The Invisible Organization: How Informal Networks Can Lead Organizational Change - Assignment Example

? Organization Introduction The psychological contract has a direct effect on happiness (Farmer, 2008). Unhappy employees make unhappy customers. In this regard managing the psychological contract and employee engagement is a strategic process of managing customer happiness. Looking at this reveals that failing to manage the psychological contract and employee engagement has a direct impact on the profitability of the firm. The Samsung HRM strategy The HR strategy will be geared towards achieving high employee commitment management, high performance management, knowledge and talent management, improve learning and development as well as rewarding employees for their contribution to the development to Samsung. By achieving these HR competencies, it will then be easy for Samsung to overcome most of the issues it is having. Talent management Talent management is a central part of any strategic business management (Deb, 2005). Samsung should include this as part of its HR strategy. Talent management will be managed by a process of hunting for talent and nurturing talent as a way to make sure that the firm will have a good pool of talent with regard to all its human resource areas. This will be important especially for the technical departments such as engineering in order to guarantee that Samsung will always be ahead of its competitors in producing the best technologies. It will also be important for the other departments because as Silzer and Dowell (2009) say, a formidable human resource is necessary for an organization to be competent in any industry. Training Training is the base of any human strategy and should be taken seriously if the organization is to be able to manage its employees (Brewster, Mayrhofer and Morley, 2004). It is training and recruitment that offers the organization an opportunity to get the kind of employees that they want. It also helps in training ordinary employees into competent managers and this means that the organization does not have to look outside for managers (Pynes and Lombardi, 2011). Figure 1.1, from: http://www.hrps.org/blogpost/736528/HR-Management-Strategies Samsung needs to look at the various ways in which it can develop its training program in order to get the best employees. Well planned training will help Samsung to have employees who will; Be ethical in their conduct thus avoiding issues such as copyright infringement. One of the issues that Samsung has had in the past is the fact that it has been involved in copyright infringement. This is something that reduced the strategic position of the organization due to the legal issues and the negative publicity which the firm gets from such. As a result, recruitment and training of employees in the firm should be done with this in mind. Issues such as copyright infringement are as a result of inadequate human resource. It is also an indication that the firm is having poor talent and therefore not being able to develop its own portfolio (Nejati et al, 2008). This has also been seen in the fact that Samsung does not have an operating system for most of its products. As a result, this makes Samsung to have a weaker strategic position compared to its major competitor, Apple, that has an own operating system for its product and never has to use third-party products. By training the right people, it will be easier for Samsung to be able to have people who can be innovative and productive enough to deal with these issues. There are other issues which need to be considered with regard to Samsung’s human resource. These include the commitment of the employees. As Kumar (2010) says, it is hard for an organization to be able to have a competent human resource if the employees are not highly committed to the organization. In this case, Samsung will have to focus on increasing the commitment of the employees. This will help the organization to be able to improve its talent management and to make sure that there is enough talent in the organization to offer innovative solution to many of the problems which the firm is currently facing. To increase the commitment of the employees, there are various mechanisms which must be looked at in order to motivate the employees to feel committed to the firm. Samsung will implement the following; Offering ownership; Samsung will encourage the employees to own shares in the firm so that its employees will feel that they are working for their own firm and not for someone else. Samsung will offer incentives such as doubling the shares of an individual when they buy. For instance, Samsung should come up with a policy which will guarantee that if an employee buys shares in the firm, the organization will increase the shares by twenty percent without any added cost to the employees. This can also be integrated with the reward system where outstanding employees will be offered ownership in the firm. This will encourage innovation as well as commitment by the employees to the firm (Truss, et al 2013). Autonomy Samsung wills also seek to give the employees as much autonomy as can be afforded by the firm. Human resource experts argue, and have been proven right, that giving the employees autonomy is an important way to not only motivate the employees, but to also increase their creativity (Pinkm, 2011). When employees are given autonomy, they are able to be more creative, more innovative and more committed to the firm. By adopting this strategy, it will be easier for Samsung to have a labor force that will help in eliminating all challenges that the firm is facing in the current time. As