Human Resources Management as a Field of Modern Management - Essay Example

Human resources is one of the most valuable and unique assets of an organization. According to Leon C. Megginson, the term human resources refer to "the total workforce, as well as the values, attitudes and beliefs of the individuals involved (Noble, 1985)." Management as a process involves planning, organizing, staffing, leading and controlling activities that facilitate the achievement of an organization's objectives. All these activities are accomplished through efficient utilization of physical and financial resources by the company's human resources. Human Resources management is one of the most complex and challenging fields of modern management. A human resource manager has to build up an effective workforce, handle the expectations of the employees and ensure that they perform at their best. He/she also has to take into account the firm's responsibilities to the society that it operates in. Human resource management deals with the "people" dimension in management. In their book Human Resource Management, Byars and Rue, say "Human Resource Management encompasses those activities designed to provide for and coordinate the human resources of an organization (Rue, 2000)." According to Ivancevich and Glueck, "Personnel or Human resource management is the function performed in organizations that facilitates the most effective use of people or employees to achieve organizational and individual goals (Glueck, 1995)." Every organization is composed of people and utilizing their services, developing their skills, motivating them to enhance their levels of performance and ensuring that they remain committed to the organization are essential for the accomplishment of organizational objectives. This is true for all types of organizations - government, business, education, health, recreation and social action. Acquiring and retaining good human resources is an essential pre-condition for the success of every organization. Organizations that can do this will be both effective i.e. they will be able to achieve their goals as well as efficient i.e. they will use minimum resources necessary to achieve their goals. Inefficient or ineffective organizations face the danger of stagnating or going out of business. Competent managers and workers are essential for the coordination of efforts towards the ultimate objectives which ensure the survival of the organization. Though such coordination alone cannot guarantee success, the lack of it can lead to failure. In the changing times, it has become evident that it is the human resources of an organization or a country that can lead it on the path of success. It is the competencies and attitudes of the human resources that can make or break a business. The business of attracting and retaining talent and nurturing it has become imperative for the development of an organization. Innovative and proactive HR managers have been defining new boundaries of HRM. The turbulent and dynamic markets and the changing values and expectations of the workforce have made the earlier concepts of personnel management irrelevant. A new strategic role has emerged for HRM - that of a key player, to make the organization survive and succeed in a highly competitive business environment. Business has become knowledge based, service oriented, competitive and more dynamic in this new age. The quality of human resources has become an essential factor in determining the success of any organization. In the words of Eric Flamholtz a renowned HR consultant and a Professor at Anderson Graduate School, human resources accounting is defined as "accounting people as organizational resources. Human resources accounting is measurement of the cost and value of people for an organization (Flamholtz, 1999)." Till recently, people were not accounted as resources and no value was attributed to their contribution. However, in recent times, the criticality of the contributions of human resources have been acknowledged and recognized. Hence, the concept of attributing an appropriate value to the worth of human resources of an organization has become popular. Human Resource Accounting helps management to value its human resources and use it with discretion and wisdom. It also provides essential information to the management to maintain and develop its important resources. Hence, human resources accounting is considered to be an appropriate technique to measure the effectiveness of the Human Resource in an organization. The role of Personnel Management as developed over a period of time starting from the late 19th century which matured somewhere in the 1970s can be broadly classified under the following heads: a. Industrial Relations: The role of handling the power of "Collective Bargaining" - essentially dealing with the management of relationships with the trade unions b. Compliance: The role of ensuring the organization is totally compliant with the rising number of legislations that were being enacted by the government from time-to-time c. The bureaucratic role: Essentially implementing the various organizational rules, managing leave of various kinds, pay-roll processing, recruitment and, behavior at work. d. Social Responsibility: This was the residue of the "Welfare Worker" philosophy, which is the foundation stone of personnel management. e. And finally a performance role: primarily trying to ensure that the personnel of the organization meet the growing demands of the business. The personnel management concept was based on the fundamental premise that if workers were to be managed they had to be constantly supervised. One of the premises was that all human beings are equally productive. And the most common result