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Human Resources Strategy - Essay Example

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The paper "Human Resources Strategy" states that hard HRM is that aspect that requires the systematic and rational alignment of HR policies with business thrust and strategy.  Hard HRM views human resources just as any other organizational resource employed in production or operations…
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HUMAN RESOURCES STRATEGY PART I HUMAN RESOURCE PLANNING AND RECRUITMENT IN A RECESSION At the first mention of “recession,” the initial reaction of most people, executives included, is that of fear of having to take a pay cut or losing their jobs. There is nothing like the prospects of a contracting economy to create a feeling of fear that could impact negatively upon productivity at a time the company may need it most. Goss (1994:5), commenting on the dot-com bubble collapse in the early nineties, said that there was significant restructuring in the firms and in the broad industry, as a spate of downsizing, lay-offs, and cost-cutting rippled through companies. It meant laying off part of the work force, sometimes indiscriminately as far as the employees’ functions were concerned, amounting to a hermorrhage of critical talent the company sorely needed to recover. This time around, during the financial crisis of 2007 and the subsequent recession, human resources managers are approaching their task of rationalizing their company’s workforce with a greater view towards the subsequent repercussions. This paper shall examine how human resources planning, flexibility, and recruitment take place in the context of an economic recession. Human Resource Planning: Strategic change in organizational behaviour in a recession According to Goss, recessions and trade crises enhance the challenges of the international competitive environment. Emphasis in planning shifted to survival mode and generally aimed at coping, resuting in downsizing, finding greater efficiencies, building ‘leaner and fitter’ organizations. It meant lay-offs, rethinking production processes and rationalizing them, and improving managerial control mechanisms. Industries undergo a “shake-out” where some leading companies, because they were debt-ridden, fall out, new leaders (usually those less leveraged and more cash-rich) emerge, and the fittest who survive move up. Emphasis was placed on value in all expenditures. Clements reported on the result of a recent survey conducted among HR managers, directors and professionals. Some firms saw opportunity in the crisis situation, and aimed not only at coping but in taking advantage of the situation to restructure and consolidate for the eventual recovery which is sure to happen sooner or later. Organizations in general became flatter, with emphasis placed on flexibility, adaptiveness and change, decentralization and devolution of responsibility to cost and profit centres, and a hard look at the strengths and weaknesses that impacted upon the effectiveness of the organization. Management of people tended towards greater participation and commitment, encouragement of flexibility and adaptability, a greater reliance on self-discipline coupled with a reduction in the supervisory levels, and development for more effective measures of rewarding individual effort towards the organizational goals. During crises, there also tended to be an undermining of trade union power; this would normally allow management the opportunity to institute changes with minimal resistance, allowing for new ideas and approaches, and sometime renegotiating a more favourable deal with organized labour. In drawing up new plans, the firm would normally take a hard look at its expenditures. The current recession is hardly different in this respect. According to Clements (2009:31), in the current full-blown recession, cost-cutting is happening in about 67% of organizations, including 89% of the larger companies (£1 billion annual turnover) and 57% of smaller companies (turnover less than £5 million). Fleming (2009), on the other hand, feels that firms do not need to cut costs or downsize even in a recession, nor should it. A more powerful alternative is to improve performance by optimizing employee and customer engagement. This was determined by Gallup research for the past 10 years, which has constantly found that engaged workgroups outperform other companies in performance and profitability. With this approach they buy time and remain financially viable without losing their talented employees and loyal customers. Furthermore, the survey showed that more organisations have put off planning for the future; 20% of businesses have planned projects and services for 5 years, and only 2% for ten years. 23% of respondents polled foresee decentralized power and greater employee empowerment in 2014, signalling a departure from the “command and control” structure which 35% believe will no longer be relevant 5 years from now. 91% of companies no longer see their new ideas as coming from the top, but rather from within the lower and mid echelons. The move towards decentralization will be a challenge in a post-recession scenario, because lost talent and knowledge together with a general lack of strategic planning will face HR managers. Natalie Gordon, marketing director of Egremont Group, observed that planning should take place even in the midst of the recession, and should be aimed at 5 years or longer; planning for two years or less will be short-sighted and very risky. Flexible working will also be accepted in five years’ time, something which is only a soft option today. 