Evaluating Human Resource Management - Case Study Example

Evaluating Human Resource Management In the 1980’s and 1990’s the HRM agenda, with its intentionally aspirational message, was an enticing and optimistic prospect to managers faced with a rapidly changing competitive environment Table of Contents I. Introduction 3 II. Human Resources Management – historical perspectives, 4 description and prospects for the future – analysis of the HRM trends of the 1980’s and 1990’s period III. Particular forms of human resources management – 6 Traditional HRM (U.S, Britain) and alternative forms of HRM (Japan) IV. Effectiveness of human resources management – 9 personnel management V. Conclusion 11 References Appendix I. Introduction Human resources management which was created in order to serve specific needs of employees around the world has achieved a significant development the last decade. In fact, it has been noticed by Korman et al. (1999, p.3) that “the world of work in which human resource management (HRM) operates has changed dramatically in the last half century”. The above changes have been ‘imposed’ mainly by the cultural differences that characterize not only each population around the world but also each particular workplace even within the same geographical area. For this reason Soutar et al. (1999, p.203) stated that “culture is an important idea as it deals with the way people live and approach problem solving in a social and organizational context”. Moreover, Schuler et al. (1998, p.159) noticed that the differentiation of human resources management in each particular workplace should be based on the following criteria: “a) the business structure, b) the legislative and employment relationship context, c) the patterns of HRM competence and decision-making and d) the national culture”. An issue that should be made clear is the fact that human resources management tends to present different forms in accordance with the standards of the environment in which it is applied. For this reason a general description of its content could be helpful towards its analytical examination. Indicatively, Sims (2002, p.3) after studying the phenomenon of development of human resources management in enterprises and governmental organizations around the world came to the conclusion that “human resources involve HRM programs aimed at developing HRM strategies for the total organization with an eye toward clarifying an organization’s current and potential problems and developing solutions for them; they are oriented toward action, the individual, the global marketplace, and the future”. One of the major characteristic of the above development has been the existence of significant differences among human resources strategies applied in the countries that have different cultural traditions or financial status. In this way it has been found that there are many differences between the HR management applied in US or UK and the one applied in Japan. Regarding this issue Kono (2001, p.251) states that “there are obvious differences between the Japanese and the US system, but it is the latter that has defined normal practice for so many management scientists”. The reference to particular types of human resources management applied throughout the world has been made in order to help the description of the content and the role of human resources management as it operates in modern social and financial environment. U.S. has been chosen because of its historical role in the development of HR management while Japan is a characteristic case of a country where HR management has followed the development of all other social and financial sectors influenced by the particular culture of this country. The use of the above two countries has been considered as an appropriate method for the thorough examination of the role of HR management since its appearance mainly in the 1980s decade (in terms of reference to the modern form of HR management) in U.S. II. Human Resources Management – historical perspectives, description and prospects for the future – analysis of the HRM trends of the 1980’s and 1990’s period The development of human resources management the last two decades has been significant. Especially during the period 1980-1990 human resources managed to be extended in most organizational structures and be recognized as the most efficient managerial sector regarding the management and evaluation of all issues related with employees. Generally, Gubman (2004, p.14) supports that “human resource strategy and planning has changed and grown significantly during the last 25 years while we can track these developments from functional strategies in the 1980s to capabilities strategies in the 1990s to results strategies today”. In order to examine the development of HR management from its primary forms (as presented above) to its current one we should proceed at a first stage to the description of its characteristics in general. In this context, Jackson et al. (1995, p.237) supported that HRM could be considered as “an umbrella term that encompasses (a) specific human resource practices such as recruitment, selection, and appraisal; (b) formal human resource policies, which direct and partially constrain the development of specific practices; and (c) overarching human resource philosophies, which specify the values that inform an organizations policies and practices”. At this stage, one of the most important issues