Human Resource Management - Essay Example

? Human Resource Management Table of Contents Introduction 3 Task 3 Current human resource management practices and linkage with the present and future needs of the business 3 Task 2 6 Theories and practices to change present human resource management practices 6 Recommendations 12 Conclusion 14 Reference 15 Bibliography 17 Introduction The project seeks to bring forth the human resource management strategies in the organization and its alignment with the short and long term business objectives of the firm. Changing business environments coupled with increase in competitive pressures have caused the company’s difficulty in sustaining in the market. Comprising of a total of 200 employees the company is faced with difficulty in managing its workforce efficiently. The main areas of human resource management strategies which have been falling short of meeting the company’s present and future business needs are explored in the project. This includes exploring its recruitment strategies, compensation strategies, training and development programs, performance management programs etc. This is followed by the explanation of how the key human resource management strategies need to be changed in the light of appropriate theories and practices. Based on the shortcomings of the strategies suitable changed have been recommended for the organization. Task 1 Current human resource management practices and linkage with the present and future needs of the business It is crucial that human resource management practices are linked with organizational goals and objectives both for the present as well as the future. The following section would analyze the HR practices followed in ABC Engine Components and identify their relevance in the context of meeting the present and future business demands in the organization. Firstly, the current recruitment strategies seem to be falling short of the future business needs and requirements in the organization. Because of the existence of a highly demanding and competitive environment, it was important that the skill requirements were changed and the current productivity level of the staffs were heightened. However, Gordon Watson, who was the Chief Executive, was found stating that the staffs would not be swapped for anyone else. This is found to be a shortcoming because with the changed in business requirements, skill requirements must also change which means that new staffs need to be employed while older ones must be either retrained or the workforce must be downsized. The retention strategies of the organization also seem inadequate as the employee turnover rate in the technical and management remain remains as high as 35-40%. The company seems to have little effective strategies for retaining employees where management and technical skills remain short in the market and are often poached by the competitors who offer them with better terms and conditions (Brown, 2011, p.102). The fact that ABC was unable to attract or retain employees to other competitors reveals its poor compensation program and structure. Despite that fact that there was little discontentment among employees there was high attrition rates in the organization which shows shortfall in the compensation structures which happens to be the key factor towards attracting and retaining employees. Also the compensation structures and policies must be such as to enhance performance and productivity. In this case there was no form of incentive in the organization which could improve employees’ productivity or employee involvement. The lack of variable pay can be regarded as a shortfall in the compensation structures to meet productivity goals in future (Graham & Roth, 2008, p.12). A proper performance management system is a prerequisite for ensuring high performance of employees. In the highly competitive environment in which the company operates, it is important that high performance of employees is maintained so as to ensure that quality standards are maintained and the company does not lose to competitors. The lack of performance management system is apparent from the fact that employees were unable to meet the company accepted offers which means that their performance was falling short of the productivity requirements of the organization. An efficient performance management system would play an important role in ensuring employee productivity during emergency situations as organizations remain vulnerable to the erratic business environments and conditions (Budhwar, Varma & DeNisi, 2008, p.15). Training and developmental activities are considered to be most important in organizations because of the changing business requirements and individual requirement for skill development of employees. Not only is it essential for the organization’s performance but for the growth of individual employees as well. Shortcomings have been noticed in the areas of training and development of employees of ABC. Lack of available training was the reason for lack of flexibility at the workplace. This was the reason why staffs were unable to be placed in different work activities arising out of urgent requirements. Some of the staffs were overloaded with work activities while others were underworked. The lack of technical skills demonstrates inadequate training on the part of the employer which disallowed employees to move between jobs. It is apparent from the case study that training programs were imparted only as long as they ensured the minimum quality standards. However no attempts were made to improve or perform above the minimum standard. Although budgets were allocated for training to the respective managers, training courses were sparse and remained insufficient for the purpose. There were no regular training programs meant to meet the skill requirements of employees rather trainings were imparted only during emergencies (Pynes, 2008, p.309). Task 2 Theories and practices to change present human resource management practices Significant research attention has been provided to the examination of relationships between the human resource management functions in organizations and the performance of the firm. Extensive studies have been conducted to examine how the different measures of HR practices correlates with the past, present and the future operational performance measures. Drucker (1954) has referred to personnel management as being unable to make any significant contribution to an organization. Researchers like Tom Stewart also have same opinion and has described leadership as failing to describing their contribution towards adding value to the organizations except in wannabe and unquantifiable terms. Responding to the repeated and long standing criticisms levelled against HR not making any contribution towards organizations, extensive