Strategic HRM: The Key to Improved Business Performance - Essay Example

? Topic: Lecturer: Presentation: Introduction Due to globalization and ever changing business environment, organizations need to effectively manage its important asset which is the employees in order to remain competitive. Effective human resource management is the key to unlocking business potential. Organizations need to align business strategies with HR strategies if they have to be successful. HR managers work is therefore to ensure the organization recruits and selects the employees needed, training and development, performance appraisal, motivation and reward management, team building and ensuring stable employee relations (Armstrong & Baron, 2002). This ensures commitment of the staff in achieving company objectives leading to improved performance and productivity and consequently profitability and competitive advantage for the firm. Banco is a medium sized bank with over 300 branches and operates 24hours, seven days thus making its HR function complex. It faces stiff competition from other companies and needs to fulfil the needs of increasing customers prompted by rapid development in service industry of two nearby towns. Being located in an area of low unemployment, Banco needs to formulate policies and strategies that ensure employee retention. Banco policies are formulated at the head office and imposed on the branches despite the difference that exist in different localities and therefore do not consider diversity and cultural issues when making decisions. The management is bureaucratic in nature as no communication channels are available for the staff to communicate with senior administration except through union representatives. The company has training and development policy whereby responsibility is put on team leaders. The recruitment policy entails external recruitment by agencies and at the headquarters. Team work is encouraged and performance is measured through set targets which are supposed to be accomplished individually and through team work. The overall goal of the organization is to ensure quality services so as to retain customers and remain competitive in the service industry. Despite all these measures, its HR policies and procedures is not effective leading to labour turnover, absenteeism and declining profitability. The paper will discuss the various HR issues in the bank and appropriate recommendations to ensure the bank achieves its goals. Human Resource Issues and Recommendations Management One of the problems facing Banco is the manner in which it is managed. It is evident that all policies and procedures are formulated at a headquarters and implemented on other branches. The strategies may be applicable in one branch but not the others due to cultural diversity. For example the rewards given to motivate workers are viewed differently by different individuals and cultures; some appreciate monetary rewards while others may appreciate non monetary rewards such as promotion so as to climb the social class. The local managers are not involved in formulating the policies and therefore they are not committed to implement the same in order to achieve results. The management team is also inexperienced and therefore cannot handle employees at the call centre if they themselves are not confident. The management also does not communicate directly with the staff but does so through the trade union and therefore may not realise the problems the employees are facing and handle them in order to gain loyalty and commitment. Banco can change its management techniques in order to achieve its objectives. It should appreciate diversity at workplace and hence involve local branch managers in formulating policies and give them autonomy to formulate some policies at branch level in accordance with local needs. This is important in getting the local managers to feel they own the decisions thus are committed to achieving the company objectives. The managers also have knowledge of the area in which the call centres are located and are close to the customers and employees thus are the best suited to take care of their needs adequately. By doing so, the company will be able to retain the customers and get commitment from employees hence improved performance and productivity as well as gain competitive advantage. Leaders act as role models to the workers and are supposed to give directions (Koster, 2002). Inexperienced leaders do not have the courage to head the workers as they fear the workers are more knowledgeable, the management should thus put qualified leaders in management positions so as to be confident while giving directions to workers and gain their acceptance and commitment. Communication is very important in an organization. Bureaucratic controls act as barrier to communication; in this respect Banco should adopt a bottom up approach system of management. Through communication, employees are able to know the direction the company is heading can air their views and contribute in decision making since they are the closest to the customers and are well aware of their needs. The workers will gain commitment and loyalty since their views are appreciated hence work towards achieving organization objectives (Bach, 2005). Recruitment and Selection Recruiting and selecting the right staff for the right jobs is key to organization success (Koster, 2002). The recruitment process is about filling vacant positions by attracting potential candidates while selection involves putting candidates on right job or matching individuals with job requirements. Most organizations have a recruitment policy and Banco utilizes external recruitment for its staff. The permanent employees