Soft and Hard Forms of Human Resource Management - Term Paper Example

Critical Assessment: Hard and Soft HRM Practices Contents Contents 2 3 Introduction 3 Discussion 4 Employer Attitude 4 Value of Employees in Organization 5 Organizational Communications 5 Empowerment and Delegation 6 Method of Payment 7 Performance Appraisal 7 Organizational Structure 8 Leadership Style 8 Conclusion 8 9 Reference List 10 Abstract Soft and Hard forms of Human Resource Management (HRM) was first identified and distinguished by eminent organizational theorist John Storey in 1898. The study of both the practices of human resource management system has resulted in a discrepancy between the two beliefs. Analysis of the key attributes of HRM such as employee- employer relationship, flow of communication, power practices, wage system and performance evaluation have shown marked differences in organizational cultures. Where hard human resource system incorporates an authoritative and bureaucratic organizational system, the soft human resource system is adopted in a more participative and consultative organizational structure. Hence, all aspects of human resource tend to yield divergent approach. The paper will reveal such divergence in a detailed manner. Introduction Human resource is considered to be one of the most important assets for an organization and hence human resource management is a crucial aspect for all organizations operating in the competitive business framework. The function of human resource management is designed in such a way that it leads to maximize the performance of employees and concentrates on minimizing the issues arises out of organizational context regarding decision making, performance appraisal and reward system, communications, wage rate and many more. In 1989, John Storey had identified two distinct forms of human resource management such that Hard and Soft HRM. Hard HRM may be defined as an employee management system that considers workers as a resource that requires be controlling and closely supervising in order to maximise employee performance, ascertain profitability and achieve competitive advantage. In contrast, Storey defined soft human resource management as a system that considers human resource as an important factor for achieving organizational effectiveness and hence strives for skill enrichment of existing employees (Storey, 2007). In this paper, the dissimilation between hard and soft HRM will be critically analysed on the basis of employer attitude towards the workers, value of the employees in the organization, level of communication, extent of delegation of authorities and decision making power, transparency in payment and performance appraisal system and above all, organizational structure and leadership style. Discussion Though there is no single connotation regarding the appropriateness of hard or soft HRM in an organizational framework, comparative analysis can be drawn for each attributes of human resource management in order to ascertain contribution of these systems towards organizational efficiency and profitability. Employer Attitude In Hard human resource management employers pose an authoritative attitude towards their workers. This human resource management system leads to establish a task oriented organization principles. Employers assign task to the employees and the workers are regarded as a means of accomplishing the task assigned to them. Decision making is always directed from the management side and there exists a downward flow of organizational decision from employers towards workers. Hence, such decisions tend to be biased and highly reflect management insight towards the concern. In this hard HRM, the employers consider the employees to be inherently indolent and they have the tendency to avoid the assigned responsibility whenever possible. Hence, the employers tend to impose close supervision on employees in order to ensure that the assigned job is successfully completed within the stipulated time. Employers also believe that the employee-employer relation is based on the ground of monetary gain of the involved parties and hence, they drive to exploit employees to the fullest in order to capitalize of each penny paid to the workers. Storey has shown that the employer attitude in soft HRM is completely different than that of the hard HRM. In this human resource system, importance of human resource in organizational productivity is acknowledged by the employers and they tend to establish a sound employee-employer relationship. Soft HRM allows workers participation in decision making. In order to enhance the performance of workers, the employers tend to motivate the workers on continuous basis through effective communication between employer and employees. In this system, the employers’ attitude reflects true qualities of leadership; they try to incorporate organizational objectives among the employees and stimulate employees in such a way that the workers themselves strive to accomplish the assigned task in order to ensure organizational effectiveness Employer attitude is comparatively lenient in the computer consulting company IBM indicating a soft HR practices rather than that of Gulf companies which incorporates hard HRM (Jenkinsa and Delbridgea, 2013). Value of Employees in Organization Perceived value of an organization indicates the nature of business practices in various phases of organizational activities. In hard HRM, the employees are considered to be another resource used for production and distribution, similar to land or capital. Employees are often coerced for enhancing their performance rather than motivating them. Incidents of workers’ participation in decision making are almost negligible in this type of human resource management; such episode is experienced only when emergency situation arises. The employees are only treated in a better manner when the employers notice a shortage in labour supply. Hard HRM limits the flow of information from employers to employees. As a result of such restrictions in the flow of communication, uncertainty prevails among workers’ mind regarding management’s movement in upcoming future which in turn tends to create dissatisfaction and conflicts, resulting in an increasing rate of employee turnover. Hence, value of employees in hard HRM is not at all established in organization. The soft HRM depicts a completely different organizational structure in which employees are regarded as the most important asset of the organization. The employees receive a much more compassionate behaviour from the management. As the management recognises employees to be the major source to gain competitive advantage, employers take initiative to provide timely training and development programs and facilitate employees to acquire relevant and upgraded skills for their personal development and advancement of the organizational operations as well. Soft HRM tends to establish a long term relationship between employer and employees. Leading UK supermarket chain of Tesco Plc treats its employees as valuable asset and provides them a number of tangible and intangible benefits from time to time (Armstrong and Taylor, 2014). Organizational Communications Steady flow of communication is most important for long term sustainability of an organization. However, the hard human resource management system institutes least possible communication between employers and employees. Such minimal communication follows top down approach in terms of employer assigning work and declaring changes in policy regulations to the workers. No communication has been initiated from workers towards management or employer. The system creates considerable perplexity among workers’ mind as they are not in a position to commune their problems that they experience in regular course of action. Such bewilderment results in frustration over a period of time and leads to create employee-employer contradiction which in turn hinders organizational productivity. A company with bureaucratic structure such as Bank of China limits communication and sharing of information with the employees which indicates hard HR practices. Soft HRM incorporates strong and continuous flow of communication. The management always encourages the employees to put forward their innovative ideas while decision making and the employees are always welcome to share their troubles related to organizational culture, production process, monetary problems as well as problems at personal levels. Employers also keep the workers enlighten regarding management’s decision to initiate organizational changes which is often required to sustain in ever changing complex business world. Effective communication builds a trust factor among workers towards their employer and this tends to minimize the occurrences of resistance to change, organizational conflict and employee turnover. Free flow of communication is encouraged in most of the global companies such as Amazon.com (Miller, 2014). Empowerment and Delegation Comparison and contrast can be brought in terms of empowerment and delegation of authority between hard and soft HRM. In hard HRM the all the power and authority is delegated towards the management and the management possess the right to influence organizational activity to a full extent. The employees hold almost negligible command in any context of the organization. The employer tends to impose the decision made by them without consulting or taking into account the interests of the workers and the workers have no other option than following the regulatory changes enforced by employer. The management is actively involved in task allocation and close supervision is exercised by the employer making the work environment suffocating for employees. Soft HRM incorporates a more consultative and participative management style where authority is delegated towards the employees and employee participation in decision making is highly encouraged. The employers in Soft HRM also invite innovative ideas from the workers. They believe that as the workers are associated with grass root level of the production and distribution process, they are in a better position to indentify the gap or difficulty in the business process. Hence, consultation with workers before taking a major decision is of utmost importance in Soft HRM. Delegation of responsibility improves accountability of workers. Delegation of authority is most prominent in Tesco Plc where soft HRM is practiced