of stick and carrot based on the principles of punishments for poor performance and appraisals for better working efficiency. The Taylorian model is based upon the belief that the average employee is by default lazy, ignorant and passive and employs the following principles of organizational control over the employees: Ceaseless control over the work of each employee through organization the system of supervisors, inspectors, quantity-surveyor, etc Control over the work of the workshops Promotion of stimulating and competitive organizational culture which may provide excessive control over the employees (Drucker, 1985) Over the 1930s, this ‘hard’ paradigm was gradually replaced by the ‘soft side’ approach (Quinn, 1988). Elton Mayo undertook one of the most known revisions of Taylor’s ideas. During his longitudinal Hawthorne experiments Mayo discovered that salary is not the best motivation for people. Instead, he found out that people are sociable by their nature and they work effectively if they receive positive feedbacks from the management. Other pivotal findings of Mayo were (i) personnel’s need for communication, (ii) existence of informal groups and (iii) group morale (Gillespie et al, 1993). Later on Mayo’s views were further elaborated by D. McGregor, W. Ouchi, J. Burns, M. Stalker, A. Maslow, and others. The war between these major paradigms highlighted the most important factors that contributed to increasing importance of HRM in modern organisational environment. Firstly, the “hard side” approach reflected the attitudes which dominated domestic and international organisational culture over the first half of 20th century. In those days people were considered to be at the same level of organizational resources as machinery. Raise organizational productivity was to be achieved only through pressure on the employees and their permanent control. Such view of strong and healthy organizational culture might be acceptable in the stable environment of those days, but it is at odds with modern constantly changing organizational environment. Strict and rigid organizational culture diminishes company’s abilities to adapt and change facing external and internal challenges. Strict culture and excessive control also reduces creativity of the employees, their eagerness to innovate and accept new ideas and perspectives. The essence of this important consideration is perfectly explained by Collins and Porras (1994). They claim that the idea of strict culture is not at all irrelevant; moreover, it is often beneficial for modern business. However, today’s organizations, characterized by swiftly changing conditions need an organizational culture which is less pervasive, instructive and controlling, and doesn’t prescribe particular norms and behavioural patterns of the past. Competitive successes of Japanese companies following the principles soft side (Z-approach) in 1970s-1980s have emphasized attention in the US and Europe on group-work, team identification and loyalty, group-consciousness, decision-emerging process, and outlined the value of employees’ participation in organizational development. As a result, hard side has been dispersedly shifted by participative management strategies emphasizing the value of the employees and insisting on less control over their functions. It has been identified that participatory work strategies better fit the demands of the global economy as they provide the optimal way to create essential flexibility and worker commitment (Markowitz, 1996). Modern business is first of all a competition of human resources. Excessive control diminishes people’s initiative, their level of creativity as well as openness to the new ideas and tendencies. Lack of employees’ initiative and people’s poor adaptation to the demands of environment may result in bankruptcy of a company. Hence, unconstrained demands on people, act as barriers to organizational and personal adaptation and change. Therewith, only human resource management incorporating the principles of development, stimulation, adaptation and promotion of people is the warranty of success in the modern business environment. The increased importance of correct HRM approaches was highlighted by a series of important discoveries made by psychologists over the last decades of 20th century. They proved that people are not literally the same parts of organizational process as machines – the view which had been previously adopted by the School of scientific management. Instead, as the role of human personality was emphasized, it was widely recognized that employees work better when they are not excessively pressed or controlled (Drucker, 1985). The changes that have occurred to the organizational environment over the last several decades also demonstrate the increased importance of human resource function: Functions Changes Ideological Humanization of working environment, employees’ integration into the process of decision making, empowerment of employees Economic Improvement of the work forces and management efficiency Psychological Motivation, development, stimulation, promotion, rewarding, and stress reduction Organizational De-bureaucratization of organizations, modernization of the principles of organizational culture, Sociological Social regulation instead of strict managerial control, cooperation control, growing role of leadership and informal groups in organizational practice Chart 1: Environmental influence and changes in organizational functions (Bolle de Bal, 