Issues in human resource management
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Human Resource Management is defined as a strategic and coherent approach to the management of an organisation’s most valued assets, the people working there, who individually or collectively contribute to the achievement of its objectives. Boxall et al (2007) describe HRM as “the management work and people towards desired ends”. John Storey (1989) believes that HRM can be regarded as “a set of interrelated policies with on ideological and philosophical underpinning”. He suggests four aspects that constitute the meaningful version of HRM:
- A particular constellation of beliefs and assumptions.
- A strategic thrust informing decisions about people management.
- The central involvement of line managers.
- Reliance upon a set of “levers” to shape the employment relationship.
The overall purpose of HRM is to ensure that the organisation is able to achieve success through people. As Ulrich and (1990) remark: “HRM systems can be the source of organisational capabilities that allow firms to learn and capitalize on new opportunities. Dyer and Holder (1988) analyse management’s HR goals under the dimensions of contribution (what kind of employee behaviour is expected?), composition (what headcount, staffing ratio and skills mix?), competence (what general level of ability is desire), and commitment (what level of employee attachment and identification?).
Caldwell (2004) has identified twelve policy goals for HRM:
- Managing people as assets that are fundamental to the competitive advantage of the organisation;
- Aligning HRM policies with business policies and corporate strategy;
- Developing a close fit of HR policies, procedures and systems with one another;
- Creating a flatter and more flexible organization capable of responding more quickly to change;
- Encouraging team working and cooperation across internal organizational boundaries;
- Creating a strong customer-first philosophy throughout the organisation;
- Empowering employees to manage their own self-development;
- Developing reward strategies designed to support a performance- driven culture;
- Improving employee involvement through better internal communication;
- Building greater employee commitment to the organisation;
- Increasing line management responsibility for HR policies;
- Developing the facilitating role of managers as enablers.
EX1: Supermarket giant Tesco is offering a massive £300,000 salary plus bonuses as it starts its search for a new group HR director, Personnel Today can reveal. The HR job, the biggest in the private sector is up for a grabs after Clare Chapman accepted the role of director-general of workforce at the Department of Health. The new confirms that Chapman took a serious cut overall earning to join the public sector in probably the most high-profile and challenging HR job in the UK. She will now earn between 3200,000 and £220,000for overseeing the people management of 1.3 million staff, a number that dwarfs Tesco 270,000 employees. (Personnel Today, 19 September 2006).
But as Dyer and Holder (1998) emphasize: ‘HRM goals vary according to competitive choices, technologies or services tangibles, characteristics of their employees, the state of the labour market and the societal regulations and the national culture’. And Boxall, Purcelland and Wright (2007) note that “the general motives o HRM are multiples”.
Managing people at work does not take place in a vacuum. Wider econic, technological, political and social forces influence and shape human resource management (HRM) strategy, policies and practices, global and local economic developments sometimes having an indirect or a multiplier effect.
EX2: The electric Giant Siemens, for example, overtakes Philips Electronics, so Philips downsizes and lays off workers. Belt -tightening workers then press for cheaper services from local traders and are prepared to work for lower wages, thereby causing an adjustment in the local labour markets and in the HRM decisions and activities of those organisations affected.
William (1993) is one of the number of theorists who have argued the importance of understanding the relationship between economic stability or instability and HRM, but it is not just the economic context that matters. New manufacturing and services technologies, new processes (eg. total quality management and International Organization for Standardization-ISO 9000) and the developments in global telecommunications networks have important ramifications or organizational and work design, and for HRM. Just as significant are demographic changes and the restructuring labour markets that affect the supply of and demand for human resource (HR). Past fluctuations in the birth rate in Anglo-Saxon economies are producing changes in the labour force composition. Human Resource strategies and practices are better understood when they are examined in the broader economic, technological, political and social context that help to shape them ( Maurice and Sorge, 2000).
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The political factors
The political context is the most complex and the most difficult to analyse, both because of its power to shape the nature of the employment relationship and because of its effect on the other contexts. As a result of that power, the social elites in whose hands it lies enjoy immense influence in society, in the political system and in the determination of the state’s policies and actions ( milliband, 1969). In a social demeocracy, the state has six major responsibilities:
- Protecting national sovereignty
- Establishing a legal system
- Developing economic policies
- Building basic services and infrastructure
- Protecting vulnerable people
- Protecting the environment
All these state activities affect business and managers in some way. Human Resource Managers in this case will have for responsibility to educate their staff about the political ideology and continually lobby and seek to influence the policies of the State. HR has help shape and regulates employment relations, and reconcile the conflict that inevitably arises in employment.
