Humans as assets to various firms
There are many business leaders such as John Chambers of Cisco Systems & Howard Schultz of StarbucksTM who consider the employees of their organisation as their assets and want to ensure that the talent that they have is retained and work with same amount of excitement and satisfaction for years to come (Jackson, Schuler, & Werner., 2009). These manpower resources who work in organisations performing various jobs in return for payments, incentives and other benefits are called Human Resources (H.R) and the people who manage the resources i.e their recruitment, salaries, performance evaluators are known as Human Resource Personnel's (What is Human Resources, 2010).
Human resources drive the company to do the best by using finance, knowledge and other available resources. These human talents must be managed and cared for to ensure the organisational goals are attained. The function that enables this task is called Human Resource Management (HRM) (Bohlander, G. & Snell, S., 2007). HRM ensures that the Human talent is effectively utilised by doing the following basic functions such i.e manpower planning, recruiting, managing performances, training, development, salaries, benefits and industrial relations (Dowling, J. P., Festing, M., & Engle, D. A., Sr., 2008).
Wilton (2011, p.6) states that decades ago organisation had a separate department which was considered to be more administrative in function such as working on payroll, leave record keeping, conducting safety related trainings and dealing between trade unions (industrial relations) etc known as Personnel Department which managed HR activities as well. However, in mid 1980's focus was shifted to more of people management techniques which has now emerged to become people centric known as HRM. HRM today in organisations still continue to do the prevalent administrative functions along with a gamut of other activities. He further states that in the old approach HR was a responsibility of Personnel Department which has now been replaced by making line Managers responsible for this function and there has been a shift from Pluralism (Trade Union to employer dealing) to Unitary or Individualism management (employee to employer dealing).
Storey (2007, p.7.), defines HRM of today as and I quote, "Human resource management is a distinctive approach to employment management which seeks to achieve competitive advantage through the strategic deployment of a highly committed and capable workforce using an array of cultural, structural and personnel techniques."
HRM approach differs from soft to Hard in organisations. 'Soft' HRM primarily means that if an organisation aligns its HR policies to that of the organisational goals, treats their employees as talents and assets they will automatically be able to ensure quality and adaptability in their workforce and will be able to retain and nurture committed employees who strive hard to achieve organisational goals. Soft HRM is based on the use of human element. The 'Hard' HRM on the other hand uses HR systems, to achieve organisational goals. It focuses more on the effective and efficient use of the available resources and considers people as a resource. Management using Hard HRM focuses only on short term gains, company and shareholder profits. They consider focusing on human aspects as a waste of time and believe that success of an organisation benefits all (Collings, & Woods, 2009, p. 2.). Radcliffe (2005), states that New Zealand business environment is generally small with just a few organisations employing more than 20 employees, satisfaction of each and every employee is necessary to optimize performance and increase organisational growth, and hence New Zealand organisations seem to be using 'soft' HRM because it is more people centric. He further adds that even though the 2 HRM approaches are different, organisations would be using both because the objective of the organisation is to get profitable, which is only attainable through 'Hard' HRM approach where as the 'Soft' HRM deals with a humane approach. (Radcliffe, 2005)
Organisations need the help of people for efficient production of goods and services. Manufacturing of the goods and services are done by people employed by organisations. The relations between employees and the employers where the employees connected deal through a union is called Industrial Relations. The broader version of Industrial relations is Employment Relations which defines all workplace associations (ILERA, 2011). Employment Relations is the relationship between the organisation and its workers to efficiently and effectively perform and complete the desired work. However, Employment relations are tripartite relationships as they have direct involvement of the employer and the employee and indirect involvement of the state or respective governments. The state or the respective government dictates laws of operating an organisation on one hand and has to mediate between both party needs in case of disputes or dialogue to ensure satisfaction respectively (Nel, Werner, Haasbroek, Poisat, Sono, Schultz, 2008, p.120.)
In these turbulent times HR also provides strategic knowledge on how to motivate and retain employees, changing of the work design, recognition systems and collaboration across time zones, bridging cultural gaps etc. The office environment is changing and more and more companies are going global and virtual. Jeffrey Joerres (CEO - Manpower Inc) states that organisations are not only moving their back office operations to emerging nations but are also moving their R&D and other knowledge centric divisions to developing countries such as India, China, Russia, Brazil etc because of the available talent and cost effectiveness hence the role of HR becomes more of a strategic, complex and important in organisational success (Lesser, 2006).
