Evaluating Human Resource Management - Essay Example

Human Resources Management Human resource management seems to promise the set of guidelines which so many managers have been so desperately seeking' (John storey, 1995, Human resource management. A Critical Text, P.4.) With Particular reference to labour management, what were the problems and to what extent did HRM seem to provide the solutions 1.0 Introduction: The Human Resources Management encompasses a variety of activities. The HRM functions have undergone a number of changes over the past decades. Previously large organizations only had 'personnel departments' with the main function of organizing the paper work connected with the hiring of the people and looking after the payment of salaries and wages for them. "More recently, organizations consider the "HR Department" as playing a major role in staffing, training and helping to manage people so that people and the organization are performing at maximum capability in a highly fulfilling manner."(Carter McNamara) But quite often a distinction is drawn between the Human Resources Management (HRM) and the labour management concentrating on the industrial relations of the large enterprises. However in the context of globalization the pressures exerted on HRM and labour Management initiatives have really changed the nature and scope of these distinct functions. "Changes in IR practices (rather than in institutions and systems) such as increased collective bargaining at enterprise level, flexibility in relation to forms of employment as well as in relation to working time and job functions have occurred as a result of such factors as heightened competition, rapid changes in products and processes and the increasing importance of skills, quality and productivity." (S.R.de Silva) These factors also seem to have an impact on the policies and practices of the HRM. In this context this paper presents an overview on the problems of labour management to the extent it affects the growth and progress of an organization and the role of the HRM in providing effective solutions to the problems being encountered in the labour management. 2.0 Position of HRM with Respect to Change Management: "Enterprises driven by market pressures need to include in their goals improved quality and productivity, greater flexibility, continuous innovation, and the ability to change to respond rapidly to market needs and demands" (S.R.de Silva). Such enhanced organizational goals increase the efforts and commitment of the HRM in realizing the management goals. For this purpose the HRM has to shift its focus to largely depend on individualism rather than collectivism that result in the alignment of the pay systems to the individual performance and skill sets. Thus realizing the improved organizational goals call for an effective change management, larger involvement of employees, increased commitment from the employee side, provision of more training, soliciting more employee participation to exhibit team work and cooperation which are all the important HR initiatives. At the same time all these can be viewed as potential industrial relations issues needing an effective labour management. With this increased responsibilities "The dominant position towards which HRM is moving points to a "change in power relations and highlights the supremacy of management. The management prerogative is rediscovered but in place of command and control the emphasis is on commitment and control as quality, flexibility and competence replaces quantity, task and dumb obedience. To put it another way: the managerial agenda is increasingly focused on innovation, quality and cost reduction. Human resource management makes more demands on employees, work is intensified .... there is less room for managerial slack and for indulgency patterns." (John Purcell) 3.0 Objectives of Labour Management and HRM: In order to have an appreciation of the ways in which HRM can provide solutions to the labour management issues, it is important to understand the basic objectives of the labour management so that it is easier to visualize the problems that may arise in the labour management and the possible solutions that HRM can provide for these problems. S.R. de Silva outlines the objectives labour management as: 1. "Providing better terms and conditions of employment to the employees that is in the best interests of both the employer and the employees for an efficient production 2. Establishing effective communication mechanisms to resolve workplace issues at enterprise and industry levels 3. Avoidance and settlement of disputes and differences between employers, employees and their representatives, where possible through negotiation and dispute settlement mechanisms." (S.R, de Silva) In addition to the above meeting the social obligations of the organizations and establishment of stable and harmonious industrial relations between the workers and the management is also included in the purview of the labour management. In fact all these objectives give rise to various issues for which the HRM provides feasible solutions. Thus"at its most basic HRM represents a set of managerial initiatives"(John Storey) Four processes are central to a HRM system - selection, appraisal, rewards and development (N. Tichy et al.) These processes leave only limited room for labour management as a central element in the human resource system. "Based on theoretical work in the field of organizational behaviour it is proposed that HRM comprises a set of policies designed to maximise organizational integration, employee commitment, flexibility and quality of work. Within this model, collective industrial relations have, at best, only a minor role."