The Challenges and Choices HR Managers Face - Essay Example

 The Challenges and Choices HR Managers Face Executive Summary This paper was prepared to analyse and discuss some of the pertinent problems and challenges facing human resource managers in relation to people management in their respective organisation. From inspiration drawn from Paul Ilsles best fit model and using the work of some researchers a number of recommendations were drawn. Problems of people management in today’s organisation include agency problem-.since ownership is separated from control in the modern form of corporation; the agency relationship poses two important problems. The paper thereafter calls for the use of Paul Isles model., chosen because it covers the SWOT analysis, A focus on the training on teams for fostering a more participatory organizational culture etc. 1.0 Introduction Human Resource Management (HRM) is of strategic importance to all organisations. HRM do not only create competitive advantage for the organisation but is the force underpinning organisation’s success (Turner, Keegan & Hueman 2006). Within the mainstream HRM literature, there is a long tradition of research arguing that in order to make an optimal contribution to firm performance, people management policies and practices should be integrated both with firm strategy, so-called vertical strategic integration and with each other, so-called horizontal integration (Turner, Keegan & Hueman 2006:317). Paul Ilsles best fit model attached in the appendix lay emphasis on this. In present day organisation, because any discussion about how an organisation’s succeeds or fails ultimately comes back to the way its people are managed, Academics and Practitioners agree that as the dynamics of competition accelerates, people are perhaps the only truly source of competitive advantage (Turner, Keegan & Hueman 2006:317). According to, Turner, Keegan & Hueman (2006:317), for an organisation to be effective and successful, the human resource management functions must be integrated into the various organisational strategy. These questions and objectives are stated in the next section. 1.1.1 Research questions and Objectives Traditionally people management was regarded as a personnel department function, it is now a collective responsibility amongst managers and non-managers, personnel directors and line managers. “The resource base view of the firm infers that firms create competitive advantage by implementing unique combinations of resources and business practices that are difficult (or impossible) for competitors to imitate” from this viewpoint, Human resource practices are key components of overall firm strategy (DeMarie & Werbel 2005) cited in Heneman et al., (2000). As Mayson &Barret (2006) writes in their paper “the management of people and human resources become even more critical. Rapid growth can put a great deal of pressure on organizational resources and systems which, in turn, puts pressure on managers and employees to react to fast changing landscapes”. Thus, This paper seeks to answer the following questions What are the people management challenges faced by today’s organization? How do present day organizations try to overcome the people management challenges they face? 1.1.2 Review of related Literature The field of people management is one of the many interesting area of research that has witnessed a paradigm shift within the last few decades (Huselid, 1995, Doty &Delery 1996). Within this area of research, an increasing body of literature contains the argument that, high performance work practices, including comprehensive employee’s recruitment, selection procedures, incentives compensation and performance management systems, and extensive employee’s involvement and training can improve the knowledge, skills and abilities of firms (Huselid 1995, Jackson, Schuler., & Sparrow, 1994). Today, with the increasing researchers desires to demonstrate the importance of an effective human resource policy on organisation performance research has shifted from a micro level that previously dominated research interest to a more general, strategic macro level (Doty &Delery 1996). The term human resource management is not new. It has been widely used by scholars and managers to refer to the set of policies designed to maximize organizational integration, employee commitment, flexibility and quality of work (Poole 1999). Jackson & Shuler (2002) referred to it as an umbrella term that encompasses (a).specific human resources practices such as recruitment, selection and appraisal and (b). formal human resource policies which directs and partially constrain the development of specific practices and in all, it comprise a system that attracts develops, motivates and retains those employees who ensure the effective functioning and survival of the organisation and its members (Jackson & Shuler (2002). Cobb Gnyawali & Offstein (2006:315) argued that while effective human resource management and policies have, indeed, been linked to strategic outcomes, human resource management theory has yet to link human assets and HR practices directly to the building blocks of strategy and competitive behavior. Accordingly, their model of strategic human resources links both micro and macro literature streams. 