Utility Analysis for Decisions in Human Resource Management - Essay Example

Introduction With the concept of globalization continuously rising, various industries nowadays are adapting with the idea of having cultural diversity in the workplace. As organizations are becoming a little less competitive as the globalization becomes the trend, majority of the team-management came up with a viable alternative in organizational development. Team playing and/or working is an idea, which has penetrated most businesses during the 90’s (Mattson, 1998). Groups and teams are powerful ways to organize people around each corporate performance goals (Katzenbach et al., 1993). Each organizational member’s contribution will never match the combined performance in a real team. Usually, the need to form a team arises from the need either to get things done more efficiently, using lesser time and effort (Mattson, 1998). And with this, the idea of a cross-cultural team sprouted up. Studies and researches were done to understand whether it would be of competitive advantage for a certain company if there are team members from different cultural backgrounds and how such differences can be understood and will not pose any problem for the company. This paper is aimed at analyzing if there really is real advantage in integrating a strategy of diversity management into HR policy and practice. Specifically, this is aimed at: 1. Analyzing the concept of cultural diversity 2. Understanding how cultural diversity is achieved and maintained by both the HR department and the management 3. Classifying the best possible approaches that leaders of a culturally diverse company should do so as to maintain the competitive advantage of the company Cultural Diversity With the continuing movement of the economy – may it be a decline or growth – every businesses and companies are using every possible means to keep the company at a stable end. Every organization must have the capability to adapt to the movement of the market and the ever-changing needs of the customers. However, an organization can only do this if the people – the very members of the workforce – are working smoothly as a team. Moreover, now that diversity in the workforce is seen as advantage rather than a problem, management have been seeking every possible means to maintain the competitiveness of each and every member of the workforce, thereby benefiting the company in the end (Becker, 1964). Diversity in the workplace has taken on a new face today. Nowadays, workplace diversity is no longer just about the issue of anti-discrimination compliance. Leveraging workplace diversity is increasingly seen as a vital strategic resource for competitive advantage of the people and of the business. More companies are linking workplace diversity to their strategic goals and objectives. Because of this, the human resource department (HRD) plays a key role in diversity management and leadership to create and empower an organizational culture that fosters a respectful, inclusive, knowledge-based environment where each employee has the opportunity to learn, grow and meaningfully contribute to the organization's success (Jayne and Dipboye, 2004). Organizations intending to introduce multiculturalism in their workforce have two avenues of guidance. Organizations can base their structures on multicultural pedagogy and team management theory to help them prepare for an increasingly diverse workforce. Companies can benefit from academic studies, which have already provided an outline of difficulty. Pedagogical methodologies facilitate the re-conception of the relationship between the self and the 'other', and the active participation in the learning process. On the other hand, industry's team management theory, which recommends participatory structures over hierarchical structures, offers methods for eradicating barriers and fostering unity. In a multicultural setting, collective decision-making is more desirable than individual actions. It emphasizes the importance of cooperation and team goals (Hambrick et.al, 1998). With the increasingly multicultural workforce, companies are implementing programs to address diversity. It is suggested industry's own team management theory, which dismantles hierarchical structures in favor of participatory ones, suggests ways of dissolving barriers and creating unity. Working together to reach a common goal underlies team management theory. Successful teams in industry support the fact that collective decision making is more productive than that of the individual. New workplace structures should focus not on individual change but on cooperation and team goals. Pedagogical methods of inclusivity and workplace teams can assist companies as they prepare for the increasingly diverse workforce (Hambrick et.al, 1998). Organizational structures based on multicultural pedagogy and team management theory can assist companies as they prepare for the increasingly diverse workforce. Business organizations adopting a multicultural approach can profit from academic research, which defines the crux of multiculturalism as the problematic sharing of power and the valuing of difference. Pedagogical methodologies enable students to reconceived the relationship between the self and the "other" and to become active participants in the learning process (Hambrick et.al, 1998). Working together to reach a common goal underlies both collaborative/cooperative