Strategic Human Resources Management - Essay Example

You have been asked by a large organisation operating in the manufacturing sector to advise them on the current trends in the management of reward. As an organisation they face significant challenges to become more flexible and to increase multi- skilling and up-skilling of the work force. Technology is playing a large part in changing jobs and the way production is managed. They are pursuing a culture change programme to develop a greater sense of employee commitment and ownership of improvement demands. A parallel process of involving staff in quality improvement programmes is underway. They have very traditional pay and benefit structures (based on service progression, focused on structures for particular occupational groups with little integration across the organisation and an emphasis on collective reward structures rather than the individual. There are areas of incentives for some occupational groups but this does not relate across the organisation to any coherent form of incentive linked to wider business performance). They have asked that you advise them on what their options of integrating reward into the wider SHRM change. (30 marks) Introduction In general, “Pay for Performance” is not always considered the best solution to a problem related with the proper handling of employees. (Lawler, 1971: 151) On the other hand, the traditional ‘performance-related pay’ (PRP) is no longer effective as an employee reward when used alone since a lot of business internal and external changes had taken place over the years. (Leopold, Harris, & Watson, 2005: Ch. 8: p. 212) Considering the economic, societal and technical changes we have encountered since 2000, the need to intergrate the existing organizational reward policies is very much advisable in order to improve employees’ flexibility at work, increase the multi-skills and the up-skilling of the workforce, effectively implement some cultural changes, and the improvement in overall work quality of each employee. Importance of Individual Performance-Related Pay In today’s business organization, human resource managers should be able to use the pay rewards based on each employee’s individual contribution to the success of the company. By doing so, each employee will become very much aware with the need to increase their own performance more than the work performance of the entire workforce. Aside from establishing a stronger working relationship between each employee and the employer, focusing on one’s own performance will minimize the possibility that the organization will have to face a collective bargaining coming from the influence of a trade union. (Leopold, Harris, & Watson, 2005: Ch. 8: p. 213) Basically, each type of individual pay-performance approach has its significant and/or non-significant impace over employees’ work performance in terms of motivation, commitment, cultural change, quality, teamwork, competence or skill, and flexibility. (University of Sunderland, n.d.: p. 249) Increase Flexibility, Competent Skills, and Quality Performance of Each Employee In relation to globalization and tigher competition in the market, employees that are capable of performing multi-tasking has become very important today. When it comes to challenges related to the need to make the organization more flexible, increase employees’ competence in terms of their acquired skills, and improve the quality performance of each employee; human resource managers who works in a company should adopt the competence / skill-related pay in order to reward employees who has the knowledge and a special technical expertise needed in performing a more competitive job performance. Since IT-based companies are subject to a fast-paced changing technology, the success of the company is normally based on the competent skills its employees have acquired. For this reason, employees should constantly up-grade their knowledge on the latest improvements in the world of information technology. For example: An IT-based company should award employees based on their competence and skills in IT soft- and hardwares. In line with this matter, employees who have less knowledge on IT skills should be awarded less to enable them to become more determined and willing to improve their existing IT skills by enrolling themselves in a university or colleges that offer higher degree courses related to IT subjects. In some cases, it is also possible for employees to grab every single opportunity that comes in their way so as to attend short-term courses that could increase their existing knowledge on the latest trend on information and technology. Another good example is when the IT company has the need to deal with other small- and medium-scale businesses in other countries. Having employees who are able to speak multi-languages should also be given a credit or a competence / skill-related pay since this group of employees could increase the overall competitive advantages of the company as compared to its competitors. Given that employees who works in the IT-based company are encouraged to improve their competency and skills, it is expected that the quality of work performance coming from each employee will also improve. Pursuing a Cultural Change Programme Organizational culture is referring to “a set of norms, beliefs, principles and behaviour that gives the organization a unique character.” (Brown, 1995) On the other hand, David (1999: 143) defines organizational culture as “a pattern of behaviour developed by an organization to cope with problems related to external adaptation and internal integration aside from enabling the employees to feel and think positively.” When a business organization is aiming to pursue a positive cultural change