Sinha (2007), defines Strategic HRM to be the link between HR and the strategic company goals. SHRM enables various business performance improvements in terms of innovations, flexibility and competitive advantage. Strategic HRM (SHRM) in an organisation would mean the involvement of HR in formation and implementation of the organisational strategies through the entire staffing process (i.e. recruitment, training, performance management and rewards and recognition). He further states that SHRM focuses on long-term HR planning, improvement of employee productivity by removing the external business obstacles confronted by Human Resources, mergers and acquisitions etc. However, SHRM will not be effective if there is no involvement of HRM in the boardroom in all stages of organisational planning development decisions.
Today we would be discussing the service sector which is growing at tremendous pace where the role of HR & ER is very crucial and complex. There are a number of explanations for growth in the service sector. One reason is that as incomes rise, consumer demand for services increases even faster than income. This is evident in services related to health care, leisure, education and travel, which all need finances. The power today of purchasing these facilities and having improved standards of living as salaries are becoming higher and people have begun to have an increase in levels of discretionary income. In higher-income countries such as New Zealand, the share of employment in both manufacturing and agriculture has declined steadily over the last 50 years, as labour has increasingly shifted to services. The number of people employed in the service sector has now gone over 70% in most developed countries (ILO, 2006) In OECD countries, most employment growth over the last decade was due to services, and in particular, business services(OECD, 2005).Answer 1
We have briefly defined HR and ER and need to understand that HR and ER are both extremely important functions for any organisation to sustain and grow. Infact it has been realised by organisations of today that along with Vision and Mission of an organisation, the HR policy and manual based on the vision/mission statement and an ER policy and code of conduct manual is extremely critical in ensuring that the strategic objectives of the organisation are met. People generally tend to form relationships and are interdependent and need each other personally, and in their work environment. Human Resources deal with the Humans and their issues. It works in the interest of employees - giving them proper guidelines and work environment, employers-ensuring smooth and efficient functioning and profits and stakeholder's - return of investment. Employment Relationship is a tripartite relationship which works in the interest of building the company and worker relationship along with ensuring adherence to the policies of the ruling body i.e. state. ER mediates between organisation management and employees to clear prevalent and ongoing disputes and improves working conditions; it ensures that the legalities of the relationships are understood clarified through proper channels of communications. I quote "ER is the cornerstone of Employment Relationship."(Nel et al., 2008).
Peter Boxall (2003), states that only 22% of Companies in New Zealand have more than 100 employees hence the country has a large number of Small Enterprises (as cited by Townsend, K., Wilkinson, A., Brown, K., & Burges, J., 2011) , many organisations have no separate HR and ER divisions and the HR professional is therefore expected to take care of the ER role. However, the HR professional if wants to operate this role efficiently, has to ensure that he is well aware of all the legislations and quick changes that are happening in them all the time, he needs to make sure that he is able to deal with the Trade Unions, handling of disputes effectively and values the organisation, the HR and the Employment Relations Policies. Therefore if an organisation needs to consider optimal performance it needs to ensure that the HR and ER policies are integrated in the work culture.
The HR & ER policies in New Zealand are based on the guidelines of 1) Employment Relations Act 2000 (ERA), Act No. 24 of 2000, dated 19th August 2000, consolidated version as last amended in October 2010 by Act No. 120 of 2010. 2) Human Rights Act No. 82 of 1993, consolidated version including amendment upto Act No. 1 of 2010. 3) Parental Leave of Employment Protection Act 1987, Act No. 129 of 1987, dated 10 July 1987, consolidated version including amendments up to Act No. 97 of 2007 (Dialogue - Industrial and Employment Relations Department - New Zealand, 2011).
The Tripartite relation through ERA Act 2000 between the Government, Employees and Employers facilitates the relationship by providing legality the employers and the employees to work and conduct business in New Zealand which in turn will enhance the state revenue through tax. This act promotes [good faith] in relationships and enables them to build positive associations amongst the 3 groups. The right further recognises that this relationship must be built as per the legal framework, ethics and integrity in behaviour and must be able to generate trust, confidence, and mutual respect for each other. It should not allow discrimination because of power, race, and everyone should be treated with equality and dignity.