are centrally recruited while part-time employees are recruited by agencies. However, the organization culture does not allow individuals to innovate and use their abilities to achieve results but they are programmed to conform to the norms. Armstrong and Baron (2002) argue that the HR managers’ role is to create an enabling environment for workers to make best use of their capacities and realise their potentials for the benefit of the organization and themselves. Failure by the Banco management to allow employees to realise and utilize their potentials makes them frustrated and as a result they quit the job or lose motivation to perform their tasks that is one of the reasons for declining productivity hence profitability, labour turnover and absenteeism. The company also aims at reducing its overhead costs but it may unnecessarily incur huge costs in engaging the services of agencies to recruit temporary staff. Part-time staffs often work for short time hence frequent replacements are needed and it may be costly to hire agencies to fill these gaps. I would recommend for the bank to centralize its recruitment and selection. This enables the banks HR experts to handle the recruitment process and get the right people. It also reduces costs as all advertisements and recruitment costs are easily monitored in a central place (Aswathappa, 2005). Potential candidates are also aware of where to get information on available jobs and present their resumes. Although external recruitment brings in new blood in the organization with new ideas, I would recommend internal recruitment since the company needs employees who can conform to organization culture. It can promote the existing employees, transfer employees across the branches, or use referrals by existing employees. Promotion of employees creates room for staff progression which is absent in Banco and makes the employees to be motivated and committed to their work hence better performance. After recruitment and selection, the management should allow the employees to use their knowledge in enhancing business performance and create an enabling environment for innovation so as to achieve a competitive advantage over other firms and quality services by employees hence customer retention. Employees also get job satisfaction hence reduced absenteeism and turnover. Training and Development Most organizations have a training and development department to ensure workers keep up with changing environment or technological advancements. Banco uses team leaders to identify training needs of employees and offer the required training. However, the team leaders have strict targets to achieve and are work loaded hence do not have time to identify training needs. They also have limited time to train or induct the new recruits thus making them to handle the most basic calls and it may take time for them to learn. The workers have high targets set for them hence there is no room for learning new things or to handle different tasks as they have to achieve the set targets and this limits skill advancement. Banco should establish a training department and reduce workload for team leaders so that they can monitor and evaluate training needs for the staff. Team work is also essential in promoting training as workers learn from their colleagues how to perform different tasks. Allowing the group members to socialize at the workplace not only outside the workplace can enhance learning in the organization (Armstrong, 2000). Since performance is based on individual targets, workers may not have time to teach fellow workers and this may hinder skill development. The company should therefore give reasonable targets to the team and encourage performance as a team so that team members can have the motivation to teach others in order to get desired results. The company can also organise seminars and workshops for workers to learn more. Mentoring is also essential and coaching by experienced personnel. Team leaders do not have time to coach workers hence coaches should be chosen to teach especially the new staff new skills. Organizational learning is very important in enhancing skill and career development leading to job enrichment and satisfaction and consequently productivity and competitive advantage. Banco should thus convert into a learning organization to achieve better results. Team Work Banco encourages the formation of teams of 15 workers headed by team leader answerable to the customer services manager. However, the team leaders were supposed to form the teams immediately and therefore no time to evaluate the team members and recruit members with skills required to perform required tasks. The teams had no specific objectives to accomplish and hence difficult to choose members with right skills. The target for individuals and the team as a whole is already set, monitored and displayed on daily basis. According to Armstrong (2000), the managers and teams are jointly responsible for achieving results and in determining what needs to be done, how to do it, and in taking action. In this case, I would recommend Banco management to allow the team members to set their own goals in line with the overall organizational objectives and determine how to achieve them. All team members should contribute in making decisions so that the goals sets are acceptable by all. By doing this, the members will own the decisions and hence consensus and commitment to achieving them rather than trying to achieve already set goals which may be overstated. The team should also comprise of individuals with different skills so that members can learn from each other. Instead of using team leaders to train them they can learn through observation and shared