97% believe that in the future, visits to the head office for face-to-face meetings will be rare occurrences, and it will be the status quo for networked, home-working employees to be managing their own output, as well as rewarded on measured performance and results (Clements, 2009:32). With these forecasts in mind the present recession provides an opportunity to invest in talent, that is, in learning and development. The recession may also provide opportunities for investing in learning and development. Security firm G4S has begun a three-year programme to up-skill every one of its 6,000-strong staff members, many of whom have no present qualifications. Riffle (2009) also urges conducting an HR audit to strategically align human resources skills, as well as the system of rewards and benefits, to company goals. Koster (2009) also recommends learning and development, but more than this urges a review of the company’s succession plans. This would be the ideal time since there is not expected to be much movement of personnel. The advantage of the bad economy is that persons who are succession risks that would have moved up in good times are not moving during bad times, giving management a chance to strategically revise the succession plan. Koster quoted Brigitte Morel-Curran, senior partner with Korn/Ferry’s leadership and talent consulting group, as saying that when the recession ends, “organizations that have been most strategic with their talent will be the ones that will suffer least when the [talent] ware starts again.” McCartner (2009:36) likewise observed that more firms are addressing the recession with talent management strategies and talent innovation, through a process of engagement & development, in order to retain them. Flexibility: Strategic change in organizational behaviour in a recession In a recession, the general exodus of non-critical personnel shall leave the firm with fewer employees who will therefore be expected to do more. Not surprisingly, flexibility and adaptability will determine the success of efforts taken to address the reduced work force. Atkinson (1984) specified two types of flexibility. The first of this is functional flexibility, which refers to the capacity of employees to become multi-skilled and their ability to transfer from one function to another depending on the demands of the business. This flexibility, through it may be present in all employees, is specifically associated by Atkinson with the core workforce of the organization, those who have firm-specific skills that could not be sourced externally. Numerical flexibility, the second type, refers to management of the headcount, that the number of persons in the work force increase or decrease to match the exigencies of the business. The staff that may be hired and dispensed with as the need arises are usually the peripheral staff, and their skills are of the generic kind that may be commonly and quickly hired from the wider labour market. Numerical flexibility may be enhanced by the hiring of temporaries, contractuals, and the self-employed. Other forms of flexibility introduced by Wilson are financial flexibility, which is achieved through functional and numerical flexibility. Temporal flexibility, on the other hand, is attained by the variation of hours worked, and this is usually attained through the employment of peripheral workers with varied contractual hours, to suit the requirements of the business. Finally, policy flexibility would refer to the facility with which HR policies and guidelines may be adjusted in response to changes in the business environment, or redirection of business strategy. Recruitment: Strategic change in organizational behaviour in a recession “Recession” is almost always equated with job loss; it is almost never associated with recruitment. Yet, Morris (2009) sees opportunities in a recession to employ recruitment techniques that will strategically position the company at an advantage against its competitors. He provides the following five guidelines for recruiting in a recession: 1. “Don’t put the handbrake on recruitment.” A blanket freeze on hiring is the first response of most businesses during the hard times. But recessions create liquidity in the talent market, and there is a general availability of strong, technically proficient and experienced staff, especially top-tier individuals who would be entertaining more affordable salary expectations. Rodriguez (2009) agrees, as with Navarro (2006), who further recommends augmenting company personnel by “cherry-picking” the labour pool, in preparation for the economic turnaround. 2. “Strategise and communicate.” The recession allows for changes which should nevertheless be poised for the long-term. Liaison between HR and sales managers, for instance, would give an idea if the recession would be short-lived, or when signs of recovery are evident, so valued staff could be kept intact in preparation for the upturn. Premature layoffs may unnecessarily slough off good talent which could leave the company leave the company crippled. 3. “Prepare to be inundated.” People out of work will be applying for any vacancy, but the numbers may overwhelm the HR department. It may be necessary to outsource the HR function for the HR manager to retain focus on the main job. In fact, in a recession many employers outsource their HR recruitment process, freeing inhouse HR personnel to concentrate on jobs outsiders could not do (Berg, 2009). 