Benefits of Flat, Fast and Flexible Company - Essay Example

Human Resource Management (HRM) has evolved from the traditional personnel management and is more strategic in nature. The policies and processes areintegrated to improve organizational performance and the HRM model differs across firms. The HR department is constantly under pressure to deliver more for less. Most models of HR believe in a ‘flat, fast and flexible’ organization (Caldwell, 2004). Caldwell suggests that it is only in theory that the flexible organizations are not only more responsive to change, they also overcome the negative features of Fordist mass production and bureaucracy. These negative features include hierarchy, standardization and an inward focus. This paper will discuss to what extent flexible HRM practices mark a break from Fordism and the era of mass production. The word flexibility itself means differently to different people. Having an employee-centered approach, not being authoritative, being anti-hierarchical, persuasive, or even empowering and considering the employees as equal stakeholders are some of the ways that ‘flexibility’ has been defined (Caldwell). Hence ‘flexible HRM is not a norm which firms follow. It is a state of mind, and the practice itself varies from firm to firm. Within an organization also, flexibility provokes mixed reaction. While some consider flexibility an employee problem, the senior management thinks of it as a cost cutting strategy. The flexible approach has also led to the evolution of self-managed teams who work closely together to achieve greater horizontal coordination across organizational divisions. Marlow (1997) contends that in the UK few HRM initiatives that are being adopted are aimed at raising employee productivity without the return of rewards. Marlow further cites that the destruction of traditional style industrial relations and the lack of industrial policy articulated by the state have led to neo-Fordism. Hence, the flexible HR practices are used to induce the labor into higher productivity. It does not form a part of the larger process of post-Fordism. Since these are not supported by technology and training, these practices become unsustainable. Further arguments arise that flexible HR practices arise due to market volatility and labour weakness, and not due to sophisticated approach to labour management. While the Fordist regime may have had structural deficiencies, flexible HR practices will lead to difficulties in attracting, gaining and retaining a skilled workforce (Fuchs, 2002). Although employees are considered to be one the most important assets, many firms are turning to temporary workers, contract employees and contingent workers. There is an increased tendency to flexibilize the internal labour market and to shrink the number of core workers. This has resulted in employment relationships becoming non-standard. The flexible HR practices have led the managers to assume that a successful organization is one that is leaner and depends on fewer workers. They feel that new approach helps to increase the commitment of the workers. The traditional boundaries of firms are dissipating to provide for enhanced efficiency and flexibility where flexibility is equated with efficiency. Organizational flexibility is associated with downsizing, partly through outsourcing certain functions and partly through delayering and restructuring (Saunders and Thornhill, 2006). Knowledge transfer is an important part of the new HR practices but this requires the ability and the right motivation for the employees to absorb knowledge (Minbaeva, 2006). Those firms who examine the core competencies and engage in extensive selection and recruitment procedures are able to generate skilled external candidates. Systematic training helps to eliminate the skill deficiencies. Internal promotions work as great motivators. All these lead to higher commitment and involvement but according to Fuchs (2002) the flexible labour market will lose its most strategic resource. The flexible HR practices extend to various HR functions. Thornhill & Saunders (1998) contend that management of human resources is now considered an activity to be carried out by all managers. This too amounts to flexible HRM practices as it is believed that devolution of HR functions to line managers results in enhanced performance in an organization. Top managers according to Thornhill and Saunders generally concentrate on formulating corporate goals and objectives. They offer ‘transformational leadership’ and they share their vision for future success with other employees. The middle managers play a vital role in any organization because they are the ones who interact most frequently with the employees. They are thus expected to have the ability to inspire, encourage, motivate, enable and facilitate change by allowing the employees to become committed to the organization. This approach of involving line managers is also debatable as to which functions the line managers are capable of handling. Downsizing has led to devolution of HRM responsibilities and the middle managers have gained importance (MacNeil, 2003) but the line managers are seldom provided training. They are expected to learn through experience, which is again not a positive and supportive approach to the flexible HR practices. Mayne, Tregaskis and Brewster (1996) contend that involving line managers amount to low use of flexibility. They do not always see HRM