programme, the implementation of gain-sharing pay in the form of cash bonuses to employees is strongly recommended. (University of Sunderland, n.d.: p. 249) Basically, a gain-sharing pay is an organizational performance-related pay that enables both employees and employer to benefit from the increase in business organization’s productivity and profitability. Considering that employees are also given the opportunity to benefit from the organization’s increase in productivity and profitability, employees stay committed to the busines organization. For this reason, it becomes easier for managers to develop and implement a stronger and more effective organizational culture that could promote some important ways in which employees as an important part of the business organization could improve their individual and team performance. In order to enable them to successfully achieve the business goal, managers should include the following as part of the organizational culture: (1) establishing an open communication among the workers; and (2) promotes the importance of team work and diversity within the work place. Considering the business organizational goal of increasing the quality work performance and competency in terms of the acquired skills of each employee, it becomes necessary for the human resource manager to develop a cultural change that is focused on promoting the need for training and development in order to increase the learning experiences of each employee. Discussion “Pay for Performance” is not always considered the best solution to a problem related with the proper handling of employees. (Lawler, 1971: 151) According to Deci (1988), it is possible for the employee motivation to be lowered since pay for performance could lower the company’s ‘intrinsic rewards’. In line with this matter, there is a risk with the use of incentive schemes in terms of creating a bad long-run effect on the business. (Kohn, 1988) To be able to design the best and most effective integrated performance-related pay for a business organization, the human resource managers should clearly identify and determine their main concern since each type of individual, team, and organizational performance-related pay has a unique impact in terms of motivating employees, increasing their commitment with the company, implementing an effective cultural change, improving teamwork as well as work performance quality, competency/skills, and flexibility at work. The best way to increase work flexibility, competent skills, and the quality work performance of each employee as well as the organization’s aim to pursue a cultural change programme is to integrate the use of competence / skill-related pay with gain-sharing pay since the competence / skill-related pay is proven effective in terms of increasing work flexibility, competent skills, and the quality work performance of each employee whereas gain-sharing pay is effective in terms of the organization’s desire to pursue a cultural change programme. In general, the application of group bonus which is a type of payment based on the production output of a team and team pay which is based on the group’s achievements can also be effective in terms of increasing the organization’s flexibility. However, the application of both group bonus and/or team pay is not as effective as competence / skill-related pay in terms of increasing employees’ competency in skills and the quality of their work performance. (University of Sunderland, n.d.: p. 249) Conclusion The traditional pay and benefit system such as the collective reward structure which is commonly based on the service progression of a particular occupational group is no longer effective in today’s business organization. Over the years, there has been a gradual shift from a collective to an individual performance based rewards. The implementation of an integrated performance-related pay can demand a lot of work on the part of the human resource managers. Since each type of performance-related pay has its unique impact on employee motivation and commitment with the company, success on implementing an effective cultural change, improving teamwork including the quality of work performance, competency/skills, and flexibility at work; the human resource managers should critically analyze the situation before choosing the best type of performance-related pay applicable in the case of a business organization. Based on the given case scenario, the best advise the researcher could give to the large manufacturing company is to integrate of competence / skill-related pay with gain-sharing pay. By doing so, the human resource manager could successfully improve the work flexibility, increase the multi-skilling and up-skilling of each employee, implement a cultural change programme as well as the quality improvement programmes. Q.4 ‘Human Resource Development is becoming a distinctive philosophy in organisations and central to bringing about effective change’. With reference to cases examples critically assess this statement. (30 marks) Introduction Many people have considered the human resource development as a distinctive philosophy in business organization and a central to bringing about effective change because of the past and present situation that human resource managers have encountered over the years. When we talk about philosophy, we are actually referring to a ‘logical reasoning’ as the human resource managers exert more effort in trying to develop an effective strategic decisions that aims to mould the entire workforce in accordance with the company’s organizational goal and culture. Basically, there is really no clear right or wrong decisions when it comes to handling employees in the sense that a strategic decision made for a company can work