EX3: China’s government is worried that the growing gap between rich and poor could provoke more instability this year. The government has announced that the narrowing of the income gap will be one of its main priorities this year and will be at the top of the agenda when Chinas national legislature holds its annual meeting. (Geoffrey York, Globe and Mail, 9 February 2006, P. A1).
EX4: Protests against France’s new job law escalate
Ten of thousands of students marched in protests of a new law that makes it easier to hire and fire young workers. More protests, in which the students will be joined by France’s main unions, are expected. Last month, the country’s government passed a law that it claims will ease the crisis of high unemployment, especially among young disadvantaged young people in the suburbs. CANADIAN HR REPORTER, 17 MARCH 2006
The social factors
Change s in the proportion of the population participating in the labour market and chamging demeographics determine the size and composition of the workforce. In addition, people entering the workplace bring with them different attitudes and values relating to work, parentwood, leisure, notions of “fairness” and organizational loyalty.
EX5: IBM labels diversity a strategic imperative. Hiring women, gays, and minorities is about more than doing the right thing. Fishing ius more fun says IBM’s “dean of diversity”, but golf is the game of business which is why, he explains, Big Blue has installed putting greens at some of its on-site day care centers. IBM should be place where people feel comfortable being popenly gay and where women and people from minority group backgrounds have equal opportunity for promotion and advancement, said Mr Childs, who is black. And anyone who has a problem with that need not apply to IBM, he added. IBMs effort to diversify the work force has moved from being a moral imperative to being a strategic imperative. (Virginia Galt, Globe and Mail, 24 June 2002, P.83)
Demographic projections are based on the most basic demographic fact: every year each person gets older. Analysing human behaviour to age offers insights into socioeconomic variables. A 30-years old, for instance is more likely to be married than a 20- years old. A-55 year old probably views work differently from25 year old. The ability to forecast behaviour according to age has the advantage of allowing HR managers to know more about the composition of the workforce and their needs. Demographic data are important source of information that can help HR managers in such areas as recruitment and selection, training and rewards management.
EX6: Mandatory retirement attacked
Government should ban mandatory retirement at age 65 because it discriminates against people who are capable of working and who often need the money, Ontario Human Rights Commissioner Keith Norton said. Mandatory retirement, where age is used to determine the person’s employment status, is unacceptable from a human rights perspective, Mr Norton told Queen’s park news conference.
Whether people seek employment and how they respond to HR practices, designed to elicit both control and the consent of employees, will depend on cultural values. Culture is a “collective product, consisting of processes and artefacts, produced over long periods of time by large members of individuals, which enables the past to be carried in the present and the future (Parker et al, 2003). Changing culture values have an impact on HRM activities. Changes in traditional gender roles and new lifestyles, for example, change participation rates in the labour market and the way in which workers are motivated and managed in the workplace. The notion of a work-life balance for instance for employees, the need to balance work and leisure/family activities is a ” hot” area in HRM research that is receiving increasing attention from policy- makers and managers (Purcell, 2004; Surges and Guest, 2004). Research on employer work-life balance strategies can have important benefits for organization. Evidence suggests that, in the face of a highly competitive labour market, work-life policies and practices are necessary for attracting, retaining and motivating highly skilled knowledge workers (Scholarios and Marks, 2004). Work- life boundary and work-life balance strategies are closely related to the commitment that knowledge workers “give” to their employer and are, in addition, necessary for creative and innovative behaviours and organizational culture (De Cieri et al, 2005).
A number of authors have argued that the use of technology within HR not only makes HR activity more efficient, but may also facilitate a change in emphasis for HRM to become more strategic within the organisation (Lawler and Mohrman 2003; Shrivastava and Shaw 2004). Literature has commented for the idea of HRM as a strategic business partner (Ulrich 1997) rather than in the administrative or transactional role that it has held historically. With the growth of information technology, much administrative can be accomplished using self-service or automated systems, therefore the HR function can, and increasingly does make significant contribution to building a firm that is staffed by the right human capital to carry out the work of the company, and enable the accomplishment of business strategy ( Lawler and Mohrman 2003: 16). Snell et al (2002) have suggested that HR can meet the challenge of simultaneously becoming more strategic, flexilble, cost efficient and customer oriented by leveraging information technology. IT can lower administrative costs, increase productivity, speed response times, improve decision making and enhance customer service all at the same time.