as a key priority and always tend to revert to the old employment patterns whereas the HR personnel are more familiar with current trends and more likely to know about the range of employment options. Another flexible HR practice is the flexi pay system or performance-related-pay (PRP) which is considered an important toolkit for optimizing human resources in the face of competition. PRP is expected to increase employees’ motivation but organizations do not always meet with success (Lewis, 1998). Money linked to performance targets has varied opinion – some feel it is the sole motivator while others feel that motivation is purely intrinsic and money should never be linked to it (Hendry et al., 2000). Besides, managers face problem in attempting to determine individual worker’s contribution to the overall performance of an organization. They risk overpaying the workers for their contribution, in which case the workers are likely to withdraw the effort they put in for the compensation (Belfield and Marsden, 2003). Post Fordism the output of a worker is measured by competency, loyalty and an aptitude to engage in a process of permanent innovation (cited by Fuchs, 2002). Foley, Maxwell & McGillivray (1999) contend that increasing pressure on employees for enhanced performance can alienate employees from commitment. Pressure for results forced the plant managers at Snow Brand Milk, Japan to resort to unethical and illegal actions (Finkelstein, 2005). Hence, flexi pay may adversely impact the organizational performance. The fast food industry is based on the Taylorist principles of mass production where the work is routinised, dull and standardized. It is low skilled, low paid and offers few career opportunities. Even though work in the fast food industry is considered a low-profile job, workers at McDonalds feel they develop general work competencies and maturation skills like reliability, strong work ethic, responsibility, concentration, punctuality and diligence (Allan, Bamber, Timo, 2006). Working in the areas like fast food promotes team working and reinforces the identification of the workers to the organization to one another. This practice of moving workers around jobs and tasks as per needs is known as functional flexibility (Dyer, 1998). This allows for movement and redefinition of working time. Since McDonalds offered low wages, they could move workers around jobs and functions but this benefits the organization and is no way employee-centered. Flexibility for workers promises improved working conditions and varied and interesting jobs. Nike, another example of mass production, based in Oregon has more than 22,000 employees and over 800 contract suppliers in more than 52 countries across the world. Most of their factories are in third world countries so that they can avoid the US law and the onus lies on the country of production. The meager wages that they pay has caused deep seeded cynicism amongst the workers. Environment of exploitation continues to prevail. High target demands lead to overtime and workers become physically worn out. Their eyes start to fail, and other physical problems arise due to long hours of work (Amey et al., n.d.). Incredibly efficient and focused on the principle of low-prices, Wal-Mart transformed the retail industry. Wal-Mart was grounded in values of respect for workers and community. Human resource management is a stronghold of Wal-Mart as right from the inception they did not believe in allowing or forming a union (Levy & Losch, 2002). They felt it was detrimental to the interest of the company and the union only fed itself from both the management and the labors. They believed in exhorting their own people, motivating them through incentives and awards such as company stocks by which they could also make up for the low wages. Wal-Mart employs immigrant workers so labor is cheap. They also take in independent contractors who cannot organize unions under labor law. It is able to control labor costs, hires temps, part-time workers. Employee wages at Wal-Mart are as much as 31% lower than competitors (Nester, 2006). It pays practically no benefits and very often employees have to work overtime without any additional compensation. It discriminates employees based on gender and disabilities. It pays a wage on which people cannot survive. McDonalds, Nike and Wal-Mart have all adopted the flexible HR practices in different ways. Flexibility may have led to mass production and mass consumption but as far as the workers are concerned, they remained low paid with no career opportunities. Employers require commitment and trust from the employees but they do not offer job security (Foley, Maxwell & McGillivray, 1999). Nothing has changed despite introduction of flexi timings and other flexible HR practices. The Fordist industrial relations provided no career opportunities to the shop floor workers and the work is standardized while the employees are paid low wages (Fuchs, 2002). Labour utility has been maximized by moving workers around jobs and functions. The choice of flexible forms of working is nothing but a more ‘strategic approach’ to the utilization of employees (Mayne, Tregaskis and Brewster, 1996). Lack of employee commitment is inherent in flexible working and this will also result in increased investment in communication and training. Saunders and Thornhill (2006) suggest that the use of flexible employment contracts is a response to sectoral shifts in the