(David E. Guest) 4.0 Labour Management and the Role of HRM - an Overview: In the United States as well as European countries "the concept of HRM experienced a process of evolution from traditional model to a more concurrent one. The initial development of HRM concept was based on the 'resource' aspect of HRM and that effective utilization of human resources could lead to the realization of business strategy and organizational objectives". (Fombrun et al., 1984) This approach to HRM connects the different personnel functions to the strategy and structure of an organization. (Galbraith and Nathanson 1978) This model attempts to bring a closer connection between the strategy, structures and HRM in an organization. The expansion of this model for achieving the effective implementation of the organizational strategies has necessitated the performance of different 'role behaviours' by the employees by exhibiting different characteristics. (Schuler and Jackson, 1987) "This model maybe said to represent a typical U.S. oriented unitarist approach towards people-management system that emphasizes managerial autonomy and legitimizes managerial control over employees" (Boxall, 1992) The labour management approach has given to various issues that need to be solved by the HRM in order to achieve the organizational objectives. Thus the labour management issues made several internal and external factors influence the HRM formation in the European organizations. Brewster (1995) identified the external factors are in the form of the "legalistic framework, vocational training programs, social security provisions and the ownership patterns (public and private)". Budhwar and Debrah, (2001) have identified that "the internal factors such as organizational culture, union influence and employee involvement in decision-making through workers' councils have had a profound impact on management policy and practices and business operation". The process of labour management has changed the characteristics of the new HRM system. The new and improved characteristics of HRM are reflected in those areas "where employees are provided with more flexibility in recruitment, work conditions and payment systems, a more individualized employment system where performance determines remuneration and promotion, an increase in the importance of HR managers' role to introduce new recruitment, evaluation and remuneration strategies, and increasing contract employment within the norm of permanent employment system" (Benson and Debroux, 2004) In order to have an effective labour management Bae and Rowley's (2004) study has identified the following areas where the HRM is undergoing serious transformation to cope with the increased demands of the labour management. Recruiting Competencies - from a general approach to position and role specific recruitments Reinforcing Competencies - increasing the recognition of performance and ability Retaining Competencies - increased use of training and development and adopting improved strategies for retaining talents Replacing Competencies - more flexibility in employment with more emphasis on external sources of competencies 5.0 Issues in Labour Management and HRM Solutions: It is now commonly accepted that employees create an important source of competitive advantage for firms (Barney, 1991; Pfeffer 1994).HRM practices in the present day context are expected to make the best use of employees by adopting efficient labour management policies and thereby increase the organizational performance. The concept of 'high performance work practice' is getting increased attention in the sphere of organizational performance. (Huselid 1995) This places much emphasis on the contribution of the work force and hence an effective labour management ensuring harmony in the industrial relations is being increasingly felt by organizations. Issues are bound to arise in the area of labour management and it is for the HRM to find suitable and workable solutions to solve these issues. Some of the issues likely to arise in the labour management where HRM can be of assistance are discussed below: 5.1 Employee Development: An important aspect of labour management is the employee turnover and retention. There are several factors responsible for the turnover intentions of the employees. Studies have proved that one of the ways of mitigating the problems being crated by employee turnover is by the development of the employees who are already with the organization to move to senior positions. "A variety of HRM practices are related to the development of the human resources of the firm. First, company investments in both technical and non-technical training are likely to have a positive impact on the extent to which the firm actually succeeds in developing the skills/knowledge of its employees." Training was suggested to be a high performance HRM practice in research by, among others, Delaney and Huselid (1996), Huselid (1995), Koch and McGrath (1996), and MacDuffie (1995) Another area where HRM can be of assistance is the career planning of the employees. By assisting the employees in planning their future career identified with the growth of the company the employees postpone their decisions of leaving the employment of the organization. It is inferred that a well defined career plan enables the employees to take additional responsibilities in the areas in which they work and this helps the employee to develop the required skills viewed as important by the company (Doyle 1997) 5.2 Job Security: One other issue that forms part of the labour management is the insecurity feeling that the workforce always has which really affects their work performance. Pfeffer (1995) looks at employment security as an important aspect of high performance HRM practice. It is true that the employees who perceive that they have relatively secured job are likely to offer better suggestions to the management for improvement in the productivity. Such employees take their jobs seriously with a long term commitment and consider the company's performance as a more important factor. 