was punishment or loss of job when the productivity was not up to the desired standards. The first among the important tasks of Personnel Management was to implement the "Scientific Management" principles of Fredrick Taylor i.e., of Time-Motion Studies. The other roles played by the department was to recruit manpower (ensure sufficient numbers of people are available for production,) Training the staff to improve productivity and, ensuring the safety and health of the employees. Still the preliminary focus was to ensure the implementation of Scientific Management techniques and the major work that used to get done routinely was - time-motion studies, fatigue studies, job analysis, developing job specifications, designing compensation program and occasional welfare programs. Typical welfare programs addressed the "other" needs of the employees like wash rooms, vacation, lunchrooms, housing, hygiene etc. 3. The initial stage of personnel management was the creation of Welfare Officers, predominantly women, as a reaction towards the hazardous conditions prevalent in the production floors at that time (it is pertinent to re-collect the economies used to revolve around manufacturing and mining in those days,) which was a heavily paternalistic role of the employers towards the women employees. With the unionization of the work-place, formation of unions at work, greatly contributed to the development of "Labor Managers" at work place aimed at managing the industrial relationships. As the wars changed the industrial relations scenario and strikes were declared illegal, the importance of Industrial Relationships grew by leaps and bounds. 4. As the realization of the importance of Human Relations Approach increased and the fact that human productivity is also influenced by various factors like organization setting, motivation, work place conditions, and finally the need to align business goals with the employees needs. Instead of looking at business goals and employee needs being in direct conflict with each other but being mutual and compatible is the foundation on which the modern HRM is based on. The major factors that influenced the movement from the Personnel Relations to HRM is the movement from collectivism to individualism, as also the radical legislative changes that were undertaken in those times primary one being the banning of sympathetic work striking. Essentially both the principles are fundamentally aimed at improving the employee productivity and thereby boosting the top-lines (then - which meant direct impact on bottom lines) and better value delivery to the stake holders (now.) The need for people orientation is being increasingly felt in most modern organizations. For example, after it realized that pressure of work was making it difficult for its employees to balance work and their personal life (Keerti). Another major issue is Team orientation. This refers to the level of importance laid on effective team work as compared to individual efforts and contributions to the organization. The presence of a strong and appropriate culture has become essential for an organization to function effectively and efficiently in the modern era. Organization culture is the consciously or subconsciously accepted and flowed way of life or manner of performing day-to-day activities in an organization. It plays an important role in determining and controlling employee behaviour at workplace. The core values, assumptions, norms, procedures etc. that are followed in an organization constitute its culture. Obviously, all these factors indirectly help in the measurement of the effectiveness of HR function of an organization. The business environment has become very fluid and turbulent in the recent times. This is especially true in most of the emerging economies of the world today. The markets have become very competitive and businesses have been forced to become more service-oriented. In this scenario, it is a very challenging task to attract, mould, develop and retain valuable human resources. The expectations of the employees have also increased as more and more of them belong to the category of knowledge workers. They are in demand and they are in a position to choose their employer, and none except the best would do. Worker Productivity is one important aspect that helps measure the effectiveness of HR function. In today's highly competitive markets factors like world-class quality, flexible manufacturing, and shorter product development cycles are not competitive advantages but prerequisites for survival. Companies are reinventing themselves to stay ahead of the competition. One of the major steps taken in this direction is a complete revamp of organisational culture and structure. Tall hierarchies and communication barriers have been dismantled. Business decisions are no longer taken within the confines of the board rooms. They are taken in place of work, on the shop-floor and in the market, because that's where the action is. This new concept of empowerment gives the employees a feeling of belonging and commitment towards the organization. The fact that they are accountable for their decisions makes them more responsible and keeps them motivated to better their performance. Many HR professionals are leading the workplace revolution. They have infused fresh life into the old and archaic systems which are no longer relevant. They prod their employees to be more creative, proactive and outgoing. Many managements of different organizations world over are willing to take the risks involved in giving more autonomy and responsibilities to their employees. They are confident of their employees and their capabilities. Self-managed teams are now common and have replaced supervisors in many competitive