research was conducted which demonstrated that progressive HR practices resulted in attaining higher organizational performance and productivity, in terms of profits, productivity and the firm’s market value (Wright, et al, 2004, p.4). Predictive Model of Human Resource Practices Consistent with the previous research works a conceptual model of how the human resource management practices might impact on the organization profitability, the predictive model of human resource management was developed. The changes that can be incorporated in ABC Watson can be incorporated in the light of this model. The following figure would demonstrate the predictive model and its impact on organizational performance and outcomes. Figure 1: Impact of Predictive Model of Human Resource Practices on Organizational Outcomes (Source: Wright, et al, 2004, p.17) As apparent from the above predictive model, HR practices should be such that it immediately impacts on the organizational commitment. These variables necessarily improve the operational performance of the organization, in terms of productivity, compensation, quality, etc which reflects through the profitability of the organization. Thus the immediate change which can be recommended for ABC Watson is enhancing organizational commitment through its HR policies to ensure greater productivity in different areas of the business. In the context of ABC Watson, compensation seems to be a strong factor which could add towards organizational commitment. Apart from compensation and benefits, training and developmental activities coupled with proper growth prospects for employees would also depict high level of commitment on the part of the organization. Besides equipping employees with the requisite skills and expertise trough the training provisions, the management would also be able to attain higher performance and productivity from them (Wright, et al, 2004, p.17). Performance Management System The following section would elaborate on the changes in the performance management system of ABS Watson using relevant theories. It is seen that staffs were working towards the company’s objectives; however their performance was falling short of the desired output level. According to Aguinis, 2009 and Grote, 1996, an effective performance management process must consist of the stages of prerequisites, performance planning, performance execution, assessment, review and finally performance renewal and reconstruction (Smither, 2009, p.12). The following figure would depict the performance management process flow that organizations must execute. Figure 2: Performance Management Process Flow (Source: Smither, 2009, p.12) Prerequisites refer to determining the organization’s strategic goals and objectives before incorporating the program. In case of a lack of clarity about where the organization seeks to head and differences between its missions and objectives and the unit component’s missions and objectives, employees would be unable to deliver or achieve what the organization wants from them. Since ABC Watson is subjected to a highly competitive and erratic business environment where sustainability becomes a crucial matter, its mission must be to ensure employee productivity even during emergency situations. The workforce seems to be underperforming when the situation demands. The planning process must consider the results, behaviours and developmental plans as fundamental aspects of the process. Employees must be informed about how much they must produce and their accountability towards the desired results. The setting of performance standards and performance targets is especially essentially important because in ABC Watson, it is seen that some employees are underworked while some others remain overloaded with work. The stage of performance execution is essentially important as they strive to produce the set targets and also display the right behaviours (Smither, 2009, p.15). In this case the standards set would obviously be higher that the levels at which employees were performing. The sustainability criteria demands greater performance from the employees and the organization. Therefore measuring the performance of employees against set standards is an essential requirement in the phase of performance execution. The last and the most important phase would include performance appraisal of employees through the step of performance assessment and review. Employees at ABC Watson would be subjected to a review phase in which they would be reviewed by the management, supervisors, peers and themselves as well. The performance of employees would be evaluated on an all-round basis on which the reviews would be developed. Based on the reviews provided candidates would determine whether their performance would be altered or not. Implementation of a system of performance management is considered to be the most crucial for ABC Watson with the view to ensuring high performance and productivity of the workforce against the competitive and unpredictable business environment (Smither, 2009, p.17). Certain changes have been found to be imperative for ABS Watson in the areas of training and development of employees. This is because the case reflects a situation of lack of flexibility at the shop floor of the company. Staffs could not be moved between activities and machines as they lacked the requisite skills to take up a different job activity. This demonstrates the lack of skill level of employees due to the inadequacy of training of employees. Training and Developmental Programs The impact of training and developmental activities have been long realised by researchers and practitioners. As stated by Vemic (2007), in the extremely complex and turbulent global environment, knowledge is considered as being the most reliable source for attaining competitive advantage. Knowledge has been regarded as most crucial for realizing competitive advantage. It is the process of employee training HRM provides for constant and continuous knowledge innovation, creates for the continuous and mutual exchange of knowledge (Vemic, 2007, p.210). According to the views of Knoke & Kalleberg (1994), the world’s economic pressure has eroded Americas’ market position significantly. Due to this situation the large and small companies in the nation have been increasingly using training as a means of coping to the technological changes fostering innovation and market competition (Knoke & Kalleberg, 1994, p.537). Training programs in ABC Watson must be organized. The two most common type of training programs recommended for the company is on-the-job training and simulation. On-the-job Training Extensive research was conducted to find the implications of on-the-job training in organizations. This kind of training programs has been found to be extremely productive