that should be examined is the procedure of ‘adaptation’ of modern HR strategies to the business plans as designed and applied in most organizations globally. Within the above environment, it has been accepted by Jamrog (2004, p.60) that “HR professionals need competencies that fall within a three-domain framework: 1) knowledge of business (which includes financial, strategic, and technological capability), 2) knowledge of HR practices (which includes staffing, development appraisal, rewards, organizational planning, and communication) and 3) management of change (creating meaning, problem-solving, innovation and transformation, relationship influence, and role influence)”. Another issue that needs to be resolved in the above context is the cost involved in the application of any potential HR strategy in a particular organization. For this reason Walker (1998, p.9) stated that “costs of human resource processes and initiatives (investment of money, time, and other resources) are best measured in relation to their outcomes”. In other words, the measurement of the cost of the application of a particular HR strategy cannot be described precisely in advance because of the existence of many factors that can lead to the differentiation of the above cost in the end of the relevant initiative. Moreover, it should be noticed that the development of human resources management has not stopped in the achievements of the decades 1980s and 1990s but it continues with a stable incremental rate. The appearance and the application of strategic human resources management (see Appendix I) indicate the above development. III. Particular forms of human resources management – Traditional HRM (U.S, Britain) and alternative forms of HRM (Japan) The presentation of particular elements of HR strategies applied in countries around the world (specifically in Britain, U.S. and Japan) could possibly help to the more effective and accurate analysis of HR management function as it takes place in organizations around the world. Regarding the UK it has been supported by Scullion (1994, p.86) that “very few British companies can claim to have a truly international top management team’ while there is an intensive problem regarding the ‘assessment of knowledge, skills and competencies that have been considered as necessary for the effective operation of the organization”. On the other hand, in Japan HR management has been structured and operates accordingly with the “country’s conventional labour management practices, the most known of which are the lifetime employment system (LES) and the seniority based wage system (SWS)” (Watanabe, 2000, p.307). To a more analytical presentation of HR strategies applied in Japan Kono (2001) states that “successful Japanese corporations are inclined to emphasise long-term goals and have a global vision, while US corporations put more emphasis on short-term profit; they invest heavily in research and development: for example about 10 per cent of the sales is invested in R&D at Sony, Matsushita, Toshiba and Hitachi” (Kono, 2001, p.1). On the other hand, Hannon et al. (1994, p.47) supported that “a) the hierarchical structure of the typical Japanese organization does not encourage initiative, creativity and risk-taking, b) unlike many societies, where even those who do not deserve a reward do no hesitate to take it, in Japan many people would be reluctant to take a reward (or to give a reward) especially the most deserving individuals and c) in certain service industries of Japan the number of employees is overwhelming”. The above particular characteristics of Japanese HR management can be explained by the fact that Japan is a country with significant differences from all other countries (especially those belonging to the ‘West’) regarding the cultural and social norms and characteristics. For this reason Odagiri (1992, p.48-49) refers extensively to the ‘three-pillars’ of the country’s internal labour system. These ‘pillars’ are analyzed by the above researcher as follows: “The first, lifetime employment (also called permanent employment or lifetime commitment), refers to the practice whereby a worker is hired immediately after school and is expected to stay with the same firm until retirement; the second is the seniority system, whereby wages and promotion are determined according to seniority. Seniority refers either to age or to the length of service within the firm; the third is enterprise unionism, which implies that all the employees of the firm, including both blue-collar and white-collar workers but excluding those in managerial positions above a certain rank, are represented by a single union” (Odagiri, 1992, p.48-49). Towards this direction, Cheng et al. (1996, p.1235) also supported that “Japanese workers can be considered as having relatively stable relationships with their employers; more specifically they tend to work for the same employer almost all their lives and enjoy numerous internal promotion opportunities”. Regarding the human resources management in U.S.A. this was formulated in accordance with the changes in population and in the workforce that took place in the country especially during the last century. In this context, Ferris et al. (1993, p.41) notices that “the United States, at the turn of the century, was characterized as a "melting pot," where the immigrants flooding in, especially from Europe, were effectively blended into a homogeneous composite that lost