companies. The old concept that all people-related problems are problems of the HR department is no longer valid. The line managers can no longer ignore people-issues. They have to manage people if they have to manage the work in their respective departments. The HR department is a facilitator providing the support required by the line managers on any personnel related issues. The most powerful way to demonstrate the value of HR is to quantify its Contributions. Companies are used to measuring the output (or, more specifically, value) of different departments by looking at their numbers. People tend to be more confident with fact-based and quantitative approaches (hrsincome.org). For example, The sales department flaunts its muscles with its growing sales figures. The marketing department highlights its efficiency with cost per thousand figures and celebrates its charm with every successful customer defection. The customer service department highlights its importance by logging every feedback or compliment received. Apart from the tangible and intangible benefits that can be reaped by the HR team that actively manages perceptions surrounding its work, there are other important reasons to justify the need to demonstrate the team's effectiveness. HR effectiveness, in essence, looks at the health of a HR function within a company. To obtain the full health report, there are a series of activities a company can undertake (hrsincome.org). Saratoga, a PricewaterhouseCoopers (PwC) human resource service offering, has developed a methodology to measure HR function effectiveness. The following figure shows the methodology developed (hrsincome.org). Source: http://www.hrsincom.org.sg/Portals/0/docs/hr%20articles/pwc%20article%20feb.pdf a) The HR Delivery Model Review: Different aspects like the Corporate HR function, HR shared service, Existing outsourcing suppliers etc, are examined and then the effectiveness is hence measured. The HR delivery model is thoroughly examined through meetings with key stakeholders like senior executives across the organization structure, HR subject matter experts and process owners. Data from existing reports covering costs, service levels, scope and headcount will also be included in the review process. b) Voice of the Customer - This review includes a survey with select HR services customers like executives and employees which covers the view of the later on issues like effectiveness of HR working with business, the HR delivery process, service quality and customer experience etc. c) Structured Interviews - A structured interview is very rigid in its structure and contents. It is based on a thorough job analysis, which directs the flow of the interview. The main advantage of a structured interview is that there is no scope for subjectivity. d) HR Activity Analysis - To find out how the HR team is dividing its time across strategic, advisory, operational and transactional activities, relevant HR personnel will receive a tailored questionnaire to clearly portray how they are utilising their time across the various domains (hrsincome.org). In order to survive and grow in a rapidly changing business environment, organizations often expand their operations beyond boundaries. A blend of different cultures together is necessary in order to manage the workforce which is diverse. Adaptation to a new culture requires workforce to overcome several obstacles in the form of differences at the level of the individual, parochialism, ethnocentrism, cultural distance and culture shock. An organizational culture influences and is influenced by the occupational or industry peculiarities tied to the organization as well as the national culture of the country in which the organization operates. It is not an end result but rather a fascinating process that blends values and links individuals (Bgin, 2006). An organization named Gallup came out with a tool named Gallup's Q12 that helps in measuring the effectiveness of the HR function of organization from different perspectives. In recent years this tool has been used by more than 87,000 divisions or work units within corporations, and approximately 1.5 million employees. Organizations with higher Q12 scores were found to have lower attrition, higher sales growth, better productivity, better customer loyalty or other manifestations of superior performance (Rao, 2008). After hundreds of focus groups and thousands of interviews with employees in a variety of industries, Gallup came up with the Q12, a 12-question survey that identifies strong feelings of employee engagement. 12 key employee expectations that, when satisfied, form the foundation of strong feelings of engagement (Rao, 2008). Results from the survey show a strong correlation between high scores and superior job performance. The following are those 12 questions used in the Gallup's Q 121: 1. Do you know what is expected of you at work 2. Do you have the materials and equipment you need to do your work right 3. At work, do you have the opportunity to do what you do best every day 4. In the last seven days, have you received recognition or praise for doing good work 5. Does your supervisor, or someone at work, seem to care about you as a person 6. Is there someone at work who encourages your development 7. At work, do your opinions seem to count 8. Does the mission/purpose of your company make you feel your job is important 9. Are your associates (fellow employees) committed to doing quality work 10. Do you have a best friend at work 11. In the last six months, has someone at work talked to you about your progress 12. In the last year, have you had opportunities at work to learn and grow In the recent years, many organizations across the globe have used this Gallup's