Human Resources Management and Organizational Dynamics - Essay Example

HUMAN RESOURCES MANAGEMENT AND ORGANISATIONAL DYNAMICS 2006 HUMAN RESOURCES MANAGEMENT AND ORGANISATIONAL DYNAMICS Introduction In termsof globalization and growing competitiveness of the market companies need to rely more on skilled and motivated personnel then on technologies and products. Whereas technologies may be stolen and products may be duplicated by competitors the only way to sustain companies' competitive advantage is to invest in its personnel. As company's past success does not serve a password to "cloudless future" business needs to rely on stable assets, first of all human resources. Increasing attention to human resources has recently called into being a new set of methods, principles and techniques known as Human Research Management (HRM). It is clear that performance of each company depends not only on hard work of its personnel, but also on the "human side" of the employees, i.e.: their competence, motivation, attitudes, communication and other variables. Most researchers admit that HRM is the core of company's general efficiency. In the present project I will analyze the paradigm of HRM in the context of organizational theories, describe the origin of modern HRM and analyze the practice and strategies of effective HRM on the analysis of IBM Corporation. HRM and organization development theories Also the history of organization is obviously as old as the history of a civilization itself, the history of HRM is much younger. Emerging in 1960s, the paradigm of HRM relied, however, on previous researches and findings of organizational scientists. As Price (2000) believes, HRM "hasn't come out of nowhere" as throughout the whole XX century and even earlier both practitioners and scholars attempted to design the theories explaining human behavior at work and the ways to raise its effectiveness. The findings in the paradigms of group theory, leadership and management, communication and motivation helped development of modern HRM as a single paradigm The first tentative ideas of HRM date back to the early XX century. These ideas are associated with American schools of management, particularly with F. Taylor's "scientific management" and E. Mayo's "school of human relations". Frederick Taylor was the first who underlay business practice with significant theoretical findings. Taylor assumed that material side is not the major motivation of the employees. Instead, people need to be managed in order to work more effectively. Taylor suggested the policy of stick and carrot based on the principles of punishments for poor performance and appraisals for better working efficiency. Besides, Taylor was the first to identify the needs of the employees and hire nurse and psychologists to his company (Storey, 2001). Elton Mayo reconsidered Taylor's ideas significantly. During his longitudinal Hawthorne experiments Mayo found as well that salary is not the best motivation for people. Instead, he found out that people are sociable by their nature and they work effectively if they receive a positive feedback from administration. Other pivotal findings of Mayo were (i) people's need for communication, (ii) existence of informal groups and (iii) group moral (Gillespie et al, 1993). In 1930s the ideas of HRM were reconsidered by Kurt Lewin who developed own theories of group dynamic and leadership. Lewin was one of the first who explained psychology of groups, identified the reasons and motives of human behavior at work and suggested the ways of their effective management. Lewin's theory of leadership still remains a classic in modern HRM. Besides, Japanese school of management is based on Lewin's findings in a larger extent (Lewin, 1947). During 1950s the diverse human relations and human factors approaches were united into a broad organizational approach. This period was the heyday of organizational science as during this period major concepts that underlie modern HRM were developed. The most important of such theories is obviously Abraham Maslow's (1954) theory of motivation. Maslow's "hierarchy of needs" provided a framework for analysis why people work. Maslow defined five general needs of people: basic needs, safety needs, social needs, need of affiliation, and need of self-actualization. Maslow's study helped evaluating the essence of HRM, i.e.: that people need to self-actualize though their work (Maslow, 1998). Maslow's idea brought to life a number of studies on motivation (Price, 2000). The key of them to be mentioned are D. McGregor's "X and Y theory of management", W. Ouchi "Z theory of management", F. Herzberg's motivation theory, Blake and Mouton managerial grid, Ohio theory of leadership, etc (Hollway, 1991). The 1970s were the time for cross-cultural surreys and empirical studies. Dutch scholar G.Hofstede (1991; 2001) defined the framework to understand business culture and efficiency depending on four dimensions, i.e.: power distances, individualism vs. collectivism, masculinity vs. femininity, uncertainty avoidance and long term orientation. This finding helped HRM to overcome the boarders of English-speaking communities and become the globally recognized paradigm. Another important finding of that time was development of strategic HR thinking and its global spread. This strategic thinking included development of personnel specialism (identification of need to focus on human resources), management thinking (development of most important HRM-associated ideas), identification of employees as primary assets of a company and contextualization of HRM practices into the general organizational strategy of a company. These and other theories and practices of organizational development brought to life the principles of HRM in 