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Human Resource Management

Due to impact of globalisation and economic uncertainty, companies are facing fierce challenges. In order to adapt to this changing environment, changes within firms are vital for business survival and expansion in a knowledge driven economy. Nowadays it is a common experience to note that organisations are relying heavily on their human capital to produce the competitive edge.

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Human Resource (HR) has drastically evolved from the 19th century to present time. HR issues have moved from Fayol’s era (1841-1925), where a rational and structure approach to management of organisation was prevailing. While in this current climate great emphasis are being put on building relationships between employees and employers and mediate individual employment relationships (Cole, 2002). Additionally, the role and functions of HR have undergone significant changes since the beginning of last tow decades. Currently, many forces appear to be changing the structure of the HR function, creating new HR delivery modes, reshaping the role of HR leader, changing existing HR jobs and creating new ones.

In today’s global environment, with the emergence of new technologies, swings in the economic cycle, dramatic increase in the number and quality of new and existing competitors, have forced organizations to change their designs. In essence, the main internal drivers of change include the desire to become more competitive and to build a high performance organisation, thus better meeting the needs of customers. Therefore, change management is crucial to the success of organisations (Mullins, 2002).

Indeed, for organisations that manage change skilfully, it can become the driving force that perpetuates success and growth, with every change presenting a new opportunity to increase efficiency or to build and expand the business. In many cases these changes have taken place, due to merger and acquisitions, joint venture and outsourcing, in order to improve competences within organisations.

Change efforts of the past decade have appeared under many banners, including:

• Total Quality Management
• Business Process Re-engineering
• Right-sizing and restructuring:

In this context, HR plays a predominant role in performing a successful management of change within an organisation. The role of HR is to understand the human behaviour at work and positively influence the employees to adapt to new changes. Here, HR assists in preparing the employees, by tackling training and development needs prior to initiating the change programme. However, in some cases, conflicts may rise and may disturb the whole process of change management. In these circumstances, HR plays a crucial in giving the staff the confidence and ability to clear the hurdles such as fear of failure and employee resistance. Also, HR role is to ensure communication within the organisations is a two-way traffic with example feedback sessions, anonymous comment/suggestion slips that identify how information must be cascaded during the change process.

In fact, redesigning an organisation will certainly have a fundamental change in the work life of people. But the leader of the organisation and the HR department should ensure a smooth transition from the old forms of working to the new ones. One successful example to illustrate the change in Management is that of General electric (GE):

During the last decade, GE was restructured to build a network of interrelated businesses positioned to capture the number one or two market shares in their respective industries. The steps involved in the change process were:

• The CEO, Jack Welch, introduced ‘Work Out’, a tool designed to help employees participate through teams in the change process
• To improve dialogue between leaders and employees, a programme of ‘Town Hall Meetings’ gave staff at all levels information on the change process, new roles and work habits required, and elicited open two-way dialogue
• Performance expectations and rewards were realigned; managers previously evaluated solely on ability to manage in a ‘command-and-control’ environment, now had to meet ownership, stewardship and entrepreneurial goals; those failing to adapt to receive bonus (Ashkenas, DeMonaco, Lawrence J. et al, 1998).

Another important issue to look consider is that of psychological contract. According to Rousseau and Wade-Benzoni (1995), the psychological employment contract reflects the individual understanding of the employment relationship’s term and the normative beliefs about what organisational members owe and in return owed. Surely, the psychological contract has changed as a result of the changes in organisation strategies and restructure and the tie that binds employers and employers and employees has become severely strained (Foot and Hook, 1999).

Nowadays, employers have to acknowledge the particular needs and motivation of the employees as well as the performance expectations of the organisation. Since today organizations will provide employability but not employment security, if employees have no stake in performance of the organisation, it is unlikely that the organisation will achieve the levels of commitment found, like in the old days, i.e., a two way loyalty (Monhrman and Lawler, 1997).

Employee relations are critical for business success. It is concerned with the relationships between the policies and practices of the organisation and its staff and the behaviour of work groups (Mullins, 2002). In 1997, a US Business Intelligence report on strategic performance management resulted to an interesting conclusion- for a superior business performance; there is a need for a good relationship between the organisation and the employees. Most of the successful companies emphasise on employee communications and employees rights. During the past decade, much importance has been deployed on employee relations, as the management is aware that for employees to perform well, they should feel that they are fairly treated within the organisation (Sadler, 2001).

For example, Consignia in UK had appointed a company board level HR director in 2002, to address the company’s chronic staff morale problems and improve the working environment. The aim is to drive the culture change by ensuring HR is at the heart of the firm from the top down, where employee’ rights are represented. Consignia has introduced a new HR- based complaints procedure and overhauling training. Other changes included revamping its employee opinion surveys so as to improve communication. Additionally, the company has set up a harassment phone line for staff so that employees can take advice without having to involve their line manager. Moreover, Consignia planned to invest around ?10 million annually to improve its working environment (Personnel Today, 2002).
Nowadays, as part of new strategic planning process, new practices such as team bonuses are adopted. Team bonus is defined as the gratuitous payment by the employer; a payment not directly earned by the teams (Torrington at al, 2002). Here, HR main objective is to help to improve team performance or skills/behaviour payments to upskill the workforce or reinforce culture or behaviour change, so that the organisations can meet its corporate objectives and prosper in this fierce economic environment, by increasing the performance of the business.

An example to illustrate team performance reward is that of Continental Airlines in the US, which was ranked last among ten major domestic airlines in baggage handling and on-time arrivals as well as first in customer complaints. The company was heading towards bankruptcy until the new leaders of the company introduced a change management plan. Through a group incentive plan, each of the 35,000 non managerial staff would be given cash bonus in any month that the airline would come among the top five for on-time departures.

