Managerial Policy in Human Resource Management - Essay Example

Human Resource Management Competitive advantage is the ultimate goal of business strategy. It is defined in terms of high quality or low cost, technical innovation, design leadership and efficiency. The HRM practices of any organization are an important source of competitive advantage because they can enhance a firm's competitive advantage by creating both cost leadership and product differentiation. Schuler and Macmillan (1984) and Ulrich (1991) provided practice-oriented perspectives and demonstrated the ways in which they believes that HRM can serve as a source of sustained competitive advantage. HRM, a relatively new term, emerged during the 1970's. Many people continue to refer to the discipline by its older, more traditional titles, such as, personnel management. The trend is changing. The new term nowadays used in industry circles is HRM. Its significance lies not so much in the observable practice of its functions but in the assumption that it permits practitioners to make. The assumption are that - (i) it is capable of contributing to, and drawing from, the highest levels of managerial policy; (ii) It is driven by both strategic and operation goals; (iii) It conceives of the organization as an environment in which managerial discretion is permitted freer ruin than in a more traditional employment relationship; (iv) employee attachment and engagement in the organization are seen and accepted as major managerial responsibilities which are not moderated by external bodies such as trade unions. What is more interesting is the fact that HRM activities are now expected to contribute to organizational effectiveness. Looking at the broader perspective of HRM policy within organization, HR practitioners and academicians are also of the opinion that by aligning HR policies and practices with business strategies, the field of HRM can become a greater strategic contributor to organizational performance and success (Mathis and Jackson). HRM, its concepts definition, study and application have developed over the years through many approaches. Understanding models in Human Resource Management (HRM) is essential for any human resource practitioner for three reasons. Firstly it provides a Macro perspective of HRM proactive in overall organizational setup. Secondly, the unity and diversity of these models serve as initial inputs in drafting tailor made HRM model for organizations. Thirdly, these models offer answers to quite a few dilemmas that practitioner encounter in their mission to pursuer an organizationally dove tailed and business aligned human resource function. The focus of HRM is on keeping the optimal quantity and quality of people needed to achieve the objective of the organization. HRM first emerge as a concept in the mid-1980 when American researchers produced two models. One of the model is called Harvard model developed by Beer et al. (1984), who defined HRM as that which maximizes organizational integration, employee commitment, flexibility and quality of work. They emphasized a need for coherence in HRM policies and role of the line managers. But it is the Harvard Model that has exerted considerable influence over the theory and practice of HRM. Harvard Model of HRM: The type of HRM policies and practices an organization prefers should be dependent upon its organizational vision, mission, strategy, Goals and objective. In quite a few cases, such HR practices shall also be devised and adopted in time with external environment of organizations. In other words, HR policies and practices are subject to influence by internal and external environment of organizations. Harvard model of HRM propounded by Michael Beer, Richard Walton, Quinn mills, P. Lawrence and Bert Spector highlighted this influence of environment on HRM is their book titled Managing human Assets published in 1984. This model also known as soft model of HRM / Harvard Map of HRM / multiple stakeholders model, argues that human resource policies are to be influenced by two significant considerations: (1) Situational factors: The internal and external environmental factor of the organizations that include (i) labour market conditions (ii) societal Values (iii) business strategies (iv) technologies (v) managerial philosophies and (vi) market conditions will constrain the formation of HRM policies. (2) Stakeholders interests. The stakeholders influence the short-tern HRM policies. They include (i) management employees (ii) unions and (iii) govt. agencies. Further, the model classifies HRM policies and practices in to four themes as follows: HR flows, Recruitment, selection, placement, appraisal and assessment, promotion, termination and the like. Reward systems. Pay systems, non-monetary recognition schemes and so on. Employee influence: Clarification of responsibility, authority, hierarchy and delegation of powers. Work systems: Definition of work and alignment of people. The above HR practices are centered on four C's as described in the following: Commitment HRM policies must contribute for infusing employee commitment to organization. The commitment will yield two benefits. Firstly it will enhance the employee performance and loyalty to his / her work. Secondly, it will enhance the individual self-respect and worth. Competence HRM policies and practice will exists in such a way that they attract, develop and retain employee with valuable skills and knowledge. Cost effectiveness HRM policies must be evaluated in terms of wages, benefits, turnover, absenteeism, strikes, benefits etc. congruence. There must be congruence between and among various HR policies as well as practices in operation. (Beer et al. 1984) suggest that HRM involves all management decisions and actions that affect the nature of relationship between the organization and it human resources. HRM is a series of decisions