1960s-1970s. Though many of modern HRM principles have been already summarized by this time, the year of HRM "official birth" is 1981 when Harvard Business School introduced a course that served a blueprint for HRM global spread. Actually, HRM made an ever-greatest since industrial revolution shift in the principles of management (Storey, 2001). HRM encouraged both managers and employees to get rid of traditional patterns of interaction, outdated ideas of motivation, stereotypes, assessment and appraisal. Managers as well stop being the mentors and executioners and turned to be the members of business teams. Introduction of HRM principle has made modern companies more competitive, dynamic and people-friendly that consequently influenced their efficiency and marketability. In fact, HRM caused what was later called "a new managerialism" - a new look on organization, the ways it functions and succeeds and the way its employees work (Storey, 2001). Regardless of global recognition of HRM, many managers are still skeptical to its principles believing that HRM is a either a set of vague principles or a reinterpretation of well-known motivation theories. However, neither idea is true. HRM is not just a set of principles; instead it is an organizational science that helps to implement company's general strategy in a most effective way. According to the most conventional definitions HRM is defined as a "system that is tailored to the demands of the business strategy" (Miles and Snow, 1984); or "the pattern of planned activities intended to enable an organization to achieve its goals" (Wright and McMahan, 1992). Apparently, HRM is also much more than a mere system of motivation as it has wider objectives and incorporates multiple other than motivation principles, i.e.: selection and recruitment, assessment, adaptation, motivation and dismissal. It is also noteworthy that HRM is neither a "panacea nor a placebo"; instead, it is the effective and working paradigm that helps a company to become more effective through focusing on its personnel and more effective utilization of human resources. HRM strategy at IBM Corporation IBM is the world leading IT hardware, software and services company headquartered in the US. IBM leads in the annual number of taken patent and the company that created the term "e-business". IBM is one of the world's biggest companies with 350.000 staff worldwide including the specialists in IT, sales, finances, human resources and law (Huub and Bondarouk, 2001). IBM is one of the first companies to understand the vitality of HRM in terms of modern business and use its principles in own business. The first strategies of HRM in IBM date back to early 1980s and company's recent success much relies on company's attitudes to its people. Since 1980s IBM is the number one company in the world in terms of human resource management (Rogers, 1986). Tom Watson Sr., IBM's legendary CEO expressed the major principle of the company: fair attitudes to personnel and fair rewarding (Rogers, 1986; Scoble, 2005). This idea has been allegorically expressed by F.G. Rogers, IBM marketing executive manager "we take care that our employees would not be frustrated and look for the ever-vanishing carrot". Hereinafter I will evaluate the following components of IBM's HRM strategy, i.e.: recruitment, assessment, training and motivation of personnel. Recruitment in IBM IBM puts significant efforts to select and recruit best candidates available on the US and foreign markets. The strategy of recruitment in IBM is contextualized into the general strategy of the company aimed to create the professional and most effective and friendly team of like-minded persons. IBM recruiting policy was designed in the early 1970 and it implies the following principle: to reach outstanding young people, who have potential for a challenging and fulfilling career (Rifkin, 1996). Pursuing this aim, IBM has established twenty six diversity centers throughout the world responsible for selection and recruitment of gifted young from all countries. IBM also practices internship for advanced college and university seniors many of whom are then recruited in the recruited staff. For this aim IBM has developed Academic Initiative Student Opportunity System enabling students from accredited colleges and universities located worldwide to upload their CVs and motivation letters to a virtual career center. These resumes and letters are then available to thousands of IBM clients and business partners in multiple states. Designing its Opportunity System IBM has achieved another aim, i.e.: to headhunt most skilled students and don't let them go to alternative companies (Schurr, 2005). IBM also headhunts for the gifted specialists who already work in small and medium companies in the US, Europe and Asia. It helps the company to minimize its expenditures for education and training of personnel and get top-skilled experienced employees. Due to the outlined attitudes to employees and the policy of recruitment the "leakage" of personnel in IBM is one of the least in the US - 5% (Rifkin, 1996). As the company invests dramatic efforts in selection and recruitment, it would be irrational to loose their potential. With this concern IBM has developed effective program of employees' assessment, training and motivation. Assessment and training in IBM IBM invests around 5% of its payroll in education, training and assessment of its employees. Company's personnel is encouraged to develop own professional skills and expertise not only in their business area but also in a variety of other jobs. About a third of IBM's employees are trained or educated at company's expenses. Besides, all company's employees have a direct access to on-line database of IBM. This database includes analysis