much of the differences and characteristics that defined the various cultures; these groups, most notably Chinese and Hispanics, often preserved the homogeneity of organizations by restricting social and economic interactions, thus creating separate and homogeneous subcultures”. In order for the above problem to be resolved, business units in the country applied a HR strategy that was mainly based on diversity. Furthermore, other functions were added to HR management in order to face the variety of problems that resulted in the workplaces around U.S.A. as a result of the simultaneous entrance of many workers in the country as already described above. These ‘functions’, as alternated and updated in the years that followed, are the basis for the HR management in its modern form. The above similarities between American and Japanese HR strategies prove that business schemes can successfully operate in many countries around the world under the condition that they will be in accordance with the local cultural and social frameworks. IV. Effectiveness of human resources management – personnel management A successful human resources management can lead to the increase of the firm’s performance. The case of Arbitron, an international media and marketing firm, indicates the effectiveness of business intervention in managing employee surveys. Human Resource departments can maximize the value of an employee survey by designing survey instruments that align with business goals and paying careful attention to follow-up action plans. Legge et al. (2006, p.8) studied the above case and highlight the following points: “In 2003, Arbitron surveyed its part-time call centre population during a period of significant internal growth and external competition for top talent; The survey results showed a decline in favourable responses among part-time staff across several key measures; The call centre leadership responded by working directly with employees to identify priorities and commit to specific follow-up actions; This intervention resulted an unprecedented improvement in employee engagement as measured by the subsequent survey and improved retention of high performance employees”. The above findings indicate the significant role of the HRM department within an organizational environment. However, it cannot be assumed that in all cases the intervention of HRM department is in favour of the company’s interests. In fact, the positive effect of HRM department in a firm depends on the design and the quality of the relevant HRM plan applied in the specific firm. In this context, an Agent Staffing and Retention Survey (Call Centre Management Review, 2000) of 218 call centres found that “83% offer incentives to their agents, although only 42% offer pay incentives; only 38% pay agents according to the individual agents skill set or experience (skill- based compensation); 61% report they encountered organizational obstacles in developing career or skill paths for their call centres”. Generally, it can be stated that the intervention of human resources department is positive and effective regarding the management of human resources of a particular organization. A research made by the University of Nottingham supported the above assumption. More specifically, the above research in which data for years 1997-2005 (retrieved from Customs and Excise (VAT registered businesses) and the Inland Revenue (PAYE registered businesses)) were used proved that 1 in 7 private sector jobs are lost in the UK each year but more are created than destroyed”. It is also noticed that “2.65 million British private sector jobs are destroyed annually, and 2.76 million created (the equivalent of 51 000 lost and 53 000 created each week)”. (HRM guide, 2007) Human resources management is often compared with personnel management. However, these two sectors refer in different aspects of employee’s activation within a workforce environment. More specifically, personnel management views employee as part of the particular organization but rather on a collective view and for this reason the relevant decisions and initiatives usually involve in firm’s employees as a whole. On the other hand, human resources management usually focuses on employees as particular entities that have specific needs and weaknesses. In this context, it has supported by Hamilton (1995, p.399) that ‘establishing a personnel unit and designating a personnel officer is dependent upon a number of variables including number of employees, type of organization, size of budget, and expectations regarding the personnel unit”. At a next level, the above researcher tried to examine the administrative methods used by the personnel departments in park districts in Illinois. The survey conducted for this reason showed that “the majority of the managers have attended seminars and conferences on various personnel function indicating a recognized need or interest to improve their skills in this area” (Hamilton, 1995, p.399). In accordance with the above studies, personnel department is based on particular rules and ethics trying to keep the balance between the organization and the employees’ interests often showing the superiority of the former. V. Conclusion The development of HR management has led to the creation of several new forms of HR strategies around the world. Moreover, its role has become vital in the survival of any organization no matter its size or its cultural or financial