that affect the relationship between employees and employers. It affects many constituencies and is intended to influence the effectiveness of employees and employers (Milkovich & Boudreau, 1997). Guest (1987,1989,1990 & 1991) has taken the Harvard model and developed it further by defining four policy goals. He argues that HRM involves the goal of integrating commitment, quality, flexibility and adaptability (Guest, 1987). This model helps HR managers in charting HR strategy for their organizations. This model offers three significant insights for practice. Firstly HRM policies should be defined keeping in view the environmental factors and stakeholders concerns. In other words, there must be a good fit between organizational environment and Hr policies. Secondly, such HRM policies and practices must have a goal to achieve employee commitment, competence development, coherence among them selves and embrace cost effective methods, thirdly, HRM that stems from environment factors and is drawn based on four C's will result in employee and organizational effectiveness. This is a soft model as it is based on stakeholders concerns and their commitment to organizational goals. According to Guest (1987), the soft developmental humanism model emphasizes on the importance of integrating HR policies with business objective, involving and treating employees as valued assets and as a source of competitive advantages through their commitment adaptability and high quality of skill and performance. In this model, the focus is on HR policies to deliver resourceful humans. It covers all aspects of managing people and, emphasizing the role of line managers, it concentrates on achieving organizational goals by winning employee commitment and high quality performances. Business Process Model of HRM: The business process aligned HRM, which gathered momentum during the last decade, has strengthened in the new millennium on account of its efficiency. Figen Cakar and Umit Bititci (2001) of University of Strathclyde proposed and tested a new model called Business Process model using Hard approach. They also tested this model in a number of manufacturing organizations. Based on the results therein, the model was further refined. They presented this fully developed model in their paper titled "Human resources management as a strategic input to manufacturing" in International working conference on strategic manufacturing held in 2001 in Denmark. The salient features of this, model is: (i) Make HRM strategy: Use business strategy and objectives and requirements of key business process to formulate an integrated HRM strategy by setting objectives, establishing current capabilities, negotiating appropriate budgets for realistic implementation of the plan, and setting HRM. (ii) Set HRM Objective: This activity interprets business strategy and objectives and requirements of other key business processes to formulate HRM requirements and objectives. (iii) Establish current capabilities: This activity establishes the current HRM capability within business and its key processes to meet the set objectives (iv) Plan: This activity develops a plan including budgets, which define courses of action the business is going to adopt to build upon its current capabilities and develop its HRM in line with the stated HRM objectives and requirements (v) Negotiate budget: Uses requirements of the plan to negotiate for financial resources, which will lead to successful implementation of HRM strategy (vi) Set HRM policies actively: Set up types of compensation, staffing methods, appraisal methods, form of training and development, and working conditions of relevant strategic needs (vii) Implement HRM strategy: Implemented HRM strategy by controlling HRM planning assessing, recruitment, selecting, monitoring and utilizing the right people in order to train, educate and develop them. (viii) Control HRM: To make sure that HRM strategy is planned, correctly applied and monitored in accordance with the objectives and requirements of the organization (ix) Recruit: Conceived with bringing in human resources into positions in line with its HRM requirements from internal and external sources (x) Train, educate, develop: Activity concerned with upgrading existing people capabilities with in the business in line with its human resource objectives (xi) Managing HRM performance: Activity concerned with the setting up of targets for individuals, monitoring progress against the targets, and identifying necessary training, education and development needs as well as deciding reward and discipline action. (xii) Manage redeployment: Facilities to identify a deficiency in job position which cannot be rectified through training, education or redeployment of the current job holder within the organization (xiii) Monitor impact on business results: This sub process monitors the impact of HRM process on business performance through monitoring its contribution to the business strategy and objectives and other key process (xiv) Monitor impact on business result: Monitors the impact of HRM strategy on business strategy as well as business performance (xv) Monitors impact on people satisfaction (xvi) Monitor impact on managerial process (xvii) Monitor impact on operational process (xviii) Monitor impact on support process : Concerned with monitoring how well HRM strategy and its implementation is satisfying the requirements of support processes. The support process mainly consists of staff function. So this model explains in detail that how HRM strategy is to be devised, implemented and monitored. The experience of organizations indicated that this model has the potential to deliver positive results to the organization. The understanding of various steps involved and its orientation helps HR managers in their efforts to implements a business aligned HRM model in their organizations. But the basic