of cases, provides specimen of decision making and problem solving. In the other words, it is a complex system of online professional education accessible from each workplace. Since 1996 and by 1999 IBM invested more than US $ 300 million in advances of its informational systems (Skills assessment, 1999). The company has developed its own system of assessment that includes the following: skill planning needs assessment, professional skills assessment, and individual education plans, etc. In order to assess professional skills of its employees IBM has developed a complex scheme that includes assessment centers, tactical tanks, 360 degree assessment and other comprehensive methods and tools. Assessment sessions held annually serve the fundaments for employees' promotion or education. Dislike many other companies assessment in IBM is not a punishment; instead, its rather a source of information necessary for both the employees and HR managers. It is also noteworthy that no one in IBM is exempted from assessment, also including CEO and executive managers as assessment is also an important tool of identification of strong and weak points and looking for the methods of their effective management or training (Rogers, 1986; Scoble, 2005). Motivation of employees in IBM As well as in all companies, the policy of motivation in IBM may be subdivided into material (rewarding) and non-material motivation of the employees. Regardless of differences in both policies they pursue the same end: making employees work more effectively through loving their job and the company (Rogers, 1986). Both in material and immaterial motivation IBM tends to be the leading company on its sector of the market providing people highest salaries and greatest rewards. As a result, only from four to five percent of employees leave the company to its competitors and the company always overachieves its objectives. Objectives of rewarding system in IBM: Procuring the feeling of safety to the employees. The company believes that its employees must not worry about the material side and instead, they should focus on accomplishing their tasks in the company. IBM as well covers related expenditures of its employees (sick leaves, petrol and free pass), provides social insurances, and provides the system of other compensations and bonuses. Providing the powerful stimuli for the employees to succeed in the company. IBM tends not to recruit people whose primary concern is money. Instead, it looks for the people who want more than material side, particularly self development and creative work. Ensuring the bonuses for the most successful employees. These may be prizes, gifts, free travels, etc. It is important that this procedure is transparent and all employees are aware of the criteria for appraisal and rewarding (Rogers, 1986). Since its founding, IBM has never discharged any of its employees due to cut down of its programs or budget. Instead, however, any employee may be dismissed in case he/she breaks down corporate ethics, or fails in his/her job. The company stimulates employees' creativity. The best solutions of the employees are always praised. As a result, nowadays IBM has the world's biggest "suggestions box" and the budget for rewards exceeds US $ 50 millions annually. Additionally, the company may motivate its employees by covering his expenses on mobile phone, transportation, luncheons, kindergarten or spouses' insurance. Immaterial motivation in IBM Also material motivation is extremely important for the people it does not satisfy people's supreme needs. The immaterial motivation in IBM is targeted to appeal to the supreme needs of people. IBM has designed a system of immaterial rewards that ranges from compliments to rewarding letters, from promotion to new titles. Each time an employee exceeds his norm he/she becomes a member of "Club 100%"; this event is widely covered in company's press and intranet and the membership in this club is extremely respected by the colleagues (Rogers, 1986; Scoble, 2005). The best ten percent of the employees become the members of the "golden circle" and their achievements are propagated in all IBM branches globally. The members of "golden circle" usually receive invitations to the restaurants and concerts, get the opportunity to have a dinner with company's senior executives and CEO, receive free trips to exotic places, like Bermudas or Bahamas. The members of "golden circle" are lionized and treated as VIP persons (Rogers, 1986; Scoble, 2005). The most gifted employees receive an opportunity to get a perfect education covered by the company. This is the double-aim HRM strategy that on the one hand raises the level of employees' education and, on the other hand, motivates people to work more efficiently. Eventually, IBM annually promotes around thirteen percent of its employees and about third of all staff is moved into new positions. Conclusions Modern HRM is a complex science based on psychology, social science and management. Also HRM is a newest paradigms in modern business it relies on the organizational practices theories that date back to late XIX - early XX century. The most comprehensive findings that prompted development of HRM as a single paradigm were the discoveries of F. Taylor, E. Mayo, K. Lewin, D. McGregor, F. Herzberg, W. Ouchi, Blake and Mouton, G.Hofstede, Burns and Stalker, T.Lupton and others. Due to the findings in the group theory, organization dynamics, informal leadership, communication, motivation modern HRM is a single and effective paradigm that helps developing organization through effective management of personnel. IBM has been one of the pioneers in human resource management with its HR program developed already in 1980s. 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