Human Resource Management As Strategic Business Contributor

MASTER OF BUSINESS ADMINISTRATION AWARDED BY NOTTINGHAM TRENT UNIVERSITY

ASSIGNMENT SUBMISSION FORM Note: Students must attach this page to the front of the assignment before uploading to WECSERF. For uploading instructions please see the help file online Name of Student: ZUBAIR SALEEM Student Registration Number:

Module Name: ORGANIZING WORK AND MANAGING HUMAN RESOURCES Module Number: WEC-MBA-05-505: OWMHR Assignment Title: HRM and Its competing Demands Submission Due Date: January 5, 2009 Student’s Electronic Signature: Zubair Saleem

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Assignment Form MBA Jan04

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Assignment Form MBA Jan04

EXECUTIVE SUMMARY In the first few sessions some traditional approaches of Human Resource Management are given to have a background and view to understand that how HRM is important and how it is strategic business contributes in the overall strategies of an organization. This highlights the main functions and Human Resource systems which directly influence the organization structure, employee behaviors and performance, development of human capital and also on the cost effectiveness from the traditional ways to recruit, manage and control the behaviors of the employees to give a satisfactory and continuously improving performance to achieve the organization goals. After this background it includes the dynamics and reasons of innovations in business environment that how business environment is changing globally and how Human Resource implement its techniques to enable the organization to sustain in new markets globally. Coming on the main point of that what are competing demands of Human Resource Management and what challenges HRM will be facing in the future, and what are the ways to compete in new markets and how HRM enables a HR professional to meet those competing demands strategically.

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CONTENTS Executive Summary…………………………………………………………... 1.0 Introduction……………………………………………………………... 2.0 HRM and its Role as Strategic Business Contributor…………………... 3.0 Functions of HRM……………………………………………………… 3.1 Employee Performance Improvement…………………………….. 3.2 Human Capital Development……………………………………… 3.3 Cost Effectiveness…………………………………………………. 4.0 Competing Demands on HRM………..………………………………... 5.0 Conclusion……………………………………………………………… 6.0 References………………………………………………………………. Appendix 1………………………………………………………………….. Appendix 2…………………………………………………………………..

02 04 05 07 07 08 09 10 16 17 18 19

1.0 INTRODUCTION Human Resource Management basically is the replacement of Personnel Management which was previously in practice to manage and maintain the employees working within the organization to achieve its objectives. HRM is mainly concerned with recruitment and selection of employees, their training and development, record keeping, managing behaviors, manage workplace, being a change change management and utilization and compensation of

skills and human capital

according to different job requirements keeping the company (Legal entity) or organization goals and objectives and business (ROI=Return on investment) or benefits in sight. The replacement of Personnel Management to Human Resource Management was obviously not an accident and was implemented after a huge research and practices. This research and practices involved a lot of concepts and theories given by many social scientists. Basically managing human behavior is a social science field and even HRM Prepared by: - Zubair Saleem

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also merged many of concepts taken from many other fields related to manage human capital like Public Relations, economics, sociology, social sciences and political science etc. These conceptual persons were thinking human and its basic and social needs and also that how their skills can be improved, how their behavior can be changed to achieve the competing demands of dynamic business environments. Specially after World War II people made a lot of changes in their life styles, working ways and almost all of fields whether concerned to their own lives or their atmosphere only to sustain themselves in this dynamic and challenging business environment. Therefore thinking about their working styles people made some theories to enhance that human is a main resource of any organization and achievement of any organization goal is only possible when its workers are sincere and have a psychological contract with the organization.

