Evaluating Human Resource Management - Essay Example

EVALUATING HUMAN RESOURCE MANAGEMENT Table of Content Serial Number and Topic Heading Page Number 0 Introduction 02 2.0 HRM-An Overview 03 3.0 HRM-Definition 05 4.0 Multinationals and HRM 07 4.1 Cross Border Investments 07 5.0 Evaluating HRM 08 5.1 HRM in Japan 08 5.2 HRM in the United States 09 5.3 HRM in India 10 5.4 Analysis 10 6.0 Journal Review 12 7.0 Conclusion 11 8.0 References 13 1.0 Introduction Human Resource Management is an evolving and changing concept. The HR operates with distinct identity, analogical to the organisation's needs. Every organisation has its own unique culture or identity. This culture represents the organisation's image as seen by the outside world. Most organisations don't consciously try to create this culture. It is inherent to the principle that it pursues. One finds that most company culture is based on: Respect for others A sense of community Work ethics (Fortune Magazine, May 15, 1995) Human Resource Management (HRM) is a planned approach to managing people effectively for performance. It aims to establish a more open, flexible and caring management style so that staff will be motivated, developed and managed in a way that they can give of their best to support the concerned departments. Good HRM practices are instrumental in helping achieve departmental objectives and enhance productivity. In the larger interest of a company it is imperative that employees are taught the nuance of the trade. Personnel with positive attitudes and can lend themselves to the causes are what organisations look for. HRM is all about this. Employees are taught to be positive, deliver quality work, have a sense of humour, and work as a team. Employees should be interested in performing as a team and take joy in team results, rather than individual accomplishments. The work of HRM is to identify people with such qualities. Building a team with members with such exemplary qualities mitigate the work of an organisation and they can build a work force that is prepared for the culture one desire (Corporate Culture, Auxillium West -The HR Manager). The above is well illustrated in the way Japanese HRM function in unison with company motives and policies. Strong HRM practices are characterised by an equally strong internal labour market, consultative decision making and enterprise unionism. Such practices, individually and collectively, encourage the incorporation of employees into the mainstream (The culture of the enterprise). This results in a strong employee-management relationship, leading to employee identification with the firm, and a high commitment to innovative production practices that enhance the firm's performance. In return the firm or organisation, in recognition of their work ethics, provides job security and rewards (John Benson and Philippe Debroux, HRM in Japanese Enterprises: Trends and Challenges). 2.0 HRM-An Overview No organisation can grow or for that matter, survive without incorporating policies that are pro-human in nature. "Functions such as managing cash flow, business transactions, communication, public relations, and production are part of human activities in sustainability and growth of an organisation. Unless human resources are looked after diligently by the organisation managers, the firm is likely to face drawbacks, which could have serious repercussions on the organisation as a whole. It is no secret that humans are the driving force of any establishment, and it is they who possess the drive to make or break an organisation. In lieu of the current market and multi-polar world situation, the work ethics of most organisations are continuously changing. This change not only affects the business but its employees as well. In order to maximise organisational effectiveness, managers must be able to manage employee capabilities, their time, and talent. Human resource management is about employees and organisational goals. In a nutshell, HRM is about recruitment, training, performance appraisal, motivation, labour relations, safety and benefits, research, and compensation. According to Cherrington, the HR is responsible for introducing the workforce to the organisation, assist them through their work, motivate them through compensation for their labour, and solve problems that arise that may arise during their life in the organisation (Cherrington, 1995, p. 5)1. An essential component of a HRM, irrespective of its organisational size, is the job analysis; to determine activities, skills, and knowledge required of an employee for the specific job. This happens when there is a vacancy created by the termination or resignation of an employee, when a new organisation is floated, and finally when there is the necessity to enhance production or introduction of new methods or procedures or machines [Cherrington, 1995] (Answers.com, 2007). Consider the Japanese HRM policies that have been a success story of human resource management: Perceived Characteristics of Japanese Employment are: 1. High levels of commitment to perform 2. Consensual rather then conflictual behaviour from employees 3. Company rewards through Lifetime employment and welfare benefits 4. Recognition for devotion to work through seniority based pay 5. Co operative, participative and team-based approach is a time tested proven HRM practice. 