4. “Review recruitment partners.” The service the company is dealing with may go out of business, in which case the firm must be prepared to link up with an alternative service. The recession may also provide an opportunity to renegotiate contracts to incorporate more favourable terms. 5. “Revise recruiting targets by focusing on priorities.” Efforts should be put in recruiting for positions that add real value to the business and generate the highest possible return on investment. WORDCOUNT = 1,700 excluding title PART II ROLE OF RECRUITMENT AND SELECTION IN EMPLOYEE RETENTION IN AN INTERNATIONAL DIMENSION The resource-based view of the firm states that three types of resources act conjunctively to create a firm’s competitive advantage: these are physical capital, organisational capital, and human capital (Barney and Wright, 1998, in Holland, Sheehan and De Cieri, 2007). Competitive advantages attributable to the first two have been eroded by technological development and the speed and sophistication of information transfer. Any significant competitive advantage in the present environment usually emanates from corporate strengths in its human capital. The mobility of human capital, however, prompts human resources managers and directors to address issues of attraction, recruitment, selection and retention of qualified and skilled personnel has become an organizational priority. The following will examine some of these considerations in the international labour market. Recruitment strategy and issues of attracting talent in an international dimension Recruitment strategies There are various recruitment strategies that are regularly availed of in human resources management in the domestic market, but upon inspection the same can be employed to a large extent to attract applicants internationally. Haesli and Boxall (2005: 1966) enumerate some of the most common approaches as follows: 1. Creating a constant supply of employees through networking, particularly where the company has a high reliance on overseas labour markets for staffing purposes. 2. Use of a variety of media for advertising ajobs; this would include websites, newspapers and magazines worldwide, and government publications. 3. Use of an employee referral scheme, which reward employees financially if a successful candidate was referred. 4. In an attempt to attract applicants, publicity could highlight the strengths of the company (i.e., leading brand manufacturers, cutting edge technology employed, etc.) 5. Highlight to applicants the attractive lifestyle aspects of the job, especially when the pay rate is not competitive with other global prospects 6. Highlight training prospects in the job. 7. Internal development of graduates in an established graduate development programme, in order to overcome skill shortages. In this scheme, graduate recruits receive on-the-job training in various aspects of the job, with the aim of developing future experts within the organization. For businesses that require a high level of knowledge skills or jobs that incorporate a high proportion of knowledge content, it is important to retain as many of its knowledge employees as possible. Strong competition, however, almost surely means that some of these highly-qualified individuals will expect to leave for greener pastures. Therefore, the company needs to keep replenishing the pool of knowledge workers. In an effort to maintain a wide choice as much as possible, the company should maintain a network by which it could readily source such individuals. Regular liaison with training institutions and colleges and universities with courses producing graduates in the desired fields, and maintaining such affiliations in different countries, would be ideal. The other strategies such as the use of websites, not only for advertising but for receipt of applications and posting of vacancies, are also low-cost means of sourcing applicants. Companies could also resort to the establishment of long-term inter-institution relationships. One such strategy would be to sponsor scholarships, particularly in developing countries, to develop qualified graduates in relevant fields with a commitment to employment with the company for an appropriate period of time. The lower costs involved in education in these countries, and the benefits that shall accrue to the company in ensuring the quality and commitment of its entrants. Issues of attracting talent Other than skills and individual qualifications, there are other considerations, psychological or cultural in nature, which influence the choice of individuals to join a multinational company, particularly one that will require mobility or relocation from the employee’s present home country. The most important factor is that of family ties. It was determined by Dupruis, Haines & Saba (Academy of Management, 2005) that perceived spouse willingness to relocate, beliefs regarding spouse mobility, and the presence of children are associated with the general willingness of an applicant to accept an international assignment. Similar results were arrived at by Tharenou (Academy of Management, 2005), who formulated an index for employees’ “willingness to relocate abroad for work long-term” (WRAW). In this study, 1,130 Australian employees surveyed indicated that WRAW was influenced positively by the organization’s international focus, the employee’s personal agency (self-efficacy and expected career outcomes), and the employee’s partner’s willingness to relocate abroad. On the other hand, family influence and attachment to the family system (except for partner’s willingness) tend to influence WRAW negatively. The implication