EX7: Norwich Union is the largest insurer in the UK and is part of the Aviva Insurance Group that has more than 60,000 employees. Human Resources within Norwich Union are managed using shared service model. The company uses an Oracle HR information system (HRI) with an extensive system of manager self-service. Managers can use the system to inform fundamental changes with regard to their employees. These includes: to change salary, cost centre and allowances, process leavers, update absences, produce reports, process overtime payments and compare salaries and performance ratings. The company also uses a degree of employee self-service with employees being able to: maintain personal details and emergency contac, provide information on their pay, request holidays, record absence, change bank account details and look at performance rating and salary history. HRM guide, October 2004
The technology and communication infrastructure can facilitate virtual working and learning.
EX8: Nestle, with over 2000,000 employees spread across hundreds of locations, has adopted distance learning approach based on e-learning with courses structured around short modules of between five and seven minutes duration.(Marquardt, 2004).
The role of HR managers will be to train employees to adapt with technological changes as it arises through training process in order to face change in the competitive environment.
As part of the economic context, globalization is the defining political economic paradigm of our time. In term of external context, globalization has affected all aspects in Business. In term of HR strategy, HRM policies and practices have to be aligned to the global activities of transnational enterprises and be able to attract and retain employees operating internationally but within different national employment regimes.
EX9: China, India and the USA will drive growth
A new research from the Economist Intelligence Unit predicts that more than half the growth in the world’s GDP over the next 15 years will come from China(27%), the US(16%), and India(12%). The foresight 2020 research report, sponsored by Cisco System, bases its predictions on new long term economic forecasts, a survey of more than 1,650 executives and in-depth interviews with senior business leaders. HRM guide, April 2006.
The growth of the global economy has resulted in significant sections of the labour market being influenced by the investment decisions and production and HR strategies of transnational corporations. These transnational corporations such as Toyota, Unilever, Ford, have established a global network for research and development, production and marketing.
These corporations integrate global resources and outsource some of their work to preferred suppliers to achieve cost efficiencies while maintaining the capability to respond to local markes. These global business strategies strongly affect the nature of local markets and therefore HRM initiatives and practices.
EX10: Employees urges British gas to reconsider plan to move 2000 jobs to India
Angry British Gas employees are campaigning for the company to reverse its decision to transfer 2,000 back-office jobs to India. British Gas plans to close sites in Manchester, Oldham and Solihull as part of a £430m over-haul of its customer billing system. People management, 15 August 2005.
Human Resource Management is a body of knowledge and a set of policies and practices that shape the nature of work and regulate the employment relationship. These practices suggest three questions: What do HRM managers do? What affects what they do? How do they do what they do? To answer these questions, we draw on the work of Harzing (2000), Millward et al. (2000) and Ulrich (1997) to identify key HRM functions. These are HR policies, programmes and practices designed in response to organizational goals and contingencies, and managed to achieve those goals and gain competitive advantage.
Planning: preparing forecasts for future HR needs in the light of an organisation’s environment, mission and objectives, strategies and internal strengths and weaknesses, including its structure, culture, technology and leadership.
Integrating: appropriately integrating or linking HRM with the strategic management process of the company and coordinating bundles of HR practices to achieve the company’s desired goals.
Staffing: obtaining people with the appropriate skills, abilities, knowledge and experience to fill jobs in the organization. Key practices are HR planning, job analysis, recruitment and selection.
Developing: analysing learning requirement to ensure that employees possess the knowledge and the skills to perform satisfactorily in their jobs or to advance in the organization. Performance appraisal can identify employee key skills and competencies.
Motivating: the design and administration of reward system. HR practices include job evaluation, performance appraisal, pay and benefits.
Designing: the design and maintenance of work system that are safe and promote employee health and workplace wellness in order to attract and retain a competent workforce and comply with regulations.
Managing relationship: processes and structures that build cooperative relationship among employees, between employer and trade union.
Managing change: which involve helping others to envision the future, communication this vision, changing mindsets and setting clear expectations for performance.
Evaluating: designing the procedures and processes that measure, evaluate and communicate the value-added of HR practices and the entire HR system to the organization.