5.3 Employees Pay Systems: Another major sphere of labour management which is likely to develop more issues is the system of wage and salary payment to the workers. With the advent of technological advancement it has become imperative for the organization to follow a system of 'performance based compensation' in order to retain the best talents with the company. Most of the research studies have identified the concept of performance-based compensation as one of the high performance HRM practices (e.g. Arthur, 1994; Delery and Doty, 1996; Huselid, 1995; MacDuffie, 1995) According to the 'expectancy theory' advocated by Vroom (1964) if the employee is made to understand that the company will provide the rewards as expected by the employee, then the employee will for sure perform in such a way that he/she gets the reward. However it must be ensured that any system of employee compensation based on performance is perfectly aligned with the other functions of the HRM so that such system of compensation does not give rise to labour management problems. 5.4 Organisational Structuring: Several studies have identified extensive use of teamwork and decentralized decision making as important high-performance HRM practices (Arthur, 1994; MacDuffie, 1995; Pfeffer, 1995) In the case of smaller organizations the labour management does not pose a serious problem as even the lower level employees will be able to have detailed information about the orgnisational issues - sometimes even better than the senior executives - and because of this knowledge can react to the organisational issues positively and rapidly. But in the case of larger organizations a well defined two way communication system should be in existence to ensure quick responses to organizational issues from all levels of employees. Here the function of the HRM is of immense use. With its strategic policies and procedures HRM would be able to play a very dominant role in structuring larger organizations and enable an efficient labour management. 5. 5 Industrial Relations: Industrial relations form a very important area in the labour management which can be described as the essence of labour management. "The individualization of HRM, reflected in its techniques which focus on direct employer-employee links rather than with employee representatives, constitutes one important difference between IR and HRM." Perhaps this view is evolved from the fact that HRM does not focus too much on collective bargaining while concentrating on the individualistic process of labour management. Collective bargaining is the central institution of Industrial relations. It has been observed that: "The empirical evidence also indicates that the driving force behind the introduction of HRM appears to have little to do with industrial relations; rather it is the pursuit of competitive advantage in the market place through provision of high-quality goods and services, through competitive pricing linked to high productivity and through the capacity swiftly to innovate and manage change in response to changes in the market place or to breakthroughs in research and development ... Its underlying values, reflected in HRM policies and practices, would appear to be essentially unitarist and individualistic in contrast to the more pluralist and collective values of traditional industrial relations."(David E. Guest) However this cannot be construed as HRM does not support trade unionism not that the trade unions have no part to perform in the HRM. Effective HRM polices and practices in the way they are being adopted by some progressive organizations have been used as a measure to avoid the unions or such HRM policies and practices have that effect. T.A Kochan et al, (1986) observe the positive role of the unions in the HRM practices and they have cited the General Motors Saturn Plant as an example for the active and positive involvement of the unions in the HRM practices. 6.0 Conclusion: From the foregoing discussion it follows that in any organization there are bound to be issues emanate from labour management. This is so with the changing business environments where the competitive advantage of the firm is of vital importance to achieve the desired rate of organizational growth. For this purpose the organizations are increasingly resorting to high performance work culture where the contribution of an efficient work force is of prime importance. In this context the employee development and their career planning and growth prospects are also essential factors that need consideration. Under such situations the efficiency of the labour management to maintain perfect industrial relations and at the same time bringing out the best performance of the employees is a must. Similarly the organizations have to formulate the employee compensation policies in such a way that the performance of the employees is enhanced to the advantage of the company. In all these areas of labour management the HRM has a big responsibility to form its policies and practices to ensure an efficient labour management. The role of the trade unions in this respect is also very important and they should act in close coordination with the HRM to ensure the organizational success. References: Arthur, Jeffrey B. 1994. Effects of human resource systems on manufacturing performance and turnover. Academy of Management Journal, 37: 670-687. Bae, J. and Rowley, C. 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