of this on organizations abroad seeking to attract foreign professionals for their labour needs is that the recruitment of such foreign professionals, if sufficiently important to the company, may necessitate provisions for the family to accompany the recruit, and for allocations set aside for their adjustment and basic upkeep to ease the inconvenience and costs of relocation (residence, subsistence, children’s education, health, dental and medical maintenance, and so forth). It is also an important consideration for organizations in the home country who seek to retain professionals in order to preserve their valuable human capital (Tharenou, 2005). In certain instances, where the employee or professional being recruited is unwilling to depart from his present domicile due to family conflict, other arrangements such as teleworking could become instrumental in convincing the recruit to join the company. Madsen (Academy of Management, 2005) found that teleworkers had lower levels of overall worka dn family conflict, as well as other factors explored (i.e., strain-based, time-based, work interference with family and family interference with work). Other problems having to do with gender, health, number of hours worked, and number of children could likewise be resolved if the prospects of teleworking are acceptable to both company and recruit, and the nature of the job so allows. Finally, there are issues pertaining to certain localities which the HR manager should be aware could influence recruitment in those areas. Zhao (Academy of Management, 2005) noted that Western recruiters overestimated the importance of salary, benefits, organizational size, and quota as they appealed to job applicants in China, and underestimated the importance to recruits of job location, organizational culture, job security, and voice opportunity. Implications are that in stressing those factors that would have been important to the home country (such as pay and benefits) and ignoring the critical factors of job location and security, for instance, would tend to dampen applicant responses at recruitment campaigns. Design of selection tools and selection criteria to support international selection. Selection tools Selecting among a large number of applicants can be a daunting task, even at the local level, if not done systematically and objectively. Selecting from among a stream of international applications can be nearly impossible, if not for the use of the same technology that is used ot advertise the job openings and source the applications in the first place. Selection tools are instruments and procedures that are employed in order to facilitate the selection process. There are no fixed requisite selection tools, although a number of them are commonly used such as the following (Bohlander & Snell, 2004): 1. Completion of an application form An application form is useful to show if the person is able to read and understand English, or alternatively the language of the workplace, if such were necessary. 2. Holding an interview An interview provides an opportunity to verify the information in the application, as well as see how the individual present himself. This also provides information if the candidate possesses the necessary demeanor that the job requires. 3. Providing references Contacting and interviewing references are important to gain an impression of how others perceive the individual. It is possible to gain from the reference some information previously not known through the application or the interview. 4. Background check This is useful for positions that require confidentiality. The purpose of this tool is to discover if the individual is prone to any questionable behaviour. 5. Personality test If the position is a sensitive one, a personality test will ensure that the potential candidate possesses the attributes that would justify investing in him the time, training and confidence to function in such a capacity within the organization. Where the labour market being sourced is in another country from that where the work is situated, the company may have several channels by which to deploy its selection tools. Documents could be transmitted through online electronic means, and webcams could provide face-to-face visuals for online interviews. However, if the number of applicants to be sourced are large, it may be necessary for the company to send its human resources manager or a small selection team to that country in order to conduct the selection method. Also, if the recruitment is a continuing activity, then it would be possible and sometimes more cost-efficient for the company to outsource its recruitment with human resources or manpower placement agencies in the country. Indeed, some countries legally require that employment be coursed through a registered placement agency, for purposes of regulation. The hiring company should be aware of and compliant with such hiring regulations in its different markets. Selection criteria Selection criteria are the standards by which an application may be measured to assess one’s suitability for the job (smarstartmarketing.com, 2009). There are no fixed selection criteria, as these are determined form the industry, company, and job description. There are some selection criteria, however, that are common to most jobs, such as these criteria identified by the Louisiana State University (2009): It is important that the potential recruits in a certain locality have a clear picture of the criteria required by the company; oftentimes, in the international sphere, there are mismatches between expectations