2.0 HRM AS A STRATEGIC CONTRIBUTOR OF ORGANIZATION BUSINESS “There is no great tradition or heritage of strategy thinking in many organizations; the skills to set and implement strategy are sometime missing; and there are barriers to strategy. All this makes strategic thinking and action a tough challenge. The first step requires finding the motivation to begin.” (Tregoe, Zimmerman, Smith and Tobia, 1989). This definition shows the direct influence of Human Resource Management in overall strategy formulation and its implementation and it plays its role as strategic business contributor, whereas corporate strategy is to create sustainable competitive advantage. It is necessary to have a review of HR architecture describing the relationship between HR functions, HR system and Employee performance. This will clearly show the importance of HR professionals in strategies formulation and implementation. •

HR Functions: - “What we think, know, or believe in is, in the end, of little consequence. The only consequence is…. What we do.” (Haines, 1995)

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HR functions like selection, recruitment, training, development etc have direct influence on organization structure and it is only possible to select, understand and implement right strategies on right time and right place if the organization structure is working as per organization business needs. Further HR functions are divided in two main parts; i)

Technical Functions: - The technical functions of Human Resources are recruiting, selection, compensation, training, development and benefits.

ii)

Strategic Functions: - Strategic functions of HR are responsible to motivate and deliver all the above technical functions to implement the organization strategies.

HR professionals must have the knowledge and capability to build a better structure of the organization and at the same time they must be experts in strategy implementation to achieve business goals. •

HR System: - HR system is its own systematic arrangement of professionals who are capable to achieve HR functions and must be able to build a high performance based business environment. To build this high performance human capital HR system should; i)

Select and sustain its decisions as per sustainable competency models.

ii)

Make strategies to develop human capital to provide skills on demands of internal customers or internal business units.

iii)

Make strategies to compensate and make performance management policies by which high performance employees can be attracted, retained and motivated as well.

iv)

Have ability to change its strategies implement new strategies because of having continuously changing and dynamic business environment.

•

Employee Performance: - Employee performance can be said the pillars of an organization and Human Resources are responsible to manage, maintain and control behaviors to attain expected performance from its employees. But before

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that HR system must make strategies, apply HR functions and achieve a better organization structure to make the organization sustain in new trends and to achieve its goals. Some more description is given below in functions of HRM.

3.0 FUNCTIONS OF HUMAN RESOURCE MANAGEMENT Human Resource Management in depth contains many functions as given in Appendix 1 to fulfill the requirements of the business environment of an organization. But mainly HRM focus on three main factors which are the key techniques to manage and improve business environments and meet the competing demands of changing environments of an organization as given below; 3.1 Employee Performance Employee performance and his awareness about his duties and organizational goals is the key factor of any organizations business profit as well as loss. HRM as a strategic business contributor is always responsible to make strategies to calculate the performance of employees according to business objectives and their job specification and requirements, and also to improve their performance to increase the quality and profits of a business. There are some key strategies which always being implemented by Human

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Resource personnel to improve and calculate the performance of employees as given below; 1. Reminding the organization’s goals and objectives to the employees 2. Explaining employee importance of their role as a part to achieve organization goals. 3. Involving them in strategies formulations and their improvements 4. Ensuring and stretching their job goals to improve the performance consistently. 5. Sharing new goals and future action plans to employees to make their minds for their achievement. 6. Explaining them organization expectations from them as individual and as team. 7. Explaining them performance measurement criteria which will be reviewed to see their performance. 8. Giving them examples of best performance by awarding and motivating on best performance. 9. Giving them opportunities to respond to the evaluations. 10. Being proactive rather than being reactive. 11. Knowing your own strengths and weaknesses being a leader. 12. Criticism on bad performance. 13. Arranging meetings to discuss their experiences, strategies to motivate them and to improve coordination. 14. Giving them opportunity to set their goals and objectives because they know their work better than all others. 1.2 Expanding Human Capital Human being the basic resource is capital of an organization. Previously practicing personnel management organization were only working in the way that on requirement and need of an expert or skilled employee for either current or new job, they have to go for external consultants or advertisements and have to hire a new employee from outside the organization. But Human Resource activities have proved that to fill up the job vacancies is not the fulfillment of job requirements and also that organizations who train