experiences. The team should be selected first and then a team member chosen as the leader to allow an open process instead of choosing a leader to select team members, he/she may not know their capabilities but the HR department knows employee capabilities hence best suited to select team members. By allowing group members to select their leader, they will have trust in him/her and this can reduce conflicts within the group. The management should also encourage team building activities and events to give them extra social time with each other through open communication (Armstrong, 2000). This will allow members to understand each other and work towards achieving common goals. Team efforts should be rewarded if the team performs well. Reward Management Good performance is rewarded so as to encourage continuous performance. Offering salary scales consistent with job being performed may boost employee morale. Banco bank offers wages which are lower than what is offered in the job market but offers more fringe benefits based on lifetime employment It also has very few incentives for the staff to encourage performance. Trade unions are essential in negotiating proper working conditions such as wages and working hours for employees but the bank call centre employees are not well represented by the union mostly because most of them are part-time workers. The bank has no proper planning of tasks hence ends up giving a lot of unnecessary overtime and shift allowances. Heineman (2002) recognizes the fact that pay is the main reason why people work and employees should be rewarded according to their value to the organization. T o motivate, retain and gain commitment of the workforce, Banco should offer good remuneration to employees and especially offer wages relevant in the labour market. If workers get lower wages than their fellow counterparts in other organizations while performing similar tasks, the workers have no otherwise than to quit and look for employment where wages are attractive. The reward strategy should be in line with business strategy so that the desired results can be achieved (Bratton & Gold, 1999). Attractive wages also helps in attracting potential candidates for jobs hence the company can recruit skilled people and be able to retain them. Besides offering fringe benefits, the organization can offer rewards such as recognition of workers performance through promotion to encourage more workers to follow suit. A clear strategy should be put in place as to how rewards are given for equality and fairness. Most workers are temporary and fringe benefits based on lifetime employment are unfair so all employees should be entitled to some fringe benefits. This will boost the morale of the employees hence improved performance. The management should also organize work effectively and address staffing needs to avoid extra costs and low productivity due to tiredness related with overtime. Workers should have clearly defined hours of work and do overtime if it is necessary to reduce absenteeism and increase productivity. The organization can also introduce performance related rewards such as bonus to encourage performance. Motivation It is evident that there are no motivators in Banco establishment. This has resulted in declining profits, labour turnover and increased absenteeism. The wages paid are below those of labour market, there is no clear progression for staff, the staffs are overworked and there is little or no career development through training. Banco can make workers motivated through various means. Abraham Maslow identified a hierarchy of needs that act as motivators for people. Some people strive for basic needs, sense of belonging, recognition and self actualization. Banco can motivate people by recognizing their needs and fulfilling them. It should give workers recognition where deserved, pay them well and ensure job security so that they can be motivated hence commitment and improved performance. It can also make the work interesting by delegating authority, job enrichment and promotion (Tutor2u, 2011). Providing staff with incentives and ensuring employee growth and development can also go a long way in boosting staff morale hence improved quality and performance. Conclusion Banco is faced with a lot of HR problems which hinder productivity and business success. It does not address diversity issues, inexperienced management, and recruitment and selection process not efficient and there are no motivators to boost staff morale among others. Banco needs to utilize strategic human resource management in order to address the issues and achieve business success. Improved communication between staffs and administration is essential in accomplishing organization objectives. Effective work teams can also ensure success and the organization should also ensure good working environment. References Armstrong, Michael (2000) Strategic Human Resource Management: A Guide to Action. 2ed. London: Kogan Page Ltd. Armstrong, M., Baron, A. (2002) Strategic HRM: The Key to Improved Business Performance. London: CIPD. Aswathappa, K. (2005). Human Resource and Personnel Management. 4ed. New Delhi: Tata McGraw-Hill. Bach, Stephen. (2005). Managing human resources: personnel management in transition. 4ed. Oxford: Blackwell. Bratton, J., Gold, J (1999) Human Resource Management: Theory and Practice. 2ed. London: Macmillan Press. Heineman, Robert (2002) Strategic Reward Management: Design, Implementation, and Evaluation. Information Age Publishing. Koster, Marco. (2002). Human Resource Management versus Personnel Management. Germany: Grin Verlag Tutor2u. (2011) “Motivational Theories”. http://www.tutor2u.net/business/gcse/people-motivation-theories.htm Read More