on both sides, rendering the recruitment process unproductive. For instance, it was found by the study by Zhao that applicants in China tended to overestimate Western recruiters’ expectations on university reputation, local conscientiousness, and personal relationships, and underestimated the importance of academic major, GPA, and analysis skills in the consideration of recruiters. It is thus important that long before recruiters even consider a locality, they should embark on an information campaign to bring to the attention of potential applicants the qualifications that they must possess in order to be matched to the position or vacancy of their interest. Creating a perfect match of all selection criteria oftentimes is a remote possibility, thus it would help if the company breaks down the various criteria in terms of necessity. It should distinguish which of the criteria would be (1) mandatory or essential criteria; (2) key selection criteria; and (3) desirable criteria. Mandatory criteria usually relate to qualifications (certificates, licenses, permits to live and work in a certain country, and so forth) that are considered absolutely essential to perform a job. A good example would be licensure or registration with the government for particular jobs that are imbued with public interest. The second classification, key selection criteria, would relate to the purpose, duties, and responsibilities required on the job. Finally, desirable criteria are qualities and traits that are still important, though they would be allocated lower weights than the key selection criteria. By classification criteria in this manner, the human resources manager will be better guided in objectively selecting the recruits with a closer match to the job requirements. Sensitive issues concerning selection criteria When recruiting from different countries and cultures, there may emerge certain sensitive issues that influence the selection criteria that would not have been significant in the home country. For instance, the question of gender selectivity has always provided occasion for lively debate. In some undertakings, such as those that pertain to jobs with high emotional content, gender segregation of employment may play a key part in the selection of service-sector workers. This would be relevant, for instance, in educational and child-care services, where women’s role as traditional caregivers and their nurturing “people skills” justify their specification in this respect (Caroll, Smith, Oliver and Sung, 2008). It does not take a stretch of the imagination, on the other hand, that gender selectivity would also pertain to certain cultures where male and female standing in the labour market have not acquired equal status, and it may be necessary, though the company may otherwise be an equal opportunity employer, for distinctions to be made in some extreme cases, so as not to create a stir by offending local sensibilities. There would also be regulations and treaties which would be operative in some areas, such as the principle of equal work for equal pay among the genders, which is incorporated in the EEC Treaty in the territory of the European Union. The disparities between the requirements of a multinational in its home country, by virtue of its citizenship, and that of the host country could be a source of legal controversy. It is important for the hiring company to carefully study its selection criteria, to protect itself from charges of discrimination which it may unintentionally expose itself to. The role recruitment and selection play in supporting employee retention and the goals of organization. The recruitment and selection process should ascertain that: 1. the potential employee’s personal aspirations are aligned with company goals; 2. the potential employee is made aware of organizational elements that seek to ensure his long-term stay with the company Among the organizational dynamics of retention are the pay and benefits package offered by the corporation to its personnel. Bethea (2009) elaborates that a responsive benefits program begins with a concise global benefits strategy or philosophy. This would provide a framework for management to understand the issues pertaining to the economic realities and diverse cultures in the different employee locations. Solutions should be apropos to different groups such as local employees, expatriates, and third country nationals. The company must recognize that local employees’ needs vary greatly from mobile employees’ needs, and from the needs of employees who serve on short assignments in international locations. In the past, the determination of compensation packages and benefits globally had been treated as an “add-on” or peripheral responsibility of HR teams. However, the size of multinational operations has growth has rendered this impossible. Thus, Bethea recommends the following strategies: 1. The establishment of small teams at headquarters to focus on human resources, compensation and benefits outside of the US. 2. Hiring or promoting local HR managers who shall report dually to the local business managers as well as the global HR director in the US; and 3. Setting clear responsibilities and approval standards in order for tasks to be shared as the need requires, between local and headquarters level. Another link between the recruitment strategy and retention is provided by De Corte (1996). He observed that recruitment and retention decisions should maximize the utility of a probationary selection process to ensure the long-term prospects of successful selectees. This objective could be attained by either a combination of recruiting sources that statistically prove, for that organization at least, to be the most effective for recruiting selectees with strong long-term prospects. These are procedures that identify the criterion cut-off value (for instance, the level of observed job performance at the conclusion of the probationary period) that would distinguish best between successful and unsuccessful selectees. De Corte recommended other retention initiatives that are linked to recruitment: 1. Student loan-repayment scheme. Under this plan, the company defrays or supplements employees’ student loan repayments. 