a result, this is an opportunity for Samsung to push forward its strategic edge and be able to compete properly with its competitors. The reward system In any organization, a reward system is one of the basic HR strategies which are used to motivate employees to be more productive and more innovative. However, as Armstrong and Brown (2006) say, the management of a reward system is a complicated issue and can cause a lot of issues if not well managed. By implementing this reward system, it is always wise to make sure that when one employee is rewarded, this will not affect the other employees in a negative way by feeling left out. In this regard, Samsung will have a reward system that is mostly run by the employees themselves so that the rewards will be given to those who the employees feel that deserve the rewards. This will help Samsung to have a reward system that works without having to sacrifice teamwork. Reward systems can cripple team work in cases where the individual employees start competing with each other in an incompetent way and in a way that discourages teamwork (Secord, 2003). Relevance of the strategy Looking at Samsung reveals a number of issues which can be solved by having a better managed workforce. As a result, a good strategy will ensure that the firm is able to take care of these issues. One of the issues which the firm is looking to solve is the issue of infringement of copyright. This is one issue which can easily be solved by having a well managed human resource. The human resource strategy as stated above is geared to not only increase productivity and commitment, but to also create a workforce that understand the need for ethical standards of work. By having a workforce that is well managed, it will be possible to achieve the following for Samsung; Protect its copyrights Ethical and committed employees are not likely to infringe the copyrights of the firm (Nejati, 2008). The technology industry is a very sensitive industry and leaking of copyright materials can be very dangerous for the firm. By creating a strategy that will address this issue, it will be easier for the firm to be able to protect its self from these kinds of negative scenarios. Avoid law cases with other firms cause by copyright infringements One of the main issues with technology firms have been the battles for copyright. A firm found infringing on other firm’s copyrights may have very strong punitive measures placed against it, such as being forbidden to do business in certain areas. In this regard, any firm must be able to protect itself from employees who may do this kind of a thing. If an employee infringes other firm’s copyrights, the firm will be the one to suffer the most because the firm will be the one that will be sued and not the employee. In this regard, it is necessary for a firm to be able to have faithful employees who will not involve themselves in this unsuitable behavior. Technology growth match Technology grows very fast and this means that any firm in the technology business must be able to match the technology growth rate in order not be thrown out of the market by competitors. In this regard, the above human resource strategy will be important in making sure that the employees are committed, innovative and productive enough to develop creative solutions at a pace which will match industry growth. This will help Samsung to not only solve the issues it has, but to also be able to meet its strategy of making people’s lives better. By having a motivated workforce, it will be possible for the firm to be able to develop creative products which will help the firm to live up to its mission of making lives better. By having a HR strategy which will help the firm to be able grow as fast as the industry is growing. This will help Samsung to continue to be a leader in the industry. Question 2 Part A Employee engagement and psychological contract The idea of the psychological contract between an employee and an employer is one that has been there for a long time and was first introduction in the 1960s. However, this concept has become more important to businesses in the modern world as competition between businesses have intensified. As the business environment has become more competitive, requiring businesses to be more innovative and creative in the way they deliver products to the market, it has become necessary for these businesses to have highly competent employees (Deb, 2005). The psychological contract is hard to define due to the fact that is it more implicit than explicit and more fluid than rigid, not taking one shape at any one time. In a nutshell though, the psychological contract can be said to be the implicit part of the employee contract that fills up what the formal employee contract does not provide. The psychological contract is not the opposite of the formal or legal contract but it is actually a complement of the legal contract. The legal contract is rigid, formal and in most cases inadequate (Secord, 2003). The psychological contract comes in to fill up this gap by making sure that the tit bits of employer-employee relations are well taken care of. The psychological contract is the implicit understanding between the employer and the employee with regard to what their obligations towards each other are. From the employee’s point of view, the psychological contract is the employee’s assumptions as to what his or her obligations are to the employer and what he or she should expect from the employer in return (besides what is defined by the legal contract). Employees feel that they may owe to the employer more than the legal contract requires them, but hat in