by delegating supply of stock related decision making responsibilities towards respective Store Managers (Truss, Gratton, Hailey, McGovern and Stiles, 2007). Method of Payment In terms of wage payment, in most of the cases hard HRM provides the workers with a minimum wage which is not even sufficient for their subsistence. As the employer recognizes his workers as a medium of production, the tendency of the management is to exploit them as much as possible and stretch their productivity to the maximum limit. When the wage rate is determined by piece rate system or time rate system, the workers also tends to maximise their wage by producing as much as possible in long working hours. However, with the legalization of minimum wage rate system under labour law, the condition of workers has comparatively improved. For example, factories in ITC Limited often experiences issues with industrial relations because of having hard human resource practices. In soft human resource management, the management incorporates a competitive payment structure to control lateral shift of workers within the industry. As the organization’s profitability is considered to be the result of employee contribution, profit sharing is also exercised in terms of bonus and other tangible benefits to secure financial interests of employees. Unlike the hard HRM system, well established payment structure restricts attrition rate (Basu, Sahu and Rajiv, 2012). Performance Appraisal Performance appraisal is an important criterion in human resource management in order to ensure constant motivation of employees for enhancing their productivity. However, in hard human resource management system no adoption of structured performance appraisal system has been noticed. Performance of employees is not even recorded in a proper order in most of the organization involved in hard HRM. Judgement is done based on personal assessment and hence, such appraisal yields extremely biased results for employees resulting in high level of dissatisfaction and de-motivation among them. The performance appraisal system of The Coca Cola Company indicates exercise of hard HRM as for employees below a certain grade in organizational hierarchy, it uses a non-standard method. In contrast, appraisal system in soft HRM follows the structured arrangements suggested by experts such as 360 degree appraisal system. Accordingly well performed employees are rewarded and promoted to the higher level. Such appraisal system also indentifies the training and development need of the employees who could not perform well in the last quarter. Most of the global companies such as HSBC Bank, Cognizant, Unilever etc. comply with soft HM practices in terms of method of wage payment and performance appraisal. Organizational Structure Hard human resource management system is experienced in bureaucratic and autocratic organizational structures whereas exercise of power is widely practiced whereas organizations with functional or divisional structures incorporate soft human resource management (Kortmann, 2012). Leadership Style The leadership style of an organization indicates the direction in which the organization is expected to progress in future. The hard human resource management is reflected in dictatorial leadership style in which all the decisions are directed from the leaders and employees are designated to follow such decisions. Leadership in Hard HRM is characterised by unrealistic demands and excessive disciplinary actions resulting in dissatisfaction and broken confidence among workers. Leadership style in soft HRM reveals a participative leadership style in which employer puts emphasis on problem solving, team building and skill enhancement of employees (Iqbal, 2011). Conclusion Critical analysis of hard and soft human resource management has revealed that hard organization indicates strong control of power and authority whereas soft HRM establishes relatively participative aspect. Though both the approaches signify more of a theoretical approach, in this era of modernization, application of soft HRM is justified. Reference List Armstrong, M. and Taylor, S., 2014. Armstrongs Handbook of Human Resource Management Practice. London: Kogan Page Publishers. Basu, S. K., Sahu, K. C. and Rajiv, B., 2012. Industrial Organization and Management. New Dlhi: PHI Learning Pvt. Ltd. Iqbal, T., 2011. The Impact of Leadership Styles on Organizational Effectiveness. Munchen: GRIN Verlag. Jenkinsa, S. and Delbridgea, R., 2013. Context matters: examining ‘soft’ and ‘hard’ approaches to employee engagement in two workplaces. The International Journal of Human Resource Management, 24(14), pp. 2670-269. Kortmann, S., 2012. The Relationship between Organizational Structure and Organizational Ambidexterity: A Comparison between Manufacturing and Service Firms. Berlin: Springer Science & Business Media. Miller, K., 2014. Organizational Communication: Approaches and Processes. Boston: Cengage Learning. Storey, J., 2007. Human Resource Management: A Critical Text. London: Routledge. Truss, C., Gratton, L., Hailey, V. H., McGovern, P. and Stiles, P., 2007. Soft and Hard Models of Human Resource Management: A Reappraisal. Journal of Management Studies, 34(1), pp. 53-73. Read More