Workforce Commitment Employment Model and Labour Transactional Employment Model - Coursework Example

Running Head: HUMAN RESOURCE MANAGEMENT MODELS (Your Name) (Institution’s Name) Introduction Cappelli (2002) defines Human Resource Management (HRM) as those activities which are involved in developing, acquiring and using individuals in a business. It is the process of appraising, training, motivating and developing sufficient number of workers to act upon the activities necessary for employees’ satisfaction, company’s objectives and efficiency of workers. (Ulrich, 2001) The main functions of HRM are human resource planning, selection and recruitment, management and training development, performance evaluation, payment and providing employee satisfactions plus benefits. HRM encompasses all those activities that are aimed at developing, attracting and sustaining a successful labour force. We all know that human resources are essential for effective functioning of every organizational. Human Resource planning begins with forecasting the supply and demand of labour as well as job analysis. Forecasting of future plans, current available employees, external supply, internal supply, economic environment etc. are considered in supply and demand analysis. Job analysis on the other hand is the procedure for collecting and recording information about jobs. (Cappelli, 2002) This paper will critically examine the main models of human resource management (HRM). It will evaluate workforce commitment employment model, Labour transactional employment model, Core-Noncore Workforce model (Mixed approach), Training and Development Model As well as International HRM Model. The paper proposes the likely future developments in this area of human resource development. Workforce commitment employment model A number of companies have shifted to an approach that is linked to the explicit commitment of employees on the idea that this would promote greater commitment from workers with enhanced productivity. The workforce commitment model takes a long-term perspective on employment relations and puts much focus on social and intellectual capital development within the organisation’s boundaries. It aims at investing and developing human and social capital within the organisations boundaries in a complex manner that competitors find it hard to imitate overtime. In so doing, it takes its human resource assets as a major competency and a unique capability in organizing thus differentiating the company from other competitors in the market arena. Employees with a desire for a long term employment relationships are bound to view a company that adopts the commitment approach as their employer of choice. (Ulrich, 2001) Employers of choice usually treats employees well offering personal development opportunities , training them well and strives to avoid layoffs as a method of managing the cost of labour. Examples of human resource practices that support a commitment approach are incentives for performance, measurements of manager’s skills in motivating and developing workers, job security, sharing finances and performance information with employees, constant training and investment in employee skills, culture that minimizes status differences between managers and workers, flexible job assignments and job designs in teams. In principal high commitment human resource practices have impacted heavily on the development of employees well being, decision making power, job knowledge, business literacy and rewards relating to the performance of the company. Employment relationship model is organisation-focused with the advantage of greater flexibility of employees in carrying out their assignments. Employers are more than willing to offer job training and security in exchange of employees’ flexibility and commitment in terms of working at different geographical locations and accepting various tasks. Workers in these organisations appearing to have fewer hierarchical levels are empowered. To ensure that workers exercise their autonomy to the interest of their bosses, employers are giving job security to the employees in exchange of high employee commitment to the organisation. Employees are willing to incur opportunity cost by forgoing short-term advantages in order to get long term employment security. (Ulrich, 2001) The forgone advantages may include willingness to learn various tasks which are only specific to one employer and can not be transferable to the external job market and the willingness to work extra hours(over time). As noted by Torrington and Hall (2005) Jeff Pfeffer a professor in Stanford business school gives a coherent view in following the commitment model as the best practice. He asserts that high-commitment model leads to workers working harder due to the increased involvement occurring as a result of gaining more say in their work. Administrative costs are also reduced since fewer managers are required because more responsibility is shifted to the employees and minimal energy will be directed to the adversarial labour management relations. More so individuals are motivated to work smarter and also in engaging skill development directed on enhancing the performance of the firm. Jeff delineates clearly on how the commonly used labour-cost minimization practices for instance, outsourcing, heavy use of temporary employees and downsizing might eventually undermine the firm’s competitiveness. On the other hand, regular layoffs of employees can greatly erode their trust towards their employer- an essential recipe for productivity and innovation gains. The tradition outsourcing of work practice can create long-term problems in reliability and quality of work. He believes that an extended use of temporary workers will also undermine quality, innovation and trust. Labour transactional employment model Presently, many organisations have not followed a workforce commitment approach in managing their employment relationship. On the contrary, they