The result of introducing such incentive resulted in an improvement in performance of the employees as the bonus program motivated the employees to reach the objective set by the leaders (Knez, and Simester, 2002). In this business case discussed above, through the provision of financial incentives, Continental Airlines was able to transform and motivate its employees as a group. The introduction of the team reward bonus led to positive changes in the working environment thus improving the company’s performance and profitability.

HR can no longer be considered as an entity separate from the core department of a company. For an organisation to be successful, top management have realised that HR will have to play a predominant and proactive role within the firm. Thus to enjoy success, the HR functions need to be further revamped by addressing the following issues:

In reality with such economic uncertainty, HR managers need not only to understand how to manage people but also the overall business strategy, the corporate objectives as well as change approach that the firm is pursuing. Moreover, they need to become a valued member of the top management team by contributing to business strategy and operations decision-making. Some organisations have already starting using this strategy. For example, in the Xerox Corporation, the actual President and chief operating officer, Mulcahy was formerly the HR manager in the organisation. The organisation was aware that leading a business with 7000 employees, which contributes to 30% of their revenue, equals to leading the people within the company and therefore skills such as leadership, management and people are needed (Whiteley, 2002).

In many organisations the HR traditional roles of hiring, reviewing, firing, training, career development, and program development should be shifted to line managers and employees. In this way, it will free the human resource organisation from day-to-day management and administration of the human resources in the organisation. The HR department will be able to focus more on the broader picture and on improving the performance of employees in alignment with the corporate objectives and simultaneously satisfying the organisation’s customers. For example, at Johnsonville Foods a US sausage manufacturer has eliminated the mentioned above responsibilities from the HR department, thus enabling them to focus more on contributing to achieve the corporate objective (Lancourt and Savage, 1995).

There is a growing use of outsourcers as a way to reduce the cost of HR function and to draw expertise on which is not easily built in the organisation. Outsourcing should be employed wherever it is applicable. In Semco, many of the human resources functions are contracted out to one of the satellite organisations started by former Semco employees, who then partner with line managers to perform a number of human resources tasks. This has proven to be cost effective for the organization as the HR department was able to again focus more on change management at a macro and micro level (Lancourt and Savage, 1995).

Additionally, The HR teams need to have high level of competency in designing human resource systems and in managing their competencies. Because they have recognised the role and value of their knowledge assets, most of the companies in the sample have focused great attention on identifying and developing their core competencies. This has inevitably led to a greater focus on the need for continuous career and skill development. Although the companies have handled the focus on people development in many different ways, in almost every case, the work encompasses far more than simply putting together a series of training programs. One solution is the career development system where there is an emphasis on employees’ responsibility for their own careers. At the Eastman Chemical, the human resources department developed a program called PASK– “people applying skills and knowledge”-to facilitate the use of employees’ talents individually and within teams. Human Resources have also focused on developing their own competencies, such as those needed to better support organisational mergers and acquisitions (Lancourt and Savage, 1995).

Moreover another crucial HR issue to look at is the measurement of human capital, which is term used to describe the people within an organisation and the value they create. In other words, it is the measurement to the bottom line contribution that each employee adds to an organisation. In fact, embracing the concept of human capital and finding the right device to measure it presents HR with its greatest chance to be demonstrably strategic to the board. Clearly by demonstrating the worth of the workforce in a way to the board, will in turn, demonstrate HR’s worth as a strategic unit that adds value to the business rather than simply providing a service.

The different approaches that can be used to measure human capital are: HR benchmarking that is based on comparing HR policies and practices with those of other organisations. Another approach is the Balance scorecard that presents a holistic view of a company’s current state of health by monitoring its activities across all areas via key performance indicators such as finance, quality and guest satisfaction. Here, a good example is Nationwide that introduced in 2002 a database of employee, customer satisfaction and HR and business performance data and then benchmarked HR indicators against other organisations. The benefits of the measurement resulted in staff turnover reduction of 1 per cent and showed a direct link between HR indicators and business performance which led to increase in customer satisfaction (Personnel Today, 2002).

12.0 Conclusion
The Human Resource functions have undergone many changes in the past five years and will keep changing in the future. For instance, uncertainty in employment security, the psychological contract between employers and employees has changed. Moreover the leadership role has taken a new angle with a tendency towards the transformational style.

Management are more willingly recruiting on a global scale, as talented people can be found beyond a country’s boundaries. Methods of recruitment have changed. Organisations, especially multinational enterprises are not only relying on the traditional recruitment process but also using e-recruitment (internet recruitment). Retention of staff has grown in importance and HR is actively involved by providing training and development opportunities. Management are more open to provide equal opportunities in relation to gender, nationality or people involved in same-sex relationship. Moreover, in the reward system, much emphasis is not only put in monetary value but also on flexible benefits. Empowerment of employees is increasing, thus giving rise to motivation. Relationship between employees and organisation is improving as management are aware that if fairness is perceived by employees, they will likely to perform better. There has also been a rise in working balance with employees experiencing a more balanced life, fathers enjoying paternity leave, employees working from home and employees having flexible hours.

It is crucial that HR managers, not only understand the overall business strategy but also participate in the decision-making process. HR should have a bigger role to play other than only in recruitment, training and career development. In fact, those areas should be transferred to line managers and existing employees. Outsourcing should be used wherever it is possible to allow the HR department to focus on a broader picture on the change management process. HR should detect individual talent and develop the talent for the success of the business. Finally, HR should measure human capital and their value and contribution to the company. This can be done through HR benchmarking and Balance scorecard.
These are only a few areas where HR can help in transforming the way in which organisation help to transform their people.

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