The Act also the gives right to the employees to join unions or not join unions for their representation, grievance or issue resolution. Further, the right gives the employee the privilege and power of deciding whether to join the union or not as they will be represented by the union irrespective of joining it. It gives the employer and the employee / Union the right to conduct business in good faith and resolve issues through mediation of the state appointed disputes Mediator, whose services are provided by the state for free. The Mediator uses the basic problem solving techniques to resolve disputes without involving the government or the judiciary in any way.
The rights are governed by the International Labour Organisation where convention 98-Right to collective bargaining is ratified and Convention 87-Freedom of association is not ratified (DOL, 2011). This is causing discontentment amongst the management who feel that the Union is holding more power Function of the mediator is efficient resolving of issues; promote availability of justice to the parties involved, identify the parties and enable positivity in relationship within the parties and communities, keeping the issues confidential during the process. (Risak, 2011)
Foster, Ramussen, Laird, Murrie (2007), state that employers are of the opinion that collective bargaining gives all the rights, privileges and power to the union's, moreover they believe that New Zealand having smaller work groups there is no specific reason to utilise the feature of collective bargaining and instead prefer to pay up the employee. The employers who earlier patronized collective bargaining do not seem to be interested in utilising this feature. To add to this a change in government has completely removed the need for employers to utilize this feature in New Zealand
HR reviewed through systems approach is functions as 1) The micro or traditional, functional aspects of the field dealing with selection, training, compensation, and performance appraisal and 2) a more macro, or strategic aspects of HRM dealing with mergers and acquisitions, international HRM, and downsizing etc. The purpose would be to provide a framework for identifying the intersections of macro and micro in service sector businesses today.
System according to me would be bringing together or integrating various elements to achieve a common goal. In HR the meaning of system would be how the use of various HR practises would influence the firm's effectiveness (Storey, Wright, Ulrich, 2009). Hence it is imperative that we must study the HR systems and its impact on tripartite relations in organisation.
Wright & Bosewell (2007), consider Micro HRM to be more of functional view of HRM. Micro HRM reflects the relevance and the effect of HR on individuals and is based on studies relevant to the fields of psychology and science/technology which works on identifying the means of increasing performance, efficiency and satisfaction of an individual employee relates it to improvements in production. It finds out ways and means of analysing the employee based on characteristics such as skill, abilities, etc and relates it to performance measure of productivity, turnover etc. This enables the HR to identify the differences in the employee intellect. They consider Micro HRM to enable the following the HR functions of Selection (Job description) / Recruitment (Job Content) /Training & Development / Compensation / Performance Management form the core of Micro systems and should be integrated with the organisational Business Strategy to achieve organisational objectives.
Further, they view that Macro HRM constitutes a broader, strategic view and is more organizationally focused. It analyses the impact of HR practises on the organisation. It works out designs or tends to focus on the differences in relevant variables across organizations, assuming relative uniformity in the variables within the organisation. The core functions of Macro HRM would be Linking Business strategy with HR policy (linking employees to Business Strategy) / Identify and nullify the differences in policies and practises / Bring commonality if differences identified in the entire organisation HR policies and practises / Conduct multi - level research within and outside the organisation to identify issues, satisfactions, improvement recommendations / trends - national, international and global.
Integrate Micro and Macro HRM systems to ensure optimal benefit such as training and development based on multi level research which would give feedback on employee needs vis a vis global trend / Assess the horizontal fit (based on abilities, skills, competency with job requirement, compensation, personal growth) / Satisfy employees perceptions and growth requirements. They further state that each of these areas in HRM system has shown great progression and that integration of the two functions would benefit HR and organisation as a whole maximise impact (Wright & Boswell, 2007).
I would also add that the HRM system today would also need to have knowledge of mergers, acquisition, global laws, management of manpower & other resources & prevalent industry norms which is an ongoing phenomena and an everyday occurrence today.