return, they may expect from the employer more than the legal contract obliges the employer. This scenario can be best understood by the iceberg psychological contract model which shows the legal contract as only a tip of the iceberg of the relationship between the employer and the employee. Fig 2.0 the iceberg model of the psychological contract between an employee and he employer. Curtsey of: http://www.businessballs.com/psychological-contracts-theory.htm#psychological-contracts-diagrams In the above diagram, it is clear that most of the important contributions which the employee brings to the workplace are actually not captured by the legal contract. This can be seen below the water level and only the issues captured by the legal contract are above the water level. These are the most useful contributions of the employee and any organisation needs to gain these from the employees in order to be successful in the market place. What is of importance here is the fact that the amount of these contribution that the employee will give to the organisation will depend on the amount of the contributions of the employer for the factors which are within the same category. For instance, if the employer offer most of these factors such as ownership, security, autonomy, etc, the employee is likely to offer more of them such as loyalty, commitment, innovation, sacrifice/tolerance, mobility etc. This is why the psychological contract is very important to the organisation. Managing the psychological contract therefore involves creating a workplace environment that encourages the employee to feel that they owe the employee these factors such as loyalty, commitment, autonomy, innovation, sacrifice/tolerance, mobility etc. If the employee fails to feel that he owes the employer these things, the employees will offer the minimum and the organization will lack committed, innovative and creative employees. A firm like Samsung requires a highly committed and highly innovative workforce in order to be competent in the market. If the social contract between Samsung and its employees is very low and the employees do not feel obligated to give their loyalty, commitment, autonomy, innovation, sacrifice/tolerance, mobility etc. to the employer, Samsung will not be able to have innovations, will have a high level of employee turnover and will definitely have lost its strategic edge. Looking at the model reveals why it is necessary for an organisation like Samsung to have a good psychological contract management. The firm must be able to have a deep analysis of the things which will help in motivating the employees to feels that they have an obligation to offer their loyalty and innovation to the firm (Deb, 2005). This will help in dealing with the many issues that an organisation may have. For instance, in the case for Samsung this might help them overcome some issues such as the copyright issues and also help the organisation to deal the rapid growth of technology. The importance of the psychological contract over the formal contract is that it meets the needs of the market directly. Employees in an organisation have a direct relationship with the market in that they are the ones who deliver the product the market will use (Farmer, 2008). The legal contract between the employees and the employer of an organisation may not fully cover this area. In often cases, organisations which are able to serve the customers in a good and efficiently way by providing the best products are those with employees who go beyond the extra mile (psychological contract) to deliver these products (Cook, 2008). This is more so for a technology firm like Samsung because such a firm has to continually innovate new products in order to remain in the market. The psychological contract closes the gap between the formal contract and the implicit needs of the market. This can be best understood by the following Venn diagram for the psychological contract. Fig 2.1 Venn diagram indicating the fit between the employer, the market and the employees. Courtesy of: http://www.businessballs.com/psychological-contracts-theory.htm#psychological-contracts-diagrams In the above diagram, it is clear how the psychological contract can help in meeting the market needs. A firm that is not able to manage this psychological contract would have many issues as the formal contract would not be enough to deliver the kind of results required in order to deliver the best products to the market. Employee engagement Employee engagement is similar to psychological contract but differs in a way from the latter. Employee engagement can be seen as the cause of the psychological contract. The more the employees are engaged with the firm, the more they are likely to have a psychological contract which will benefit the firm. Employees’ engagement can be seen as a way for employers to be able to create a useful psychological contract between themselves and the employees (Wellin, 2012). If an organisation wants to have a beneficial psychological contract with their employees, they cannot just offer some benefits which they feel that will make the employees happy and expect that the employees will automatically reciprocate. In fact, it is possible for an organisation to spend so much money in trying to provide the incentives which will create a favourable psychological contract but only end up with a work force that is not motivated to be creative, innovative, loyal etc. In this regard, it is necessary for an organisation to be able to create an environment which engages the employees in order to make them feel happy and content with their work. Engaging the employees therefore goes beyond