6. True employee value based approach for success through more investment on training "This HRM practice led to the dramatic rise in Japanese exports during the 1960s and 1970s. The success of many large Japanese manufacturing firms in establishing offshore facilities in the 1980s led to debates concerning the organisation of work and models of labour-management relations (Elgar and Smith, 1994: 1-2). The success of Japanese firms, with their emphasis on people as the key resource, became a model for Western managers (Dulebohn el al., 1995: 30; Goss, 1994: 4)" (John Benson and Philippe Debroux, HRM in Japanese Enterprises: Trends and Challenges) 3.0 HRM and Economic Restructuring HRM is essentially an American creation in response to their companies' requirements and the country's labour market conditions. This concept is based on the notion that people management can be a key source to sustained competitive advantage and that effective HRM could lead to lower employee turnover and greater productivity. Legge (1985, 1995) stated that human resource management as the management of an organisational team; the organisation's second line managers playing a crucial role in coordinating resources (manpower) towards achieving organisational objectives and profits, and the management of organisational culture. HRM though personnel, is planned and implemented with regard to company strategies and the way HR can contribute to those strategies. Since this is a very important portfolio in the success of the company, the person heading HR is of a very senior position, most likely that of a director (Monir H. Tayeb, p.5-6, 2005). Economic restructuring is seen in many countries that have opened their border to foreign investment. This is required to meet international standards and the changing market trends. Enterprises restructure is imperative to challenge competitive marketplace and seek a competitive edge over their rivals. China and India are two giants that have made great impact on the world economy through their labour intensive manufacturing, and consulting. As these giants stamp their authority on the labour driven markets in Asia, countries like Indonesia, and Thailand which will have to adjust and move into medium technology manufacturing segments. Such restructuring will necessitate changes in education and training both at macro and enterprise levels. During the 1980s there were not too many corporate move across borders. Due to this, there were not much happening in the world of HRM. The end of the cold war opened the gate to investment into Western Europe. The two Germany's became one and the erstwhile Soviet Union began to break. This brought about a revolution in FDI into the breakaway states of the Soviet Union. The flow of FDI and establishment of western companies created opportunities never seen in this part of the world. With new enterprises establishing their base, and setting up new machinery and work ethics, the local workforce had to change their style of work. HRM activities began to grow and planning and execution of business vistas required innovation. This was the first step to new initiatives. The 1990s was more fast-paced, with China (already open to FDI since 1979) and India vibrating to economic dominance. Huge influx of funds into the region saw these two countries enjoy market dominance. HRM policies in these countries changed with the challenges. Cheap and qualified workforce was available in abundance and this was a very positive incentive for the foreign investors. In order to makeup for the import of new technology and work pressure, HRM policies were directed at motivation and retention. The change has been smooth and both, the country, its people and the investor are reaping rich dividends, thanks to HRM initiatives. 4.0 Multinationals and HRM Throughout the history of the human race, trade between tribes, societies and later nations, have been a feature of our economic life. The industrial revolution that England witnessed during Queen Victoria's time, spread rapidly through Europe to the Americas, Asia and other parts of the world. This gave impetus to greater economic growth around the world. The advancement witnessed in telecommunication and Information Technology brought about definite changes in the way business houses transacted their business worldwide. Multinational companies (MNC) revolutionised the way governments worked as they held the most sensitive portfolio of goods and service movements around the globe. In order to operate in unfamiliar terrains (read countries), these companies need to negotiate their entry into foreign countries, adjust their operations in tandem with the local legal requirements, and modify their accounting and taxation policies to suit the host country's law. This also meant that the company had to employ personnel from other parts of the world to suit local as well as company interests. This makes the HRM operations of these multinationals among the most delicate and challenging of all managerial tasks (Monir H. Tayeb, p.4, 2005)2. 