Chew (2010), different organisations use different strategies to manage their employees. In 1999, Lepak and Snell developed an HR architecture that grouped into 4 different modes of employment to that of their work relationships. The 4 different modes were identified on the basis of their unique skill sets in relation to the processes requirements knowledge based / job based / contract / alliance and partnership mode. Here knowledge based employees would be the core people of the company on whom the company would be willing to invest in providing training & development, benefits, growth etc. The Job Based mode would have skilled professionals who may be associated with the organisation as consultants and have specific loyalty / Contract based would generally mean labour & Partnership mode would mean temporary relief staff.
What was identified from this study that Organisations have different methods managing HR and ER functioning. While the organisations would be happy to invest more in the development of the core members, its methods of operations with regards to mode 2, 3 and 4 would be totally different. Based on the behaviour of the organisation the commitment, loyalty response, the relations between levels of disputes and or satisfaction would also differ from the employee perspective (Chew, 2010).
Forstenlechner, Bourne, & Lettice (n.d.), identified 3 benefits of commitment based approach in HR architecture. 1) It created an internal need for growth leading to more challenging jobs and work related challenge rather than just position. 2) The focus of the group was attaining organisational goals and hence motivation was based on performance. 3) Trainings & Development programs were designed as per the firm's needs or required knowledge on the basis of long term growth of the employee and the organisation. This approach motivates employees to perform as a team and work towards the achievement of organisational goals.
This architecture was further studied and on highly skilled knowledge based professional workers such as scientists, engineers where there was a consistent change identified. However, when this approach was used in highly knowledgeable base with random volatility and change, it was able to increase efficiency, revenue and growth of the firm. This attracted further talents to the company and produced high amount of employer - employee relationships (Collins, J.C., Smith, K. G., 2006).
Armstrong (2009), explains that managing of people in the global context where the parent company has branches across the globe is called as International HRM (IHRM). IHRM manages the expatriates and the globally employed staff of multinational firms with branches overseas. The company generally has a centralized HR Manager or team managing IHRM. IHRM has to deal with globally diverse cultures and business environments. HR Manager has to know the prevalent laws, work culture, motivation patterns, people characteristics, standard industry norms of the overseas operations and hence the job becomes very complex and challenging.
When a company sells goods and services in a domestic market across the country then it is a national company, however when it integrates this into global economies and trades world over it is called globalization. Global HRM (GHRM) deals with managing of the multi cultural teams, expatriates, senior level members, knowledge transfer specialists, regular commuters, etc through global HR Rules (Armstrong, 2009).
Managing talent has become a great challenge for HR Managers, Extensive research based on the objectives of the HR Policy and finding the relevant talent is crucial for organizational success. However, HR Managers today have to ensure that they retain this talent need to focus on important aspects of remuneration, primary and secondary benefits, career development, training needs, culture of the organisation and working conditions along with safety, security etc (Telegraph, 2011)Answer 2
Organisations are identifying immense growth in the service sector which has been enhanced due to the support of the Global Business environment. To continue to grow and achieve economic recovery and long term gains, Human Resource Development must be made an integral part of the organisational strategic planning process (Kefela, 2010).
GE is a Global Organisation a multinational company operational for over 125 years in more than 160 countries. It has over 3, 00,000 employees world wide and is one of the leading names in the field of Infrastructure, finance, media and with footprints in healthcare, information and entertainment. It is one of the only companies in the world which is still listed in the DOW Jones Industrial Index since 1896. It's R& D Budget - $5.2 billion with U.S Patents filed -2370 in 2009 (GE, 2011).
GE New Zealand has been operational with four businesses since 1982 employing around 600 people in the field of Technology Infrastructure, Energy Infrastructure and Capital & Media. Its offices primarily are in Auckland and Wellington (GE in New Zealand, 2011).
Primarily being a US based company, GE abides by the American Governing norms. However, it being present in over 160 countries makes it impossible for the company to restrict itself to those US norms and hence the company clearly takes the responsibility and follows the prevalent country norms wherever required and applicable.
Since we have taken into account a multinational organisation, the HR policies to be drawn would be centralized for different divisions on the factors such as Code of conduct, security, government laws, employee responsibility and obligation towards the company, etc.). The other policies such as Job description, title, leaves etc would be related to the region the organisation is operational and would be made region specific.
The main features to the Policy document would be as follows (GE, 2011):
Integrity & Trust:
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