shortcoming of this model is that it solely depends on business strategies and profitability of the firm and not paying much attention to employees as a human being. It treats employees solely as one the resources, which can be utilized to maximize profitability of the organizations. This Business process model stresses HRM's focus on the crucial importance of the close integration of human resource policies, systems and activities with business strategy. From this perspective human resources are largely a factor of production, an expense of doing business rather than the only resource capable of turning inanimate factors of production in to wealth. Human Resources are viewed as passive, to be provided and deployed as numbers and skills at the right price, rather than the source of creative energy (Legge, 1995, p.66-67). This emphasis on the quantitative, calculative and business-strategic aspects of managing the "headcount" has been termed human asset accounting (Storey, 1987). This HRM approach has some relationship with more rational/scientific management as people are reduced to mere objects that are not treated as a whole people but assessed on whether they posses the skills/attributes the organisation requires (Legge, 1995; Vaughan, 1994; Storey, 1987; Drucker et al, 1996; Keenoy, 1990). From this perspective the human resource is largely a factor of production and an expense of doing business and organisational practices are focussed on gaining control rather than eliciting commitment of workers. Whereas Harvard model emphasizing the importance of integrating HR policies with Business objectives and focuses on treating employees as valued assets and a source of competitive advantage through their commitment, adaptability and high quality skill and performance. Employees are proactive rather than passive inputs into productive processes, capable of development, worthy of trust and collaboration, which is achieved through participation (Legge, 1995, pp 66-67). This model is seen as a method of exploring untapped reserves of human resourcefulness by increasing employee commitment, participation and involvement. Employee commitment is sought with the expectation that effectiveness will follow as second-order consequences. Now it is clearly visible that HRM does not provide a consistent set of policies and procedures, the distinction between Business process and Harvard models of HRM offer management two sharply contrasting alternatives within a supposedly single approach. Both models of HRM give weight to a link with strategy and the importance of people, different meanings are attributed to these components and different assumptions of human nature underlie each. Truss et al's (1997) study found that most organisations support that employees' were valued human assets and a source of competitive advantage. These organisations did not always support policies and practices consistent with this. In particular, organizations were mixed on both type of models and its variables. Many did not support policies on employee involvement, participation, communication and training that met the needs of the individual and the organization that would support the proposition of employees being valued assets. Practically, we seldom find any organization that has adopted any single model. Almost all the organizations in such a fierce competitive environment generally adopt hybrid models to succeed in the market. Modern jobs are fraught with danger of stress. The motivational strategies like job enrichment, incentives, rewards, awards, promotions may obtain superior performance from employee in short term but these are also potential sources of job stress, if not managed timely and appropriately. Sometimes they may have fatal consequences that make these motivational strategies not only irrelevant but also counter productive, broadly there are two kinds of stress. Environment induced stress like economic recession, uncertainty in business environment, competition, changing technologies and changing products. Organization induced stress like complexity of management, which demands high level of consistent performance, increasing pressure/targets, unstructured job profiles, enhanced responsibilities, employment insecurity, and Sharp reward and punishment measures. Studies proved that stress is becoming a major area of concern to managements particularly to HR mangers. Unfortunately, avoiding or removing stress altogether from workplace is an impossible task. However, HR managers must make efforts to identify sources of stress, particularly organization induced in order to minimize than. It left assessed or unattended, it may become a formidable block in realizing the potential of employees apart from resulting in dysfunctional efforts. The case study of "NATFHE" clearly indicates that how the excessive work has adverse affect on employee i.e. education lecturer's health. Through the court it has been clearly established that lecturer was overburdened and even he complained but management has not listen and consequently he collapsed. This situation is one of the examples of the high workplace stress. Most of the organizations nowadays are identifying this workplace stresses and trying to minimize it because it adversely affect the productivity as well as increase their cost of management. In general, stressful conditions at workplace result in high turnover rate of employees, absenteeism, and more expenses on medical facilities, lower level of productivity and more and more litigation cost. At present, most of the governments also after identifying the workplace stresses formulating different laws and making it compulsory for the organizations to implement it. The case study "The de-stress call" shows that how the workplace stress is becoming menace to the organizations all over world. After assessing the workplace stress situations within