4.1 Cross-Border Investments Cross border investments by Asian companies within Asia, and elsewhere are also of relevance to HRM policies. The early entry of Asia countries into Africa, Latin America, Europe and the United States has created a need for HRM to device employment opportunities with specialization in technical fields. The Asia-Pacific region has seen waves of investment by Japanese, American and European companies. With the rise of their economical base, these countries were able to expand their operations to relatively smaller and poorer economies to expand their presence. In all these cases, the role of HRM became that much more challenging, as it had to deal with alien conditions and work ethics. This trend meant that the relocated workforce required the necessary expertise to operate efficiently in alien conditions. Executives needed to be taught the political, social and cultural situation of the host country. HRM required the skill set to meet and manage an expanding multicultural workforce. 5.0 Evaluating HRM This chapter focuses on the various HR practices in three selective major economies, Japan, The United States, and India. 5.1 HRM in Japan (Definitely Pro-employee) The Japanese are very hard working people (Buruma, p.139, 1985)3, have infinite capacity for hardship and pain, and have a strong sense of duty and indebtedness, on. This sense of obligation and repayment of on, sometimes span across generations. The Japanese believe that all employees, especially at operating levels, should be encouraged, and indeed be expected, to take part in any decision making processes. 'Quality circles' is another vehicle for employment participation. Quality circles represent group activity, in which ordinary blue and white coloured workers, usually employed in similar work are let by their supervisor to volunteer to participate. This participation includes training in problem identification and problem solving techniques. In addition, success in HRM in Japan is attributed to management practices, such as time employment, seniority wage system, and high levels of investment in employee training. Japanese treat their company as family, primarily a social entity, operating in an economic environment (Hofstede, 1980)4. Team work and a consensus style of management are regarded as a distinctive characteristic of Japanese HR policies. Employees view themselves as members of a community rather than hired labour (Marchington and Parker, 1988)5 5.2 HRM in the United States (Pro-management) In contrast to the style of the Japanese work ethics and HRM, American style of HRM is distinctively different. Individualism informs and inspires American management; hard work and long hours when necessary, individual employees' readiness to take decision; personal initiative, strong presentation of personal image, promotion and high incomes as reward for success (Lawrence, 2000)6. In addition, the American rule of individualism in society only encourages managers to promote, on the basis of merits as against status, hierarchy, or gender. Another feature of the US business culture is its anti-trade unionism. Also, there is managerial opposition to unions. In most of the non-unionised sectors, redundant workers can be laid off in whatever order the employer desires, and employment contracts terminated without reason. The working condition under which employment takes place is employee-determined, limited only by labour-market forces and the protective labour legislation (Wheeler, 1993)7, notably the minimum wages law. Many large American companies prefer to deal with their employees through human resource management polices and practices rather than through unions 5.3 HRM in India (Hierarchical) Large power distance, manifested with a high level of respect for and obedience to older people and those in position of power, is the cultural characteristic of individuals in India. This leads organisations to be hierarchical with a central decision making process and little or no authority delegated to lower ranks. Management style is mostly authoritarian or paternalistic with a clear distinction between white-collar and blue-collar employees in terms of power, pay, working conditions and other privileges. Various acts of Parliament secures minimum wages, regulation for payment of wages, healthy working conditions, equal remuneration for men and women and several schemes providing security to the workers against contingencies, such as industrial accidents are available. Industrial relations legislation is pro-worker and aims at protecting one's employment and well-being. Unlike the British and Americans, Indians prefer to work under supervision and seek their manager's approval before taking any decisions, a reflection of their deference to and respect for authority. 5.4 Analysis 1. Human Resource Management (HRM) is a planned approach to managing people effectively for performance. It aims to establish a more open, flexible and caring management style so that staff will be motivated, developed and managed in a way that they can give of their best to support the concerned departments. Criticism: HRM policies as we see are more company-specific. This means that despite motivation and incentive schemes on offer, they are targeted at getting the best out of the employees for the benefit of the organisation. HRM does not believe in unions and they try to suppress any sort of pro-employee initiatives by groups that could hamper HRM policies. 