effectively even though it is expected that the same strategy may not equally work the same with another company. Given that human resource managers are facing new challenges each day, the study of human resource management is considered as a distinctive philosophy. Case # 1 – Organizational Changes Caused by Merger and Acquisitions In relation to globalization, tight competition in both domestic and global markets significantly influence a lot of medium- and large-scale businesses to enter into a merger and acquisitions with the purpose of strengthening the company’s ability to sustain the continuously increasing operational cost and the decrease in demand for their products and services. With regards to this matter, human resource management also face a crucial tasks in terms of enabling the companies’ existing employees to be able to adopt with the significant organizational changes that needs to take place within the business organization. (Margolis & Hansen, 2002) Since the human resource manager will have to face a lot of different human-related problems each day as a result of the merger and acquisition contract that occurred between two different companies, the human resource manager should philosophically develop and implement an effective strategy to simplify the change process without negatively affecting the business performance of the company. Having a totally new working environment normally increases possible conflicts that may arise between employees coming from two different companies. For this reason, it becomes a challenge for the human resource manager to be able to establish a new culture that will effectively promote team work and increases the open communication among the employees in order to avoid unnecessary conflicts that could greatly affect the overall business performance of the company. The same strategic process will apply as the human resource manager tries to develop a long-term learning, development, and performance culture. (University of Sunderland, Unit 6 - Human Resource Development Strategies, n.d. b: p. 310) For example: Even before the human resource manager implements a new strategy, the manager should be able to think logically as he/she analyzes the entire working environment, the characteristics and types of employees the organization is composed of, including the overall business situation in order to enable the human resource manager to easily foresee what could happen upon implementing strategy A. Prior to the implementation of Strategy A, several questions may arise as to whether or not the human resource manager should develop another strategy which could be more effective in terms of directly addressing the organizational concerns more as compared to the first strategy made by the manager. For instance, in case strategy A and B does not seem to work with the situation the business organization is facing, the human resource manager should think and develop another set of strategy that will be effective in encouraging all workers to accept the organizational changes and voluntarily participate in the new organizational culture that promotes the need for each employee to work as a team. Case # 2 – Effective Way on Motivating Employees Belonging to Generation Y and Baby Boomers Human resource managers are constantly looking for different ways on how to improve the motivation of their employees at work. This is necessary in making the entire team to reach the optimal levels of accomplishing the company’s objectives. Strategic ways on how a human resource manager could effectively motivate employees that belongs to baby boomers is very much different with the motivational ways the works well with employees that belongs to the Generation Y. Basically, ‘baby boomers’ is the term used in describing the oldest work force generation who were born between the years 1946 to 1964. (U.S. Census Bureau, 2006) On the other hand, generation Y workers are those born in 1980s onwards. Human resource managers should critically and logically analyze the impact of monetary incentives in the overall work performance of employees that belongs to baby boomers and generation Y. In general, monetary incentives could cause different effects on the employees. Monetary incentives such as in the form of increase in salary, bonuses, pension plan or insurance program can be used in motivating employees in terms of increasing their short-term work performance. However, not all employees can be motivated with monetary incentives. Rewards can either be classified as intrinsic or extrinsic. An example of intrinsic rewards or a motivational approach is a sincere acknowledgement for a good performance or thanking the employees for their effort at work. (Shamir et al., 1993) On the other hand, extrinsic rewards can be in a form of increased salary or bonus given to employees. In line with this matter, a study shows that the use of intrinsic rewards like entending their gratitude for employees’ work performance either verbally, written on a personal note, imposing a public recognition or a celebration for a successful work result is more effective motivator in terms of increasing their job satisfaction and work performance. (Graham & Unruh, 1990) Reward system related to monetary compensation and promotions are not always effective in motivating the baby boomers because material rewards like cash incentives can demotivate the baby boomers. (Anthony et al., 1989; Cecil Hill, 1989; Craig, 1989) Likewise, the ‘pay-for-performance’ strategy does not always guarantee the improvement in employees’ work performance, retention and job satisfaction since giving them extra money could hurt employees’ pride. In most cases, business organizations that are using this strategy could end up experiencing