background. For this reason, Luthans (1998, p.17) stated that ‘the traditional role of the HR/personnel department has essentially been functional in nature and has revolved around specialized tasks such as HR planning, recruiting, job analysis, performance review, compensation, training, and legislative compliance”. The above assumption is also supported by Gooderham et al. (1999, p.507) who came to the conclusion that “despite their very different assumptions, both rational and institutional explanations of organizational structure and management practices predict similarity among firms that operate in the same industry within the context of a simple country”. In other words, the operation of HR management around the world has to be based on specific principles and criteria. There are only a few issues that need to be taken into account when there is a need for ‘adaptation’ of a HR strategy within a particular environment. Moreover, the development of HR management since its major restructuring in the 1980s decade has been continuous and intensive. It should also be noticed that this development is common for all countries around the world that use this ‘business tool’ even if there are major cultural and social differences that would possibly create obstacles to the operation of HR management within the particular countries. The cases of Britain, Japan and U.S.A as analyzed above support the above assumption while offering valuable elements for future research on the particular area. References Call Center Management Review, Special Issue: Agent Development and Retention, Spring 2000, www.ccmreview.com Cheng, M. M., Kalleberg, A.L. (1996). ‘Labor Market Structures in Japan: An Analysis of Organizational and Occupational Mobility Patterns’. Social Forces, 74(4): 1235 Gooderham, P.N., Nordhaug, O, Ringdal, K., (1999). ‘Institutional and Rational Determinants of Organizational Practices: Human Resource Management in European Firms’. Administrative Science Quarterly, 44(3): 507-526 Gubman, E. (2004). ‘HR Strategy and Planning: From Birth to Business Results’ Human Resource Planning, 27(1): 13-22 Hamilton, D. (1995). The Personnel Function in Small Public Organizations. Public Personnel Management, 24(3): 399-407 Hannon, J.M., Sano, Y. (1994). ‘Customer-driven human resource policies and practices in the Japanese service sector’. Human Resource Planning, 17(3): 37-49 HRM guide, Employment market (2007), available at http://www.hrmguide.co.uk/jobmarket/job-creation.htm Jackson, S. and Schuler, R. (1995). ‘Understanding Human Resource Management in the Context of Organizations and Their Environments’. Annual Review of Psychology, 46: 237-254 Jamrog, J.J., Overholt, M.H. (2004). ‘Building a Strategic HR Function: Continuing the Evolution’. Human Resource Planning, 27(1):51-63 Korman, A., Kraut, A., London, M. (1999). Evolving Practices in Human Resource Management: Responses to a Changing World of Work. San Francisco: Jossey-Bass Legge, M., Wiley, J. (2006). Disciplined Action Planning Drives Employee Engagement. Human Resource Planning, 29(4): 8-13 Luthans, K. (1998). ‘Using HRM to Compete in the 21st Century’. Management Quarterly, 38(4): 17-23 Odagiri, H. (1992). ‘Growth through Competition, Competition through Growth: Strategic Management and the Economy in Japan’. Oxford: Clarendon Press Schuller, R., Rogovsky, N. (1998). ‘Understanding compensation practices across firms: the impact of national culture’. Journal of International Business Studies, 29(1): 159-172 Scullion, H., (1994). ‘Staffing policies and strategic control in British multinationals’. International Studies of Management and Organization, 24(3): 86-97 Sims, R. R. (2002). Organizational Success through Effective Human Resources Management.Quorum Books. Westport, CT Soutar, G.N., Grainger, R., Hedges, P. (1999). ‘Australian and Japanese value stereotypes: a two country study’. Journal of International Business Studies, 30(1): 203-211 Walker, J.W. (1998). ‘Are We Using the Right Human Resource Measures?’ Human Resource Planning, 21(2): 7-10 Watanabe, S. (2000). ‘The Japan Model and the future of employment and wage systems’. International Labour Review, 139(3): 307-325 Appendix I Strategic Human Resources Management - some Common Theoretical Perspectives (Sims, 2002, 29) Perspective Description Universalistic There is one best way to manage human resources. Strategic HRM is the process of transforming traditional HRM practices into a limited set of “correct” HRM procedures and policies. Strategic fit Strategic HRM involves matching specific HRM practices to the organization’s overall business strategy. HRM as internal service provider Strategic HRM involves HRM professionals providing HRM services to organizational units within the organization. The HRM goal is to enhance the effectiveness and efficiency of the operations of their organizational unit customers. Configurational There are various configurations or “bundles” of HRM practices that go together and, collectively, can improve organizational performance. Certain bundles are effective in certain industries and/or in certain business conditions, where as other bundles should be used in other industries or underdifferent business conditions. Resource/competency Strategic HRM engenders organizational success by enhancing an organization’s ability to acquire, develop, use, and retain employees with high competence levels relevant to organization activities. Read More