2. Generally vacancies are caused due to replacements due to retirement, resignations or caused by expansion plans of an organisation. At times we see that companies create a new post to deal with a specialist activity, which could arise due to import of technology or machinery. Whatever the case may be, HRM takes care to see that the vacancy is filled by suitable person(s) in keeping with the organisation plan. Criticism: HRM policies address only the immediate concern of the organisation and not long term goals. Due to this, replacements are confined to only to people with the se qualities required to sustain operations. There is no doubt that HRM does encourage training and motivation, but selection is based on only those who have the prerequisites to perform immediately. General hands are not given prominence in such situations. 3. HRM is pro company-specific Criticism: There is no doubt that whatever be the agenda for selection, training, or motivation; these attributes are made for the interest of the company and its shareholders. There are no issues to address the welfare of the workforce and their kin. If an employee is found wanting in his/her duty, HRM policies mandate that the organisation is not held ransom for under-performance, and the employee is abdicated in the interest of the company. 6.0 Journal Reviews-Testimonials Q & A with Rudy Karsan, KENEXA: 'Organisational Reputation Key for Indians' Mr. Rudy Karsan is the co-founder and CEO of Kenexa, having served as chairman of the board of directors since 1997. Prior to that Mr.Karsan headed marketing actuarial division of the Mercantile and General Insurance Company in Toronto, Canada. Mr. Karsan received a B.Math in Actuarial Science from the University of Waterloo and is a Fellow of the Society of Actuaries. The following is an excerpt from an interview given to L.Venkat Ram Reddy, Deccan Chronicle, Newsprint, India. Q. How big is the Human Capital Management (HCM) space and how do you see competition and challenges A. Organisations now, increasingly acknowledge the value of their employees and the intense competition, to hire and retain qualified employees. Few organizations have systemised best practices for talent acquisition and employee performance management. The absence of effective systems and processes can have negative implications on an organisation, including failure to retain qualified employees, optimise productivity and to remove poor performers. These dynamics are driving the market for comprehensive talent acquisition and employee performance management solutions (Deccan Chronicle 19th Feb' 2007). 7.0 Conclusion HRM practices are company-biased. In this paper on the various techniques used and the environment under which HRM policies were evolved showed that, greater flexibility and pro-labour attributes resulted in positive employee-employer relationship. Japanese HRM policies are pro-labour without distinguishing the blue- and white-collar jobs. This led to equal participation and better productivity. This is perhaps how HRM practices need to be oriented for the benefit of the employees and the organistion that they work for. HRM has always been viewed from two different perspectives; hard and soft (Storey J, 1992)8. The hard model is a way to drive strategic objectives of a company by the HRM. Stress is on human resource as an object for production and an expense of doing business. Resources such as machines and raw materials can be manipulated to suit the market and managers' requirements. The same cannot be said of humans. Employees have needs, emotions, interests, and attachments, and perform well if these conditions are met. However, they have their limitation. HRM will fail terribly if they push the workforce illogically. The hard model of HRM is quite cynical and an unfair practice in company growth. The Soft model on the other hand, though gives importance to integrating human resource policies with business objectives, employees are seen as valued assets, a source for competitive advantage through their commitment, adaptability and high quality. Motivation is the key to success. Employees are seen as proactive inputs in production processes, capable of development, worthy of trust and collaboration, leading to higher achievements through equal participation and informed choice. Stress is on generating commitment through communication, motivation and leadership. If employees' commitment yields better economic performance, it leads to greater human development (Monir H. Tayeb, P.6, 2005)9 In the words of Guanzi (551-479 B.C) the ever popular Chinese philosopher, "When planning for one year, there's nothing better than planting grain, When planning for ten years, there's nothing better than planting trees, When planning for a lifetime, there's nothing better than planting men". What better way to conclude, than to express the role of HRM in the mould of a machine, which churns pedestrians into professionals. 8.0 References 1.0 Corporate Culture, Auxillium West -The HR Manager, www.auxillium.com 2.0 John Benson and Philippe Debroux, HRM in Japanese Enterprises: Trends and Challenges 3.0 Answers.com, Human Resource Management: Information from www.answers.com 4.0 Monir H. Tayeb, International Human Resource Management: A Multinational Company Perspective, Oxford University Press, 2005 5.0 Deccan Chronicle, Newspaper 6.0 Cherrington, David J. (1995). The Management of Human Resources, Englewood Cliffs, NJ: Prentice-Hall. Read More