a higher turn-over rate of employees as compared to organizations that are trying to avoid it. Considering the basic facts and information about the impact of monetary incentives when it comes to motivating employees, human resource managers should first analyze the main concerns and characteristics of each employee (baby boomers and generation Y). By critically analyzing these two important factors, human resource managers could effectively develop a motivational scheme that will work well with baby boomers and generation Y employees. Baby boomers are generally optimistic and more dedicated to their work. (Zemke, Raines, & Filipczak, 2000; Broderick, 1998) Therefore, human resource managers should acknowledge their need and desire to be directly involved in making important decisions on behalf of the business organization. Aside from giving them the opportunity to make decisions on behalf of the business organization, baby boomers also greatly acknowledge one-on-one rewards in the form of verbal praise coming from their co-workers. (Shamir et al., 1993; Graham & Unruh, 1990) On the other hand, human resource managers should be able to adopt a more flexible scheme and rewards since most of generation Y employees strongly believe in their own worth and has adopted the ‘speak-your-mind’ philosophy. Basically, motivation through ‘relationships’ and ‘experiences’ are more important as compared with the traditional incentives like job promotion or the increase in employees’ basic salary. (HR Management, n.d.) In line with this matter, generation Y employees can be motivated through work-life-balance as well as work flexibility such part-time job or work at home option. Considering the different ways in which baby boomer and generation Y employees can be motivated at work, human resource managers should logically think of possible ways on how to restructure the company’s overall reward system. As soon as a new motivational scheme has been developed for the business organization, the human resource manager should also logically think of ways on how to implement the new motivational scheme within the organization. Conclusion The work of human resource department is considered as a distinctive philosophy in organization because of the fact that human resource managers often face a relatively new and unique situational cases related to the proper way of handling employees. When dealing with different scenarios, human resource managers are responsible in conducting a logical reasoning as he/she develop a new strategic solution that will address the main problem within the business organization. Based on the first case scenario presented in this study, we have clearly seen some ways on how the human resource manager could logically address organizational problems related to internal conflicts which may arise due to merger and acquisitions between a medium- and large-scale busineses. As part of the first case, the study shows how the human resource manager could develop and implement a new organizational culture that could promote open commnucation among employees as well as a long-term learning, development, and performance culture. In the second case, proper ways on how to develop a universal motivational scheme for a business organization that is composed of baby boomers and generation Y employees was discussed. *** End *** References: Anthony, R., J. Dearden and N.M. Bedford. Management Control Systems, 5th Edition. Irwin: Homewood, III. p. 57, 1989. Broderick, A. "Managing Diversity." Women in Business (1998): 44(3):13 - 14. Brown, A. Organizational Culture. London: Pitman Publishing, 1995. Cecil Hill, F. “Generating Ideas that Lower Costs and Boost Productivity.” National Productivity Review (1989): 8(2):161. Craig, Eric Schneier. "Capitalizing on Performance Management, Recognition, and Rewards Systems." Compensation and Benefits Review (March-April 1989): 23. David, F.R. Strategic Management: Concepts. 7th Edition. New Jersey: Prentice-Hall, 1999. Deci, E. "The Effects of Contigent and Non-Contingent Rewards and Controls on Intrinsic Motivation. in. Baker G.P., Jensen M.C., Murphy K.J. Compensation and Incentives: Practice vs. Theory." Organizational Behavior and Human Performance (1988): XLIII(3):593 - 616. Graham, Gerald H. and Jeanne Unruh. "The Motivational Impact of Non-Financial Employee Appreciation Practices on Medical Technologists." Health Care Supervisor (1990): 8(3):9 - 17. “HR Management.” 2008. Matching Personal Value Systems with Corporate Reward Solutions for the Next Generations of Workers. 13 June 2008 . Kohn, A. "Incentives Can be Bad for Business." INC (1988): 93 - 94. Lawler, E.E. Pay and Organizational Effectiveness: A Psychological View. New York: McGraw-Hill. p. 151, 1971. Leopold, John, Lynette Harris and Tony Watson. Strategic Managing Of Human Resources. Financial Times Management, 2005. Margolis, Sheila L. and Carol D. Hansen. “A Model for Organizational Identity: Exploring the Path to Sustainability during Change.” Human Resource Development Review (2002): Vol. 1, No. 3, pp. 277 - 303. Shamir, B., R.J. House and M.B. Arthur. “The Motivational Effects of Charismatic Leadership: A Self-Concept Based Theory.” Organization Science (1993): 4:577 - 594. "U.S. Census Bureau." 3 January 2006. Facts for Features: Oldest Baby Boomers Turn 60! 13 June 2008 . UniversityofSunderland. Strategic Management of Human Resources: Unit 5 - Reward Management. University of Sunderland. pp. 231 - 291, n.d. —. “Unit 6 - Human Resource Development Strategies.” University of Sunderland (n.d. b): 294 - 354. Zemke, R., C. Raines and B. Filipczak. Generations At Work Managing the Clash of Veterans, Boomers, Xers, and Nexters in Your Workplace. New York: American Management Association, 2000. Read More