2. Training for tenure. The company could subsidize specialized training for employees in exchange for his commitment to remain with the company for at least a specific number of years. 3. Linking other benefits to tenure, such as car payment plans (the organization offers to subsidize a portion, usually half, of the payments for a car or other such asset, in instalment payments spread over a number of years). On the other hand, market driven dynamics of retention are adversely influenced by a regime of labour shortage, as discussed below in the case of Singapore. Where the labour market falls short of prospects, certain devices must be resorted to, such as job engineering, to incorporate greater value-added elements for the employee; and linking performance with greater prospects for upward mobility. Influences of hard and soft approaches to HRM on recruitment and selection strategies According to Wilson (2005:31) hard HRM is associated with business planning, in that it ensures that the staffing mirrors the organization’s need, and the appropriate number of people with the needed skills are placed in the correct positions in the organization at the time they are needed. Hard HRM is that aspect that requires the systematic and rational alignment of HR policies with business thrust and strategy. Hard HRM views human resources just as any other organizational resource employed in production or operations. In contrast, soft HRM is also formulated within the confines of business strategy, but emphasizes on the uniqueness of people as a source of competitive advantage. Soft HRM is geared towards HR development and maximization of the human potential, that is “resourceful humans rather than human resources” (Wilson, 2005:31). Stress is on motivation, training, fostering trust and partnership, and aspects of the psychological contract. Hard HRM influences the recruitment and selection process by strengthening the selection tools and criteria to more objectively and closely match the corporation’s needs. For instance, hard HRM will require the strengthening of information systems that support recruitment and selection. Information support, databasing and benchmarking become critical elements for decision-making. The need relevant information where and when needed is a function of technological support. The likes of Accenture’s human resources applications programs and networks, for instance, increases HR support effectiveness across several countries (Beulen, 2008). Part of the need for data in recruitment is to extend the reach of applications sourcing, and provide a continuing liaison between and among the various plant sites and headquarters concerning vacancies, job requirements, personnel requirements, and applicant matches. The information system would also support the need for benchmarking, to ensure that the multinational benefits programs are fair and relevant. By benchmarking, data arrived at could shed light on employees’ perceptions of their compensation and benefits, in comparison to their peers and co-workers situated in other countries. Benchmarking also justifies providing enhancements in relation to local government mandates, and in deciding on issues about harmonisation of benefits across multiples sites with inconsistent plans, while at the same time remaining competitive in that locality (Bethea, 2009). On the other hand, soft HRM aids in attraction, recruitment and selection, and thereafter even retention, through the formulation of an appropriate responsive and comprehensive benefits package.Bethea (2009) observes that global benefits management requires diverse benefits for a diverse workforce. A standardized benefits program for all employees globally is impractical and does not achieve the desire results (applicant attraction, employee retention, and productivity). Soft HRM also focuses attention on training and value-added jobs, which the younger generation finds more attractive than high pay and benefits (Cunning and Debrah, 1995). Due to the high costs of seminars and the specificity of on-the-job skills needed to advance, jobs that offer these tend to attract more high-performing college graduates seeking to immerse themselves in industry for the first time. Where labour shortage is prevalent, soft HRM influences recruitment efforts towards some unusual strategies. An example is the case of Singapore. Cunningham and Debrah state that low internal labour supply and rapid economic expansion have resulted in labour turnover rates as high as 17% nationwide and 50% in some companies. Organizations have resorted to employee piracy and “poaching” from one another. Because of this situation, companies resorted to giving free high tea and door gifts to attract applicants (Goh, 1993 in Cunningham et al, 1995), or offering free meals and organizing bi-monthly birthday parties for employees (Williams, 1993a in Cunningham et al., 1995). 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