EX 11: The 21st century chief human resources officer (CHRO)
A new report from Deloitte Consulting, Strategist& Steward: The evolving role of the Chief Human Resources Officer outlines the challenges, processes and performance measures facing today’s CHRO. According to the report, the modern CHRO is required increasingly to act as both strategist and steward. To quote Deloitte’s media release, they are ‘leaders who not only manage the HR function and operations team, but also collaborate directly with the CEO and board of directors on a range of critical. Deloitte Consulting’s Strategist and Steward report is available at htt://www.deloitte.com/us/strategistandsteward.
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Human resource planning
Human resource planning is the process by which the management of an organization determines its future human resource requirements and how the existing human resources can be effectively utilized to fulfil these requirements. In the process, the management strives to have the appropriate number and the appropriate kind of people at the appropriate place. Human resource planning is one of the HR practices that is a futuristic form of assessment. It tries to assess the human resource requirements in advance keeping the organizational objectives, production schedules, and the fluctuations in the background. The basic purpose of human resource planning is to have an accurate estimate of the number of employees required with the matching skills to meet the organizational goals.
It helps organization to maintain and improve its ability to achieve its goals by developing strategies that will in optimum contribution of human resource.
In order to gain sustainable competitive advantage, Stainer recommends the following nine strategies for human resource planners:
- They should collect, maintain, and interpret relevant information regarding human resources.
- They should report periodically human resource objectives and requirements, existing employees, and allied features of human resource.
- They should develop measures of human resource utilization as components of forecasts of human resource requirements along with independent validation.
- They should employ suitable techniques to effective allocation of work with a view to improving human resource utilization.
- They should conduct research to determine factors hampering the contribution of the individuals and groups to the organization with the view to modifying or removing these handicaps.
- They should develop and employ methods of economic assessment of human resources to reflect its features as income generator and cost and accordingly improve the quality of decisions affecting the human resource.
- They should evaluate the procurement, promotion, and retention of effective human resource.
- They should analyse the dynamic process of recruitment, promotion, and loss to the organization and control these processes with a view to maximizing the individual and group performance without involving high cost.
- They should develop procedures and techniques to determine the requirements of different types of human resource over a period of time from the standpoint organizational goals.
Recruitment and selection:
Recruitment and selection have always been critical processes for organizations. Recruitment and selection are vital stages in the formation with an emphasis on a two way flow communication; employees are attracted to and select an organization and the work on offer as much as employers select employees. Thus, employers need to see the attraction and retention of employees as part of the evolving employment relationship, based on a mutual and reciprocal understanding of expectations, as well as an attempt to predict how a potential employee might behave in the future and make a contribution to the organization requirements. This is very important when the labour market is tight in other words when there is a strong competition. The purpose of selection is to select the most valuable candidate who would meet the requirements of the job. There is a wide variation s in recruitment and selection practices, reflecting an organization’s strategy and its philosophy towards the management of people. Employees seen as part of the primary internal market become the focus for the bundle of human resources practices intended to bring about increased motivation, an increased acceptance of responsibilities, deepened skills and greater commitment, providing the organization with a competitive edge.
- Human resource planning
- Staff needs, option internal/external
- Pool of applicants
- Job performance
The stages of recruitment and selection
EX12: Blind jobseekers brought up speed
Speed recruitment days based on the speed dating format, are being used to boost the number of visually impaired people in work. The charity Blind in Business set up 10 years ago by three blind graduates to make it easier for visually impaired university-leavers to get jobs, believes the events are a way of matching employees and candidates who may otherwise never meet.
Human resource development
Technology, global markets, customer expectations and competition have all contributed to the view that organizations need to achieve high performance working leading generation of high value added products and services for customers, and trust and commitment from enthusiastic employees (International Labour Organization, 2000).Many organization now claim to take a holistic view that embraces the idea of learning individual and organizational levels as a crucial source of competitive advantage.
EX13: Ernst & Young: Building your professional career
At Ernst& Young, you can look forward to enriching your knowledge and experience. Whilst we expect you to take a proactive approach to the management of your career, we also provide considerable support. We provide many opportunities for you to specialize in an industry sector or in particular markets, and, in addition, excellent opportunities exist for our best people to develop experience through international assignments. To provide the in depth learning required to support your development, we offer a comprehensive suite of high quality training courses. Financial times, 24 October 2008 p.16
The ‘flexible firm’ model by Atkinson and Meager, 1985, p.2 which draws into a simple framework the new elements in employers manpower practices, bringing out the relationship between various practices and their appropriateness for different companies and groups of workers. This model identified four types of flexibility:
Functional: a firm’s ability to adjust and deploy the skills of its employees to match the tasks required by its changing workload, production methods and technology.