structure of employment and the need to cut costs. While companies are seeking temporary workers, it has been found that even workers prefer flexible work. MacDuffie’s (1995) research on ‘HR bundles’ was unable to establish if flexible production was a superior strategy or led to ‘speed up’. On the contrary flatter organizations can create organized chaos and motivational deficit. A study of small firms in the UK revealed that owners/managers are aware of the initiatives of HR practices but they focused the flexibility to maximize productivity but limited it to this area alone (Marlow). They did not adopt flexible specialization by way of adopting technology and introducing training. They even emphasized on team work but only to minimize resistance. Hence, although in theory flexible HR practices are supposed to be employee-centered, in reality it is just a form of capital restructuring to maximize productivity and extracting greater value from labour. The hospitality industry operates in an uncertain environment with great emphasis on responsiveness to customer needs and the provision of superior quality, customized goods and services. This requires an innovative and developmental approach to HRM which aims at providing employee flexibility, adaptability and commitment to the organization. Research suggests that if cost control is the core business strategy flexible HR practices are ineffective (Hoque, 1999). Firms are now attempting to replicate the Japanese style of HRM practices which is successfully responding to the crisis of mass production (Winfield, 1994). The Toyota unit at Derby has a new model workforce committed to corporate goals. Its HRM policies and practices have resulted in a totally committed and cooperative workforce. Assembly workers are expected to sort out the production problems themselves. The workers are seen as intellectual, problem-solving beings rather than being employed as entities to be controlled. This philosophy is an extension of Fordism. Its central tenet of Just-in-time is based on the Fordist principle of chronicity. Both are based on the fact that if there are wild fluctuations in the flow of work, the entire system will break down. During the recruitment process they give considerable weight to personality factors such as group compliance, low ego needs and high tolerance for frustration. Toyota’s HRM practices tend to maximize integration, employee commitment, flexibility and adaptability and quality of working life. Thus even in the era of mass production, Toyota is able to maintain a committed workforce. Fordism was associated with mass production and based on rationalization and mechanization of the production processes. There was no attention paid to the employee know-how and his creativity was underutilized. Production was standardized and each department was concerned with achieving its own objectives. Post Fordism the requirements are ‘right first time, quickly on time, cheaply and flexibly’ (Johnson, 2004). The line managers have a challenging task to manage the new age workers in a new way. Flexible working hours have increased flexibility both for the employer and the employee. Today HRM has a strategic approach and applies new techniques to retain, attract and motivate employees. While new information technologies create new opportunities which lead to use of contract labour and flexible work locations, there has been an increase in burnout, emotional exhaustion and higher absentee rates. Flexible HR practices is to some extent is a response to the situation that has arisen due to downsizing and the need to cut costs. It has led to intensification of work effort required by labour. It has also resulted in decrease in health and safety standards. It intensifies the control of capital over labour by using new management techniques. Flexibility should be known as neo-Fordism which is a capitalist solution to a scientific management problem. It aims to utilize the knowledge of employees for the purpose of rationalization. The devolution of line managers in HR functions does not appear to be beneficial. Performance related pay exerts pressure on the managers and the results of this may be disastrous. Temporary and contract workers can result in low commitment. Study of three giants namely McDonalds, Nike and Wal-Mart suggests that the Fordist principles of low wages and standardization still prevail in this era of mass production. Training is to some extent provided in specialized areas but by and large employees are expected to learn on the job as in the case of McDonalds. No career opportunities exist in many industries and attrition rate is high. This results in low commitment from the employees. The flexible HR practices are a break from Fordism only to the extent that schedules have become flexible and contract workers have increased. On the other hand, Toyota is able to maintain a committed workforce even in the era of mass production. Attempts to maximize labour productivity result in low productivity, higher absenteeism and emotional exhaustion. Thus the flexible HR practices have very little tangible benefits. Some changes may be necessary to adopt with the changing business environment, but mass production with mass consumption has only led to exploitation of labor. It is in essence capital restructuring and maximization of profits in the face of competition. References: Allan, C., Bamber, G. 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