have employed an internal labour minimization strategy thereby moving towards a labour transactional model. This models aims at cutting down on wage and benefits transactions costs as well as employment levels within the firm’s boundaries. The strategy has been referred by some scholars as the externalization of employment. Under the transactional model the employer buys or transacts only the services of the workers it currently requires from the market place at reduced costs. Labour transactional approach is mainly driven by the shareholders and financial institutions powers as well as the pressures from the economic product market. Its major strategy is purchasing the requisite human resources available from suppliers or individuals in the market place at reduced short term costs with an aim of minimising the human resource assets ownership and maximising flexibility within the internal boundaries of the organisation. In simple terms the two models i.e. transaction and commitment can be seen as contrasting decision making models to the human resource management. Under commitment model human resources are taken as the assets of an organisation and are heavily maximized through investing on them i.e. the organisation achieves the needed human resources. In contrast, labour transaction model assumes that employees (human resources) are principally a cost, and aims at minimising the cost of doing business. The organisation transacts or buys only those services required by the workers and at reduced costs. In the short run labour transactional model is likely to cost less in terms of labour as opposed to the commitment model. (Cappelli, 2002) The labour transactional model is focused to the job assignment with an advantage of flexibility in employment should there arise a fluctuation of demand for products and services. This employment relationship is aimed at emphasizing a higher level of task performance from workers without necessarily requiring their concern or commitment for the long-term survival or success of the company. Job responsibilities are well defined, a benefit that goes to the employer. Nevertheless, a down size may occur such that it causes inflexibility in the task demands thus requiring a formal renegotiation of the employment agreement between the employer and employee. Downsizing and layoffs have become more common since the practice has been valued normatively. In 1993 Xerox, for example, announced that it would layoff ten percent of its labour force, this made its prices of stock to climb by 7 per cent considering the fact that the firm was aggressively beyond the competitive curve. (Milkovich and Bourdreau, 2000) Core-Noncore Workforce model (Mixed approach) It is only few employees who will specialize on either labour transactions cost minimization model or a workforce commitment model. Majority tends to employ a mixed model approach with various employment models for both core and noncore employees. Under this model employees who possess the skills that are seen to be supporting the core competencies of the organisation (unique attributes that may make the firm special while compelling in the marketplace) may be recruited under those policies that supports the commitment approach. In addition, the same employer may also recruit workers who are seen as noncore to the firm or who have been employed under various negotiated hiring roles or under temporary basis. Noncore workers employment policies are more reflective of the transactional model. They may also acquire some few benefits that are enjoyed by the core labour force employees. Milkovich and Bourdreau (2000) have argued that practicing various employment systems for both core and noncore workers can be a good way of gaining competitive advantage. He further argues that a major risk of building strategy where companies invest heavily in the development of the general workforce skill development is that more time and huge sums of money may be spent on training and may end up being a waste following the failure to create value. The shift toward a core-noncore model was first witnessed in the 1970s the time when long-term employment relationship model began to fade. To acquire global competitiveness, all employees (in manufacturing and blue collar jobs as well as those in white collar jobs i.e. healthcare, financial services and education) downsized and later ‘right sized’ to cut down on labour costs , often replacing all workers (from professionals, managers, clerical and blue collars) with contract, temporary or part-time workers. Currently it is estimated that 25 to 30 per cent of the labour force in United States comprises of contingent workers and the figure is expected to rise further. The trend has acquired a global face since subcontracting and outsourcing is increasing substantially in many other nations, for example, Japan and the United Kingdom. Researchers have argued that when temporary workers are hired strictly for short-term purposes, either to perform noncore (non-repeating) work or to assist the organisation in a period of temporary demands, the core-noncore workforce model can greatly help in preserving the employment security for those regular full-time workers. Hewlett-Packard, for example, employs the core-noncore model in ensuring employment stability to its full time regular employees. Largest companies in Japan applied this model for many decades after the Second World War. Conversely, the Japans dual economy led to the minority groups and women being hired at the smaller organisations due to the temporary practices thus rarely able to become full-time regular workers at the most prestigious companies. Airline industry is also well known in using two tiers of employees. Generally the newly hired workers have less benefits and wages compared with most senior employees. (Purcell, 2003) Training and Development Model As prescribed by the American Society for Training and Development, this model comprises nine