the organization, mostly top managements are adopting such policies, which could reduce stress at workplace. They are adopting policies like providing more and more communication channels, regularly auditing policies, procedures and systems to ensure stress free workplace, educating and supporting the employees to counter stressful conditions, setting clear objectives, communicating more and more with employees, consult and involve in change process and adopting the models and policies, which have the potential to minimize workplace stresses. Different models, especially Harvard model is said to be and known as humanistic model / collaborative model and more nearer to employee feelings. Harvard model take considerations of external and internal situational as well as and take stakeholders interests so this model has rationalized the overall environmental induced stress and stressors effectively. Stress is induced by environmental factors on the employees has been managed by the Harvard model properly and effectively. As for as the organizational stress is concerned, organization complexity is much more properly addressed in Harvard model. Basically change of any kind may induce stress on employees. So if the model manages change effectively then employees of the organization feel less stressed. If we look at Harvard model, we can find out easily that this model is very much employee oriented and flexible and with human touch. It includes human values, commitment and more flexibility. So this model is more equipped to minimize stress among employees. Legge (1995a) cites a large volume of evidence from surveys and case studies and concludes that firms practicing a soft HRM model/Harvard model would be expected to prefer functional flexibility rather then numerical flexibility. Although theoretically, functional flexibility appears to be more compatible with soft HRM but have some doubt of this happening in practice. Although the functional flexibility sought may not be achieved but it can have a positive culture changing or at least working climate-changing effects, which ultimately have stress reducing effect. But Numerical flexibility is much more instrumental and calculative and hence more compatible with Business process model of HRM initiatives of downsizing, de-layering and organizational efficiency (Doe, 1994; Towers, 1996). Firm practicing business process HRM, tightly tie human resources to business strategy, performance is paramount and management is preoccupied with cost reduction (Hendry, 1995). It is more likely to induce more stress to employee. It appears therefore that organizations faced with change will be receptive to workforce flexibility but the degree to which that flexibility will be numeric or functional is contingent upon whether the organization is practicing Soft or business process HRM and employees feel stress according to the model adopted by the organizations. In the mentioned article it has been found that stress at workplace is becoming one of the largest problems, which is to be faced by the employees and organizations both. So management can control several of the factors that cause stress-particularly task and role demands, organizational structure. As such, they can be modified or changed. Ways to minimize the employees work related stress include the improvement in work environment and clarifying roles. Organization can provide and support employees to communicate effectively. Organizations can support employees' efforts to cope with stress by offering wellness programmes, which can foster a supportive organizational culture. Now looking at the requirement of minimizing the stress level organizations have to adopt such HRM models, which could provide them better options to manage workplace stresses. Certainly Soft/Harvard model of HRM is much more equipped to manage workplace stresses. Now it has been clearly evident that some of the most stressful condition at work was increased workload, insufficient rest breaks, long working hours, organisational change and restructuring. Some of the surveys show that better management (including more communication and consultation), more staff resources and lighter workload and less performance monitoring would be a solution to stress. Some felt that there should be less focus on a narrow economic view of productivity and management should value and support their staff more (ACTU, 1997). This is consistent with a Hay Management Consultant survey (1998) that found that two thirds of their respondents believed that change was partially successful in assisting the organisation with competition. In addition to this, studies by Harvard, INSEAD and the London School of Business show that the high failure rate (70%) of change is attributable to lack of attention to people factors (Hay Management Consultants, 1998, p. 5). So these stressful workplace situations couldn't be avoided completely but adopting proper organization culture such as offering wellness programmes, improving work environment and clarifying roles, job redesigning provides employee more responsibility, more meaningful work, more autonomy and control, which ultimately reduce uncertainty and increase predictability in the workforce, SMART goal setting, role negotiation, more transparent effective organizational two-way communication and more enhanced social-emotional support system within the organization such as forming effective team, can reduce workplace stresses to a minimum level. ************************************************************ References: 1. ACTU OH&S Unit (1997) Stress at work: a report on the ACTU 1997 national OHS survey on stress, Australian Council of Trade Unions publication, Melbourne. 2. Beer, M, Spector, B, Lawrence, P, Quinn Mills, D, and Walton, R, (1984) Managing Human Assets, The Free Press, New York. 3. 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