learning and team management theory. Thus, new workplace structures - in response to the increasingly multicultural workforce - should focus on cooperation and team goals rather than on individual change. Further, communication plays a key role in working with others to achieve company goals, and thus, in the successful corporate shift to a multicultural, cooperative philosophy (Hambrick et.al, 1998). The desire to maintain individual identity operates in all employees -- those within current corporate structures and those who attempt to enter them - and can create tensions between cultures. Germaine Shames (1986) explains that cultures clash because individuals feel that their "own ways of behaving seem natural, right, and normal, and not merely the result of cultural conditioning”. Therefore, the culture shock that the "other" experiences is a "cumulative and debilitating state of disorientation, one that builds slowly from each experience in which the sufferer encounters contrary ways of perceiving, doing, and valuing things" (Shames, 1986). Such culture shock can result from differences in race, gender, physical ability, aptitudes, outlooks, backgrounds, and learning styles. One aim of multicultural management is the reduction of such culture shock. Also, it is possible that work in small groups can create new corporate cultures for getting things done. Newcomers may have different approaches but will reach similar ends; therefore, true collaboration and negotiation can lead to positive results. Marlene Fine's (1995) study of the multicultural success of nine organizations confirms that companies valuing "diverse cultural modes of being and interacting" do benefit from this approach, where "all cultural voices participate fully in setting goals and making decisions". Other studies reinforce these findings. George Henderson's (1994) analysis concludes that successful culturally diverse organizations are able to build trust; "create an open, problem-solving climate"; allow widespread responsibility for decision making and for setting diversity goals; and foster increased "awareness of the diversify `process' and its consequences for organization effectiveness". According to Henderson (1994), the "building blocks for a diversity program include team building, inter-group problem solving, confrontation meetings, goal-setting and planning, third-party facilitation, and consulting pairs". Finally, Gary Heil's (1993) study indicates that companies prosper when they reward experimentation, non-conformity, and the questioning of current practices. In sum, successful diversity programs possess the basic components of well-functioning teams: trust; a non-judgmental atmosphere; conflict resolution and negotiation skills; goal-setting abilities; and pervasive individual responsibility. Thus, team theory facilitates diversity in organizations. Maximizing The Benefits of Culturally Diverse Human Resources With the idea on core and distinctive employee competencies comes the maximize utilization of company human resources. With Wright’s, McMahan’s, and McWilliams’ (1994) expression that discloses that the human resources have the highest probability of providing the source of sustained competitive advantage for the firm, below are the suggested ways on how to maximize the company human resource, especially of the cultural backgrounds of the workforce is diverse: Regard the Human Resources as Valuable In the resource-based perspective, it is strictly suggested that the human resource be valuable before it can help maintaining sustainable competitive advantage for the firm. One of the best thing to note and ensure if the resource offers great value to the firm is by assessing if there is a heterogeneous labor in the firm. This means that the jobs of firms differ and these jobs require different skills and the supply of labor is equally heterogeneous in a way that individuals vary in both the types and levels of their skills (Steffy and Maurer, 1988). In line with the idea of heterogeneous supply and demand of labor, there are studies that can prove that the idea stating that the demand for and supply of labor are heterogeneous, at least with regards to skill levels of individuals. In connection with this, Lawler (1996) has argued that human resources must have power, information, knowledge, and rewards (PIKRs) to be a source of competitive advantage. One best example of this is the fact that personnel selection, training, and utility analysis has verified that more highly skilled individuals do better than lower skilled individuals (Boudreau, 1991). More so, these performance differences have been able to provide value to firms. Thus, more skilled individuals are more likely to possess these. Ensure that Human Resources is Rare Any firm’s human resource must be rare, especially if it aims to be the source of sustained competitive advantage. Human skills are normally dispersed in the population, but human resources with high skill levels are rare (Jenson, 1980). In the same manner, the responsibility attached to working in a company or firm requires variation in skills to offer variation in contributions (Hunter & Hunter, 1984). This is also the very reason why redundancy in human resource is extremely avoided. In every organizational structure, the role of each member of the organization, his/her responsibility, his/her direct contribution to the realization of the company’s goal is always