1992) An informative insight into the value of balanced and effective HR management is provided by Schuler (1990) whom emphasizes that the HR function has had an opportunity to shift from being an “employee advocate” (associated with personnel management) to a “member of the management team”(p.52). Schuler’s (1990) view was that this required HR professionals to be concerned with the bottom line, profits, organizational effectiveness and business survival. In other words, human resource issues should be addressed as business issues. It is noteworthy that emergence of HRM chimed with decay of heavy industry and development of sophisticated IT business. Thus, HRM was a key to professional revolution that took place in 1980s Storey (2001) claims that HRM made an ever-greatest since industrial revolution shift in the principles of management. HRM encouraged both managers and employees to get rid of traditional patterns of interaction, outdated ideas of motivation, stereotypes, assessment and appraisal. Managers stopped being the mentors and executioners and turned to be the members of business teams. Introduction of HRM principles made modern companies more competitive, dynamic and people-friendly that positively influenced their efficiency and marketability. Effective management of HR produced what was later called “a new managerialism” – a new look at the nature of organizations, the ways they function and succeed, and the way they employees perform (Storey, 2001:18). Although the role HRM plays in development of healthy organisations and motivation of the workforce has been recognised by majority of theorists and practitioners, some of them still adopt sceptical attitude toward its principles. They consider HRM to be a set of vague principles or a reinterpretation of well-known motivation theories. However, neither idea is true. HRM is not just a set of principles; instead it is an organizational science that helps to implement company’s general strategy in a most effective way. According to the conventional definition HRM represents a “system that is tailored to the demands of the business strategy” (Miles and Snow, 1984: 36-37); or “the pattern of planned activities intended to enable an organization to achieve its goals” (Wright and McMahan, 1992: 343-345). Apparently, HRM is a much broader concept than a mere system or policy of motivation as it has wider objectives and incorporates multiple other than motivation principles, i.e.: selection and recruitment, assessment, adaptation, motivation and dismissal (Storey, 2001). Simultaneously, HRM is neither a total panacea nor a placebo: it is an effective paradigm that helps organisations become improve performance through focusing on its personnel and more effective utilization of human resources. CONCLUSION Modern HRM is a complex science that relies upon a wide range of traditional disciplines including psychology, sociology, and organisational theories. Deep changes in the organizational practices in the second half of 20th century have resulted in serious reconsideration of the traditional principles of organizational culture and the way it influences the personnel. The simple principle of strict control has been gradually replaced by a more complex model which emphasizes the role of organizational culture in development and motivation of people and shift from managerial control to participation and group control. Modern discipline of HRM emerged to incorporates the most recent and important findings in the realm of group theory, organization dynamics, formal and informal leadership, communication, and motivation to become a single paradigm that facilitates development of organizations through effective management of personnel. REFERENCES Beardwell, I., T. Claydon, and L. Holden (2003). Human Resource Management: A Contemporary Approach (4th Edition). Financial Times Management Bolle De Bal, M (1992). Participation. In: Concise Encyclopedia of Participation and Co-Management. Széll, G. (Ed.), New York: Walter de Gruyter, 603-610 Collins, J. C. and J. I. Porras (1994). Built to Last: Successful Habits of Visionary Companies. New York: Harper-Business Drucker, P (1985). Management: Tasks, Responsibilities, Practices. New York: Harper-Business Gillespie, R., Galambos, L., Gallmam, R (1993). Manufacturing Knowledge: A History of the Hawthorne Experiments (Studies in Economic History and Policy: USA in the Twentieth Century) Cambridge University Press Gunnigle, P., M. Morley, and J. Kelly (2002). Human Resource Management, Employee Relations and the Labour Market, Employee Relations: The International Journal, 24, 4, 371-460 Quinn, R. E. (1988). Beyond Rational Management: Mastering the Paradoxes and Competing Demands of High Performance. San Francisco: Jossey-Bass Markowitz, Linda (1996). Employee Participation at the Workplace: Capitalist Control or Worker Freedom? Critical Sociology, Vol. 22, 2, 89-103 Miles, R. and Snow, C. (1984), Designing Strategic Human Resource Systems, Organizational Dynamics, 13, 1, 36-52 Price, A (2000). Human Resource Management in a Business Context. International Thomson Business Press Schuler, R.S. (1990). Repositioning the human resource function: transformation: or demise? Academy of Management Executive, 4, 3, 49-60 Storey, J. (2001). Human Resource Management: A Critical Text. Princeton: Thomson Learning Wright, P.M. and G.C. MacMahan (1992), Theoretical perspectives for strategic human resource management, Journal of Management, 18, 295-320 Read More