1.1.2.1 People Management Challenges Faced By Today Organisations According to the theory of agency, proposed by Jensen and Meckling (1976) the relationship between shareholders and managers can be regarded from the perspective of the principal agent relationship in which the shareholders (principals) delegate work to the managers (agents). This relationship is governed by the employment contract. (Eisenhardt, 1989: p. 57) The contract stipulates that the manager (the agent) provides returns to the shareholders in the form in return for compensation such as salaries, stock options and other compensation schemes. Since ownership is separated from control in the modern form of corporation, the agency relationship poses two important problems. (Eisenhardt, 1989: p. 57) Firstly, the interests of the shareholder may be in conflict with those of the managers. While shareholders may expect managers to satisfy their interests, managers too may be interested in satisfying their selfish interests rather than what is best for the organization as a whole and the shareholders in particular. Secondly, the shareholder may find it difficult to observe the actions of the manager owing to the fact that both parties may have different attitudes towards risk. (Eisenhardt, 1989: p. 57) While the shareholder may be interested in seeing the manager invest in high risk high NPV projects, the manager may be risk-adverse and therefore discard such projects. Consequently, the principal agent relationship results into agency costs which are often incurred by the shareholders. (Jensen and Meckling, 1976). Spong, et al,(2000) concluded that, without incentive to maximise the value of the owners investment, the hired manager may act to enhance their own utility by consuming extra perquisites (Expense preference), pursuing personal prestige and power (empire building), rejecting positive net present value projects that have particularly bad outcomes in some state of nature (risk aversion) or simply expending low amount of effort. In contrast to some previous studies of large actively traded corporation, Spong K, et al., (2000) found no evidence that non-managerial insiders, or blocks of outside owners, can effectively monitor the hired manager 1.1.2.2 How Can these Problems and Challenges be solved Human resources compliance has become a necessity for any business in today's legal environment. Between the Fair Labor Standards Act (FLSA), OSHA, sexual harassment, and antidiscrimination laws, a business that isn't aware of its HR responsibilities is heading is heading for trouble.( http://www.allbusiness.com )last accessed 12/11/008. According to their strategic human resource (SHR) model, firms with superior stores of human and social capital are in a better position to launch a high volume of complex and forceful competitive moves within the marketplace and as such to obtain this objective requires careful planning, coordination and action of its human resources (Cobb Gnyawali & Offstein 2006). Furthermore, Müller and Turner talked of two forms of contracts, a fixed price contracts and a time and material contract often used to align the interest of the principal and the agent. While fixed price contract shift all the risk to the agents, time and material contract on the other hand shift all the risk to the manager and the owners. Because contracts are usually incomplete, a farsighted governance structure which supposes should be flexible is required for every project contract. The costs incurred in monitoring agency contracts reduce the manager’s compensation, therefore there is incentive for the agents to minimise these costs by refraining from conflict with the principal (Arnold et al 2003). In addition, organisations are called upon to train both employees and managers. Managers on their part have significant day-to-day interactions with their employees; each manager should be provided with a policy manual with clearly defined roles and career progression path for both managers and employees. Effective HR compliance programs need to be integrated into your business strategies and given more than just lip service. Compliance has to start at the top and trickle down to all levels, so everyone in the company knows that the workplace must be kept safe and discrimination won’t be tolerated. So far, many researchers have been able to recommend the following methods as a pathway towards effective people management and development. Keep abreast with the laws. Human resource policies changes most often and to be on the safe side requires organisation to be responsive to current laws and their environment. This will enable the organisation develop appropriate policies and facilitate communication with employees. Another important factor can be drawn from agency theory. Aligning the interest of the principal and the agents requires a fair play where neither the principal nor the agents are worst off. The standard principal agent framework on one hand, leads to a prediction that participation may negatively influence a firm’s performance. While the primary challenge within agency theory on the other hand is for firm’s owners to create an incentive system that leads the firm’s workers to act in the owner’s interest in daily management activities. 