being assed so at to checked that every member of the organizational chart is rare and that every body is contributing a unique input to achieving the desired output of the company. Consider Human Resources as Inimitable Like the idea that human resource is rare, if a human resource is difficult to imitate, it can be the source of a sustainable competitive advantage. In support with this, it has also been noted that resources is a lot difficult to imitate if in the presence of causal uncertainty and social complexity (Barney 1991). Causal uncertainty or ambiguity happens when it is hard to understand the link between a firm's resources and its competitive advantage (Reed & DeFillippi, 1990). Thus, in human resource’ point of view, competing firms which cannot identify the human resources that are responsible for the competitive advantage, or the way by which human resources create the competitive advantage only signifies that they cannot imitate the advantage. It is also in this point of view why it is noted that team production often leads human resources to causal ambiguity. This is because with team production, difficulty in isolating and identifying the particular human resources (individuals) that produce the superior performance of the team can be expected (Alchian & Demsetz, 1972). Social complexity, on the other hand, usually occurs from transaction-specific relationships, and the competitive advantage these relationships create may be due to transaction-specific human capital, i.e., human capital, such as knowledge, that is only important during the focal transaction. In various firms, different enablers interact with different people in and out of the company premises, This in turn enable them to establish relation which can be company-related or not. Because of such relationship, a very complex social situation may result and this may constitute a competitive advantage for the firm. Even if the relationship can be considered as too intricate to dissect, it is also reasonable to hypothesize that the value of the focal relationship may be due to transaction-specific human capital, wherein the knowledge and trust that are developed over time by the focal personnel (Becker, 1964). Regard Human Resources as Non-substitutable It should be noted that any human resource is considered as a source of a sustainable competitive advantage if it is a non-substitutable resource, especially if the human resource comes from a culturally different background. Human resources are among the firm’s few resources which can be transferred to series of technologies, products, and/or markets so as to prevent becoming obsolete (Harrigan & Dalmia, 1991). In today’s modern time, a lot of technology types can now be used to replace human function. Continuous upgrades of equipments, series of technology linkages, and even non-stop innovation and invention offers threat to the strength of human-resource. Like for example, the general human capital resources such as learning capability which can now be transferred across a wide variety of technologies, products, and markets. Furthermore the firm’s continuing acquisition of individuals with high levels of learning capability and eventually training in various state-of-the-art technological skills could also mean that the resource does not become obsolete (Harrigan & Dalmia, 1991). Therefore, it is very unlikely the substitution of human resource to technology would eliminate the advantage of the human resources for long. This is proven by the fact that technologies can already replace the people. So why would a company continuously hire a person – who will be receiving years of benefits, medical benefits, and even retirement benefits that are all too costly- if the company can only buy a certain technology and use it without even worrying for the benefits that human resource have? However, it is also worth noting that there are certain limitations that technology has which human resource does not have. First is the fact that technology is now and continuously being internationalized. This just proved the fact that technology may be easier to imitate or be substituted as competition becomes more global because (Mansfield, 1984): The number of companies with equivalent R&D resources increases as an industry goes global. There is a direct relationship between the knowledge and the number o firms in a way that as the amount of knowledge available to build on increases, the number of firms also increases. The property rights to intellectual capital turn out to be increasingly hard to protect. With this idea, the competition of technology versus human resource became more on the side of the former, if it is managed properly. This is because as competition becomes increasingly global, technology also become increasingly imitable, which, in turn, argues for the increasing importance of human resources as a source of sustainable competitive advantage (Mansfield, 1984). Conclusion Most businesses are now accommodating diversity by improving corporate communications, observing religious holidays, offering training seminars, forming task forces, and offering management training. Similar to the teaching methods for multicultural classrooms, cultural awareness training in the workplace addresses communications issues, utilizing exercises to instill participants with a better understanding of other perspectives. 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