giving the incentives such as benefits, safety and promotion. It is a matter of mutual respect and making the employees feeling valued. In fact, it is possible for an organisation to be unable to offer these incentives to the employees but still have a committed and engaged workforce. This especially happens with new firms where the employees feel that they have power and that they are important to the organisation. In established organisations however, this is harder to achieve because the bureaucratic structures of an organisation such as Samsung make the employees feel less useful and less powerful. In this regard, an organisation like Samsung must be able to address this issue in order to make sure that the structure and size of the organisation is not a barrier to encouraging employee engagement and creating a favourable psychological contract. Part B Managing the psychological contract can be a hard thing for any organisation due to the fact that the psychological contract is implicit and does not have specifics which can be discussed. Issues may arise in cases where the employee’s implicit expectations are not met by the employer who may not be aware of the expectations. This kind of a scenario can lead to a disengaged workforce and to a low or unfavourable psychological contract on the side of the employee. The issue therefore becomes answering the question of how an organisation can manage the psychological contract and employee engagement. In such a situation, any organisation would be better off if it starts from the known aspects of human resource management then finishing with the unknown. The Maslow’s model The Maslow’s model of human needs is the best place to start as to provide insights as to what motivates people, not only in the workplace but generally in life. By understanding what motivates people, it is possible to understand what these people may be expecting from their work, and how to meet these expectations. According to Maslow, human needs take a hierarchical structure, with each level of needs giving way for the next once it is met. This can be used to understand the needs and expectations of each employee in the firm depending on their profile. Fig 2.2 Maslow’s model of hierarchical needs. Courtesy of; http://dinamehta.com/blog/2010/01/12/twitter-maslows-hierarchy-of-needs-nay-hierarchy-of-tweets/ The Maslow’s theory of human needs indicates that different people will have different needs at any one given time. Maslow also postulated that the needs that a certain person has at a specific time is what motivates the person to do various things such as working. For instance, an engineer who has been in a firm for a long time may be more interested in a promotion than a pay rise. Understanding these human needs will help in anticipating the needs of the employees and also being able to deal with them. Having an open line of communication As has already been indicated, the worst thing that can happen is when there is a miscommunication between the employee and the employer with regard to their expectations of each other. If the employer fail to understand what the employee expects from the social contract, it will be hard for the employer to play his part of the bargain. This sill lead to the employees feeling betrayed and thus disengaged. This kind of a situation can be avoided by having a well designed communication channel in order to make sure that there are no misunderstandings (Barrow and Mosley, 2011). Although the formal contract is different from the psychological contract, it is also necessary to have a well laid formal contract in order to avoid unnecessary misunderstandings. Maintaining an open communication line which will help the employees to air their grievances without fear of victimisation is one way to avoid these misunderstandings (Albrecht, 2010). Conclusion Human resource management is becoming a major part of business management. In this regard, HRM strategy is therefore a major part of business strategy. It is therefore necessary for any firm to have a food HRM strategy. A good HRM strategy will be geared towards managing the psychological contract and employee engagement. The psychological contract, when breached leads to unhappy employees and this can contaminate the whole workforce. The important thing for any firm to understand is that the psychological contract is not explicit but is made of assumptions. Sometimes the employees may have assumptions which the firm may not be aware of and when the expectations arising from these assumptions are not satisfied, the employees may feel that he has been betrayed. This can lead to a feeling of unhappiness and negativity that can affect not only the employee but the rest of the workforce. In this regard, it is absolutely necessary for an organisation to clearly understand its employees in order to make sure that any expectations within the workforce are addressed in the right way. Reference List: Albrecht, S. (2010). Handbook of Employee Engagement: Perspectives, Issues, Research and Practice. New York, NY: Edward Elgar Publishing. Armstrong, M. et al. (2006). Strategic Reward: Making it Happen. London, UK: Kogan Page Publishers. Barrow, S. and Mosley, M. (2011). The Employer Brand: Bringing the Best of Brand Management to People at Work. Hoboken, NJ: John Wiley & Sons. Brewster, C. M. (2004). Human Resource Management in Europe: Evidence of Convergence? London, UK: Routledge. Cook, S. (2008). The Essential Guide to Employee Engagement: Better Business Performance Through Staff Satisfaction. London, UK: Kogan Page Publishers. Deb, T. (2005). 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