major parts of HRM. These include selection and staffing, organization and development, personnel research and information systems human resource planning, employee assistance, compensation benefits, Training and development, organizational job design, union relations etc. The main outputs of human resource areas are productivity, quality work life and readiness for change. This approach focuses the key activities as classified into development, acquisition, maintenance and motivation. Acquisition comprises of internal and external recruiting, employee specialisation and resource planning. Development encompasses career development, management development and employee training. Motivation includes job evaluation, performance evaluation, job design, compensation benefits, rewards and discipline. Maintenance puts more emphasis on employee relations, health and safety etc. The external influences in this model are equal employment opportunities, labour union management practices and government regulations. (Kochan, 1997) International HRM Model As prescribed by Purcell (2003), International HRM are those activities that an organisation undertakes so as to effectively utilize its human resources. The aspects referred in these activities are; - HR planning - Staffing - Training and development - Performance management - Labour relations - Compensation and benefits As presented by Morgan international human resource management model entails three basic activities like allocation, procurement and utilization. The three activities are always spread over in home, host and other countries. HRM turns out to be the interaction between the three dimensions i.e. countries of operation, type of employees and human resource activities. Activities in International HRM are similar to those in domestic HRM, for example procurement which refers to human resource staffing and planning. However domestic human resource management is only involved with workers who are within a single national boundary. Basically the complication of working in diverse countries and providing work for different national groups of employees is a major variable distinguishing the two approaches. As observed by Dowling the complexities of International HRM are associated with the need for a broader perspective, changing emphasis as the labour force mix of locals and expatriates differs, more HR activities, increased involvement in personal lives of the workers, risk exposure and the impacts on external influences. (Purcell, 2003) Conclusion It has clearly emerged that major distinctions can be drawn between the transactional, commitment and mixed (core-noncore) models to the human resource management. This paper has created a framework in understanding strategy development and managerial decisions making which states that human resource strategies and decisions differ in the nature of their roles of organisation and in their discretion management levels. Wider prevalence of mixed models and labour transactional cost minimization approaches has led to a fundamental shift in the senior management and employee attitudes concerning the centrality of having committed workers engaged in an employment relationship that is long-term in nature. Workers in all levels are widely taken as labour costs as opposed to human resources. A typical assumption is made that firms should boost their investment in employees while reducing and limiting costs at the same time. To the extreme such a scenario may bring negative effects thereby resulting into reduced commitment and loyalty between employers and employees in these relationships. Research has revealed that most people are opting away jobs from major and well established organisations in the United States in preference for entrepreneurial work. If the majority of the brightest and the best do not prefer working for the US biggest employers, then outcomes of the growing use of labour in the labour transactional cost minimization models are not creating a positive environment for the competitiveness of the United States leave alone the entire society. Shifting towards such new workplace practices and transforming employment relationships creates important ramifications for employees, employers as well as a country’s competitiveness in the global market place. (Torrington and Hall, 2005) Although the media might convince individuals to believe that nearly every organisation have shifted towards the employment relations that are geared at achieving labour cost minimization , this paper assumes that some variations are exhibited in the employment relationships management. Employing the organisations as well as managers holds a high degree of choice on the need to invest in human resources as a core competency. We still have a good number of organisations who follow a high –commitment model to the employment relationship, for example, Starbucks, State farm, Birkenstock and Airlines, among others who see workers as long-term assets, strive to offer long-term job security, train and invest in them and lastly, pays them well. Reference Armstrong, M.(2006):A Handbook of Human Resource Management Practice 10th Edition, Kogan Page, London Beardwell, I. and Holden, L. (2001): Human resource Management – a contemporary approach. 3rdEdition. Prentice Hall, London Cappelli, P. (2002): managing the market-driven workplace, Harvard Business School, Boston Kochan, T. (1997): Rebalancing the role of Human resources, human resource management. Spring 1997, 121-128 Milkovich, G. and Bourdreau, J. (2000): human resource management, Irwin, Chicago. Purcell, J. (2003): Strategy and human resource management, Palgrave Macmillan, London Torrington, D. and Hall, L. (2005): Strategic HRM and HR Strategy. In: Human Resource Management 6th Edition. Prentice Hall, London. Tsui, D. (2002): Choice of the Employee-Organisation Relationship, Oxford University Press, Cambridge Ulrich, D. (2001): Human Resource Champions, Harvard Business, Boston. Read More