Numerical: a firm’s ability to adjust the level of labour inputs to meet fluctuations in output.
Distancing strategy: the replacement of internal workers external subcontractors that is, putting some work, such as running the firm’s canteen.
Financial: support for the achievement of flexibility through the pay and reward system.
These flexibilities are achieved through a division of employees into the core workforce and the peripheral workforce. The core group is composed of those workers expected to deliver functional flexibility and includes those with firm specific skills and high discretionary elements in their work. The peripheral group is composed of a number of different workers. One category might be directly employed by the firm to perform work with low discretionary elements. Another might be employed as required on a variety of contracts, and the final category comprises trainees, some of whom may be prepared for eventual transfer to the core group. Functional flexibility could be presented as:
- Job enlargement
- Job enrichment
- Job rotation
Training and development
In the present competitive and dynamic environment, it has become essential for organization to build and sustain competencies that would provide them sustainable competitive advantage. No enterprise can last long in a highly competitive society unless it keeps pace with the emerging market trends and technological changes. The training programme can be defines as a process through which an organization seeks to attain the objectives of performance enhancement by developing the skills of a set of learners or by fulfilling the learning requirements of an identified group of employees. Development on the other hand is holistic, often aiming at overall personality development. The content of a development programme includes conceptual or theoretical inputs, perspective strategic thinking or focusing on behavioural aspects such as leadership skills, managing teams, groups. We may say that training is imparted to operatives, whereas development is a process of grooming mainly used for executives and managers. The benefits for organization are:
- There will be an increase in the intellectual capital of the company
- Training helps in achieving higher standards of quality, building up a satisfactory organizational structure, delegating authority, and motivating employees to perform better.
- Employee turnover and absenteeism are reduced
- Wastage is minimized
- Jon enlargement and job enrichment programmes can be implemented easily
- Making training a continuous affair in the company can strengthen employee loyalty.
EX14: Getting the value from NVQs at the Northern Snooker Centre
The Northern Snooker Centre Ltd is a long established family business in Leeds. With over 33 staffs, the company has developed from having 9 snooker tables to over 27,plus 16 pools tables and three bar and lounge areas that are open 24 hours a day and 365 days a year. The family owners have consistently worked towards developing a customer focused culture and ethos based on staff training and development, teamwork and leadership. The company regards the teams as the whole workforce and has therefore sought to provide learning opportunities for everyone, using NVQs as a key mechanism. June williamson, company secretary. Daily Mail, 06 January 2007 p.12
Performance management and appraisal
Performance appraisal can be described as the process of reviewing employee’s performance, documenting the review, and delivering it to the employee in the form of feedback. The information collected from performance measures is used for compensation packages, employee development, identification of training needs, providing feedback, and development of the employee.
EX 15: RBS examines its people practices.
A project aimed at identifying which people practices drive customer service and business performance has been launched by Royal Bank of Scotland Group (RBS). The initiative, called Service Excellence through People will bring together key data on 4,000 of RBS’s retail bank branches worldwide in a bid to take its leading edge human capital strategy to the next level. RBS has engaged Harvard Business School and its survey consultants to carry out the study. Rima Manocha, People Management, 28 July 200
The human resource of an organization constitutes its entire workforce. Human resource management is responsible for selecting and inducting competent people, training them, facilitating and motivating them to perform at high levels of efficiency, and providing mechanisms to ensure that they maintain affiliation with the company. Change is inevitable in life and in the case of organizations, the general tendency is to complacent with policies and practices that have been successful in the past. Human resource , which has been a staff function, has now assumed a strategic function, as it has to coordinate with other functional areas in forecasting the future and gearing up human resource to meet the future challenges.
Rima Manocha, People Management, 28 July 200
June williamson, company secretary. Daily Mail, 06 January 2007 p.12
Financial times, 24 October 2008 p.16
People management, 15 August 2005
HRM guide, April 2006
De Cieri et al, 2005
HRM guide, October 2004
Virginia Galt, Globe and Mail, 24 June 2002, P.83
CANADIAN HR REPORTER, 17 MARCH 2006
Geoffrey York, Globe and Mail, 9 February 2006, P. A1
(Personnel Today, 19 September 2006).
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