Q 12 as a tool to measure the effectiveness of their HR function and found to be a great tool that helps them measure it. In order to be successful in HRM measurement, one important component is the necessity for the alignment of the metrics that are used with the Organization's overall business and HR strategy in order to add value. That is to understand what is important to the business, what key business measures exist and what can be done as for the HRM part. Second major component is benchmarking the results that are obtained as measures will not be able to tell what the other players in the market i.e. the competitors are doing. Measurement answers the question "how are you performing" Benchmarking answers the question "how are you performing relative to your competitors" Measurement cannot be treated as an independent activity and should be considered together with benchmarking in order to allow Organizations to assess for improvement (balantlar, 2007). Recruitment has acquired immense importance in today's organizations. Organizations have realized the value of human capital and its role in their development. Recruitment is the first step in the process of acquiring and retaining human resources for an organization. In today's rapidly changing business environment, organizations have to respond quickly to requirements for people. Hence, it is important to have a well-defined recruitment policy in place, which can be executed effectively to get the best fits for the vacant positions. The magnitude of recruitment and the methods to be used are determined by the human resource plan. Depending on the HR policy, the organization decides on the number of people to be recruited; the jobs for which they have to be recruited; and whether the recruitment is for permanent or temporary staff. Once these decisions are made, the modes of recruitment are finalized. All these decisions are taken in alignment with the recruitment policy of the company and the organization's long-term goals. With the advent of globalization, the talent acquisitions and resourcing for HR professionals has become a great challenge. Prior to the globalization era, companies at most competed in the local domestic market for talent. But globalization has dissolved international boundaries creating either an acute shortage of resources or availability both of which are a headache for a human resource professional. In either of the extreme situations mentioned before, recruitment tends to take a longer span of time thereby leading to business losses either directly or indirectly. Recruitment has become one of the specializations in the human resource practice globally. What started off as a part and parcel of human resource function in the next few years is likely to be considered an independent function. Training and Development is another aspect that needs to be focused more upon by HR professionals in any organization as it is the one that helps employees deliver better results. With the advancements in technology and the spread of business on a global scale, it has become important for organizations to concentrate on training their employees to meet global challenges. Merely selecting employees does not ensure that an organization will be successful. It has to train them to face the continuous challenges of a competitive business environment. Moreover, the ongoing trends of greater work force diversity, flatter organizations, and increased global competition, have increased the significance of training and development in helping employees take up greater responsibilities. Training is an essential part of the orientation program for new recruits in an organization. If the selected employee is not trained appropriately, then the investment made by the organization in recruiting the employee might not give the expected benefits. Every organization, irrespective of its size or nature of operations, needs to provide training to its employees at various stages of their career. The main objectives of training are: Improving Employee Performance - When an employee is recruited by an organization, he might not have all the skills required to carry out his job. Training the employee at this stage helps him learn his job faster and ensures better performance. Training also helps in bridging the gap between the actual and the expected performance of the employees by enhancing their knowledge and skills. Further, it helps the employees improve their performance to meet organizational performance standards. If the employees perform well, then this obviously proves that the HR function of the organization is very effective. Updating Employee Skills - It is important for the management to continuously evaluate and adopt any technological advances that can help the organization function more effectively and efficiently. Technological changes may result in job changes in terms of the tasks and activities involved. Training enables employees to update their skills and helps integrate the technological changes successfully into organizational systems and processes. Avoiding Managerial Obsolescence - Managerial obsolescence is the failure to adopt new methods and processes that can improve employee and organizational performance. Rapid changes in the technical, legal and social environments have an impact on the way managers perform their jobs, and those who do not adapt to these changes become obsolete and ineffective. Retaining and Motivating Employees - One way to motivate and retain employees is through a systematic program of career planning and development. Employees feel cared for and consequently become more motivated and committed. Organizations should therefore provide such training that helps in retaining promising