1.1.4 Summary and Conclusion This paper was prepared to analyse and discuss some of the pertinent problems and challenges facing human resource managers in relation to people management in their respective organisation. From inspiration drawn from Paul Ilsles best fit model, and using the work of some researchers a number of recommendations were drawn calling on the management, to create conducive environment, more workers participation, career succession planning, career relevant training, greater opportunities for higher roles, job satisfaction in order for trust and commitment to be enhanced. If this recommendation is properly implemented by Human Resource Management practitioners or managers, a number of benefits could be achieved which include developing a set of shared values, reducing costs when the relationship finishes and increasing profitability as a greater number of end users customers are retain. References Cobb T.A, Gynyawali R.D, & Offstein H. (2006) A strategic human resource perspective of firm competitive behavior. Human Resource Management Review Volume 15, Issue 4, Pages 305-318 Doty H. D., & Delery, E. H (1996). Modes of Theorizing in Strategic Human Resource Management: Tests of Universalistic, Contingency, and Configurationally Performance Predictions. The Academy of Management Journal, Vol. 39, No. 4 (Aug., 1996), pp. 802-835 Eisenhardt K. M (1989). Agency Theory: An assessment and review. Academy of Management Review, vol. 14, No. 1, pp. 57-74. Gilbreath, B., (2008). Creating Career-Conducive Organizations. A primary intervention approach. Advances in Developing Human Resources, 2008-10 Grehart, B. & Becker B., (1996). The Impact of Human Resource Management on organizational performance: Progress and Prospects.The Academy of Management Journal, Vol. 39, No. 4 (Aug., 1996), pp. 779-801 Huselid, A. M., (1995).The Impact of Human Resource Management Practices on Turnover, Productivity, and corporate Financial Performance. The Academy of Management Journal, Vol. 38, No. 3 pp. 635-672 Jackson E.S., & Shuler S. R., (2002). Strategic Human Resource Management. Jensen Michael C., (2003): Theory of the Firm Residual claims, and organisational forms. Cambridge, Massachusetts London, England Kotter, John. P., (1995). ‘Leading Change: Why Transformation Efforts Fail’, Harvard Business Review, Vol. 73, Issue 2, p59 Poole, M., (1999). Human Resource Management and Industrial organisation Critical perspective on business and management Sveiby KE. (1997). The new organizational wealth: managing and measuring knowledge-based assets. San Francisco: Berrett-Koehler; 1997. Turner, R. Keegan, A & Hueman, M., (2006). Human Resource Management in a Project-Oriented Company. A Review. International Journal of Project Management 25 (2007) 315-323 Youndnt, A. M., & Snell, A. S., (1995). Human Resource Management and firm performance: Testing a contingency model of Executive controls. Journal of Management. Vol.21, No. 4, 711-737 Appendix Characteristic of a Psychological work environment as outlined by Gilbreath (2008). • Conflict, ambiguity, and uncertainty are minimal; • Job control is commensurate with job demands and employee self-efficacy; • Social support is available and provided when and as needed; • There are good fits between employees and their work environment; • Expectations between employers and employees are congruent and met; • The work environment allows employees to develop and move toward their ego ideal; • The organization balances and enhances its subsystems without losing sight of its ultimate purposes; • There is positive morale and job satisfaction; • Work provides reasonable amounts of challenge, variety, learning, recognition, and meaning; • The workplace is safe, is not unpleasant, and has good communication and feedback, respect, flexibility, equity, and consistency; • Supervision is competent, considerate, supportive, and not overly close; • Employees receive decent pay and benefits; • Work is no demeaning and interesting; References 1.1.5 Appendix 2 Action Plan Where X = ONE Day, XX= TWO Days XXX= THREE Days Activity Week1 Week2 Week3 Week4 Mile stone Finalisation of introduction, problem statement and objective of study x Chapter one completed and approved. Reading of existing literature, initial contact with sample organisations x xx Literature review completed Finalisation of research methods, administration of questionnaires and conducting interview x xx All questionnaires dispatched and interview administered Data collection and data entry xxx Data ready for analysis Discussion with supervisor and data analysis and presentation x Submission date agreed upon and go ahead received for presentation Report writing xx Typing of report Report submission for review x Final copy of report submitted for supervisors review Correction and presentation of final report Project Graded Read More