Human Resource Management in Its Environment - Essay Example

HR & Environment Human Resources (HR) have always been central to organizations. Today, they have acquired an even central role in building sustainable competitive advantage for the corporations. It is increasing being realized now by organizations that as the world moves towards borderless economies, and as businesses become global, one of the most important aspects of a successful business is to understand and manage its human resources strategically and competently. As a result of these developments, human Resource Management (HRM) has become a major thrust area where, the focus is on synergizing and propelling organizations to seamlessly integrate with the macro environment. Business and 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, 2003). It is being growing realized that the work force should no longer be seen as a liability but as a key resource that needs to be carefully nurtured and constantly developed. The last two decades saw major shifts in people management approaches and practices. The HRM of the 1980" was reactive in nature and performed staff function only. Later on, it becomes a strategic function and plays an integrated role in the company's goals and planning. People are seen as an important investment. HR is considered as a key player in achieving competitive advantage. Personal, Industrial Relations, Human Relations, HRM or what ever is the preferred moniker for the function of managing people in organizations, has existed for well over a century (Wright et al. 2005). 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. Boxall (2003) addressed them as the Michigan model and the Harvard framework. The Michigan model by Fombrun et al. (1984) asserted that HRM system and the organizational structure should be managed in a way that is congruent with organizational strategy an d that the strategic HR concept and tools needed are fundamentally different from personal management. Beer et al. (1984) 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. Michigan Model of HRM: The Michigan Model has a harder, less humanistic touch, holding that employees are resources in the same way as any other business resource. They must be obtained (i) as cheaply as possible (ii) used sparingly and (iii) developed and exploited as much as possible. John Storey (1987) termed it as utilitarian instrumentalism. The hard model of HRM focuses on the crucial importance of the close integration of HR policies, systems and activities with business strategies on HR system to achieve the strategic objectives oh the organization. This model emphasized the quantitative strategic business aspects of managing the headcount resource, in a rational way (Storey, 1987). The Michigan theorist highlighted the following as being the most important HR issues to achieve such a match. Selection of the most suitable people to meet business needs, Performance in the pursuit of business objectives, appraisal, monitoring performance and providing feed back to the organization and its employee, Rewards for appropriate performance development of skills and knowledge required to meet business objectives. The essential features of their model are that it is focused on individual and organizational performance is based on strategic control, organizational structure, system for managing people concentrates on managing human assets to achieve strategic goals contributes to human resource performance has components such as organizational structure, mission and strategy, human resource selection, performance appraisal, rewards and development, requires that personal policies, practices and system are not only consistent with the business objectives of the firm but should also have coherence among various subsystems of HRM. This Model has been originated from the writings of C. Fomburn, Noel Tichy and M.A. Deveanna in their book Strategic human resource Management, published in 1984. This model has been lauded for its practical approach. In other words, this model is different from other employee relations oriented Models (Harvard Model), which stresses on the commitment and relationship factors rather than on business results. This is also most popular among practitioners, and many organizations had adopted it in practice. This model his indeed influenced the direction of HRM literature during the last two decades organizations that practice this model, monitor investment in employees training and development, to ensure it fits in which the firm's business strategy. Hard HRM assumes that the needs of the firm are paramount and that increasing productivity is the management principal reason for improving the effectiveness of HRM. Although it acknowledges the importance of motivating and rewarding people, it concentrates most on managing human assets to achieve strategic goals (Pinnington and Edwards, 2000). Some writers have dismissed this model as in human while others proclaim it as common sense and the only route to business success (Hendry, 1995, Morris, 2000). Others have argued that Hard HRM has been used to strengthen management prerogative and legitimize the worst employee- relations excesses of enterprise culture (Legge, 1995a). Though the both models have received attention of researchers but have yielded different results often contrasting on various factors. Truss (1999) found that soft model of HRM have positive affects on women's productivity. Gooderham, Nordhaug and Ringdal (1999) tested the effect of micro level variables on HRM practices and found that while institutional determinants such as firm size have a strong effect on the application of both soft (Collaborative HRM / Harvard Model) and hard HRM (Calculative HRM / Michigan Model). They found that stronger the management autonomy leas to more calculative HRM practices. Kane & Crawford (1999) studied the extent to which firms exhibited soft or hard approaches to HRM in relation to perceived overall effectiveness. Contrary to other findings they found that there is little evidence of conflict or incompatibility between the two theoretical perspectives. Basically management attitudes, knowledge deficiencies and current status of HRM in the organization are some of the factors, which plays important role in implementing HRM system in any organization. It has been concluded that HRM effectiveness can be achieved through both hard and soft HRM because effectiveness could be achieved through applying both organizational strategy and objectives and employee motivation and development. The soft and hard HRM models (Harvard / Michigan) have helped to advance researchers theoretical understanding of the link ages between human resource management practices and business strategic objectives. Now if we combine these two models we will get a holistic model, which cover overall HRM, practices in an organization. Figure below shows the variables operation in internal and external environments of an organization and the corresponding responses at organizational level as well as at HRM level. Model of the Moderating Effect of HRM Orientation on Business and HRM Strategic Response to Environmental Change Levels of environmental change Business strategic responses Cost reduction strategies Emphasis on quality Change in organizational culture Change in patterns of work Change in product life cycles HRM Responses Employment patterns Industrial relations Societal environment Economic Political/Legal Societal/demographic Technological Task environment Labour market Competition Product markets Customers HRM Orientation Soft Vs. Hard Models 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 topic "The de-stress call" also shows us that if workplace stress has not been managed properly it will ultimately affect the performance of the employee and also the effectiveness of the organization. Its adverse impact on individual productivity is more visible nowadays. 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 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 Hard HRM initiatives of downsizing, de-layering and organizational efficiency (Doe, 1994; Towers, 1996). Firm practicing Hard 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 Hard 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. ********************************************************************** References: 1. Beer, M, Spector, B, Lawrence, P, Quinn Mills, D, and Walton, R, (1984) Managing Human Assets, The Free Press, New York. 2. Boxall, P., and Purcell, J. (2003). Strategy and Human Resource Management, London: Palgrave. 3. Doe, P.J. (1994) 'Creating a Resilient organization' Canadian Business Review, summer 1994, 21:2, pp. 22. 4. Fombrun, C.J, Tichy, N M, Devanna, M.A, (1984), Strategic Human Resource Management, Wiley, New York. 5. 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Towers, B. eds (1996), The Handbook of Human Resource Management, Blackwell, Oxford. 19. Truss, C. (1999) Human Resource Management: Gendered Terrain Intern. Journal of HRM, Vol. 12:2, 180-200. 20. Wright, P., Snell, S. and Dyer, L. (2005) "New models of strategic HRM in a global context," International Journal of Human Resource Management, 16(6): 875-81. ********************************************************************** Read More