in the context of American organizations. They are considered to be extremely job specific and effective in enhancing technical skills of candidates. It has also been found by the researchers that the impact of this type of training is immense for improving employee mobility. This aspect can be utilized in the organization as ABC Watson greatly suffers from employee immobility (Lynch, 1991, p.151). Research also suggests that On-the-job Training is specifically useful for improving technical skills of employees and reduces the risk of employees leaving the organization substantiality. On the other hand, the impact of off-the-job training is contradictory as it increases the risk of employees leaving his or her employer. This is because it allows the workers to choose alternative career options and find a better match for his skills. In ABC Watson, employees can be trained to work on different machines so that during demanding situations they can be moved to different positions. This would be effective in reducing the excess burden on certain workers and balance work pressures between all members in the organization. Most importantly the chances of employees leaving the organization leading to high rates of attritions could be controlled to a large extent. Simulations Simulation refers replicating the characteristics of the real world which are required for transferring of knowledge and enhancing learning in the organization. Machine simulators are considered most important for training employees on specific machines and equipments. Simulation is important for controlling the training environment, for safety issues, for introducing feedback and learning principles and finally for controlling or reducing costs. Simulation would be most effective on the managerial and technical staffs in the organization as they would be better equipped and confident to confront with the global environment and conditions efficiently. This mode of training would be effective in lending stability among employees and reduce employee turnover in the company too (Frazis & Loewenstein, 2007, p.9). Compensation and Benefits Significant shortcomings have been noticed in the field of compensation management in ABC Watson. Compensation management is said to have played the key role in managing challenges in large organizations. The high attrition rate in the organization is depiction of the failure of the compensation structure in the same. Also the fact that competitors or rival organizations were more tempting in terms of the compensation structures and packages show that ABC Watson held a weak competitive position in the market and was unable to attract talents or retain them. The change required in the compensation structure is to include an element of incentives which would be directly linked with employee performance. Lack of incentive payments could have been one factor attributed for the fall in workers’ performance or commitment towards the organization. Inclusion of the incentive system in the compensation package of employees would be necessary to motivate employees towards taking more responsibilities and generating greater accountability for the work they were delivering. Keeping the base salary same and allocating a high percentage of the same as variable pay would be effective in tempting employees towards enhancing performance and productivity (Dychtwald, et al., 2006, p.15). Recommendations The overall scenario in ABC Watson depicts a case of poor human resource management practices resulting in low employee productivity, high rates of attrition, falling quality standards and losing out to competitors in the markets. Managing people issues have been identified as the main way for combating the problem. The first recommendation extended in favour of the organization is to establish organizational commitment through its HR policies, such as performance management systems, training and development programs, compensation structures, etc. A 360 degree system of performance appraisal is recommended for the purpose. This is to ensure high and consistent performance of employees through employee reviews provided by subordinates, peers, supervisors, seniors, himself and the management as well (Goel, 2008, p.42). The disparities in reviews provided by himself and that provided by others would highlighted the shortages and drawbacks in employee skills and performance and would assist employees in filling up the skill gaps or shortages. Revision of the training and development programs is recommended. Training programs in the organization must be organized and formal. The modes of training programs identified as being most suitable for the organization are on-the-job training and simulation. The former is chosen for its special usage in providing skill specific knowledge while the latter is regarded to effective in equipping employees in adapting to the turbulent, unpredictable and changing business environment. Because the changes in the business environment and the consequent changes in demand for skills in organizations leading to difficulty of sustenance, the above two modes of training have been considered to be appropriate. Lastly a change in the compensation structures is recommended as a determinant of motivation and performance of employees. Along with the fixed component, a variable component is suggested which must be linked with the productivity and performance of employees in the company. This is specifically done with the purpose of increasing motivation of employees to employ greater effort to generate greater performance. The addition of variable component would also help to curb employee attritions as they get attracted towards other rival firms offering better compensation packages and structures (Dyson. Et al., 2003, p.68). Conclusion The current scenario at ABC Watson demonstrates a situation of inferior human resource management practices which is cause of its losing out to competitors in the market and reducing sustainability in the market as well. Analysis of the case shows inadequate technical skills of staffs required for meeting desired performance at the competitive level. Also the fact of high attritions reflects poor HR policies and structures in the firm. Suitable commendations have been provided for improving the system. This involves inclusion of the 360 degree system of performance appraisal, inclusion of a variable pay structure linked with employee productivity and redesigning training modules and imparting of on-the-job training programs and simulation programs. Reference Brown, J. N. (2011). The Complete Guide to Recruitment: A Step-by-Step Approach to Selecting, Assessing and Hiring the Right People. Kogan Page Publishers. Budhwar, P. S., Varma, A. & DeNisi, A. S. (2008). 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