employees. Creating an Efficient and Effective Organizations - A manager who has well trained and well equipped employees needs to spend less time supervising them. Accidents at the workplace can also be reduced by effective training of the employees. Organizational stability can also be improved by the creation of a reservoir of skilled employees who can help and organization sustains its effectiveness. The term training has been traditionally used to describe the acquisition of technical knowledge and skills. Management development, on the other hand, refers to the methods and activities designed to improve the skills of managers or prospective managers. While training helps employees to improve their performance in current jobs, development grooms them to handle future responsibilities. Though the distinction between training and development is often blurred, it is important to note the major differences between the two. Management development activities generally focus on a broad range of skills, while training programs concentrate on a limited number of technical skills. For example, a training program for a software developer involves enhancing his technical skills, whereas a development program would involve a wide variety of interpersonal skills and managerial skills, like planning, organizing, leading, communication, motivating and decision making. Many companies undertake training and development activities simultaneously (The ICFAI Center for Management Research (ICMR), 2004). Management development relates to the development and growth of the employees in an organization through a systematic process. This development is future-oriented and prepares managers for career of valuable contribution to the organization. It is concerned with the learning and development of the employees. It helps in the development of the intellectual, managerial and people management skills of managers. It trains managers to understand and analyze different situations, and to arrive at and implement the correct solutions. Management development is a key component of an organization's efforts to prepare its employees to successfully handle new challenges. Employee compensation is one of the major determinants of HRM effectiveness in an organization. The compensation policy and the reward system of an organization are viewed by the employees as indicators of the management's attitude and concern for them. It is not just the compensation in Toto, but its fairness as perceived by the employees that determines the success of a compensation management system. Hence, it is very important for the management to design and implement its compensation system with utmost care and tact. A good compensation system should be able to attract and retain employees, give them a fair deal, keep the organization competitive and motivate employees to perform their best. Once again, best performances of employees of an organization are definitely the proof of an effective HR function of the organization. Traditionally, pay scales in companies reflected the importance of the work and the responsibility level. Today organizations try more to assess the worth of an individual in terms of his performance and contribution to the organization. With the growing demands of the workforce and the constant challenges in the business environment, organizations have to evolve an accurate system for evaluating jobs and assessing their worth. Job evaluation helps to determine the relative worth of a job in an organization in a systematic, consistent and accurate manner. It also helps in estimating the basic pay for each job in accordance with the importance of the job in the organizational hierarchy. Once the basic pay is determines, the rewards, incentives and benefits attached with the pay, position and performance are also determined. The basic wage, incentives and rewards and benefits, together form the compensation package of an employee. Employee benefits have proven to be an excellent tool for employee retention and improving an organization's bottom line. The quality of an organization's employee benefits scheme determines and enhances its image as a caring employer. Employee benefits that an organization offers are a long-term investment that can result in a sustained competitive advantage for the organization. Benefits have been defined as the fringe advantages that accrue to an employee over and above his salary, as a result of his employment with an organization and his position in the organization. They are normally not linked to performance. Over the years, tremendous emphasis has been placed on making HR practitioners strategic business partners and a value-added source within organizations (Ramlal, 2003). Traditionally, HR professionals could talk generally and conceptually about employee morale, turnover, and employee commitment as outcomes of HR efforts. Furthermore, the HR function was often viewed as an expense-generator and administrative function and not as a value-added partner. Ulrich reiterated that to fulfil the business partnership role of HR. concepts need to be replaced with evidence, ideas with results, and perceptions with assessments (Ramlal, 2003). Bibliography 1. balantlar, y. v. (2007, July 07). Measuuring HRM. Retrieved May 08, 2008, from Human Capital Strategy: http://humancapitalstrategy.blogspot.com/2007/10/measuring-hrm-3.html 2. Bgin, D. S. (2006, January 10). Organizational Culture Counts. Practoce Knowledge Center , pp. 1-4. 3. business balls.com. (2004, August 2). Graphology - handwriting analysis. Retrieved April 19, 2008, from http://www.businessballs.com/graphologyhandwritinganalysis.htm 4. Due, B. &. (2000). Human Resources Management. 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