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their workers for challenging jobs and also develop their skills for new or current but jobs up their level and after development fill their upper vacancies from their own employees, then these organizations face so less problems and don’t have to invest money on hiring a person and even the trained employees give them better efficiency then the newly employed staff. Because the employee hired from outside take a time to understand the business environment as well as he require time to establish coordination and better communication with other workers to be merged and sustain in new business atmosphere. Human Resource Management gave the concept of Training and Development of current employees to overcome all these problems mostly faced by the organizations. Trainings mostly are given to improve the performance of the employees in their current jobs and to get more benefit from their skills and capabilities and development of their skills make the organization able to fill up their higher positions from its current workers with their developed skills and to reduce the cost of advertisements and hiring of new employees which obviously will also effect the cost of products and also the profits of the company per product as well as per employee. 1.3 Cost Effectiveness Human Resource management is basically concerned to the Human capital of the organization and it thinks the human as the basic asset of the organization. Every organization emphasize on cost effectiveness because it has a direct effect on the profit and loss in the organization business. Human Resource Management also works for the cost reduction but in an organization some costs are fixed and may not be reduced like purchase of resources, process costs and utilities but Human Resource Management is not directly concerned with these costs but it has an influence on their strategies formulations. Human Resource Management is mainly concerned to manage, maintain and control the following costs; •

Cost on hiring employees

•

Cost on training and development of organization employees

•

Cost on advertisements like to hire new employees etc

•

Cost on different motivating and collaboration activities

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•

Cost on Awards, flexibilities etc

•

Cost on each employee and profits from each employee

These all costs are the key costs of human resource department to manage, maintain and control the behaviors of employees and to develop human capital of an irganization.

5.0 COMPETING DEMANDS ON HRM “HR is the process by which the guiding members of an organization envision its future and develop the necessary procedures and operations to achieve that future.” (Godstein, Nolan, Pfieffer, 19920) Human Resource Management as a handler and motivator of changing behavior of human capital of an organization which is the basic resource of an organization, it also have to cover many competing demands not to fulfill its duties only but to make organization able to enter in new markets and to sustain in current markets and also to manage the behavior of employee working within the organization. Also HRM influences in better decisions or strategies of an organization, so have to meet these competing demands which enables organization for a better action plans to produce its required products and to get benefit of its employees duties as per expectations of their jobs and goals.

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These competing demands also changed with the passage of time and as per requirements of new markets, continuous competition in business and challenging future trends. “Its been rather easy for us to decide where we wanted to go. The hard part is to get the organization to act on the new priorities.” (Floyd and Woolridge, 1992) HRM can be said as an agency working for the organization which benefits organization by using its techniques and activities to achieve business from full utilization of human skills. But as for as HRM is concerned with people as Human Resource author Dave Ulrich said that “the HR activities appear to be- and often are- disconnected from the real work of the organization”. This meant that HR activities are to make the expectations and to make the employees enable to meet these expectations but as a proactive part of organization and should also be empathically drive its employees to achieve their goals. Human Resource as a strategic business contributor acts like a navigator, capability builder, internal consultant, business partner and also as relationship manager of the organization to motivate the employees towards achievement of business goals and managing their behaviors as per organization expectations from the employees as an individual as well as in team. HRM itself must work to achieve some competencies or competing demands. These competencies can be divided into three main levels as given below; 1. Core Competencies Core competencies of Human Resource Management include those competencies which make organization employees able to meet current as well future requirements of market and meet the standards. These competencies make expectations from different levels of organization employees as follows; •

Personal Attributes: - These are the competencies from a single employee which focuses to improve skills and motivate him for organization goals and make him

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able to achieve future trends as well as to improve his temperament to sustain in dynamic business environment. •

Leadership Competencies: - In these competing demands HR professional have to make strategies to meet the future trends of markets either current or new markets keeping opportunities, competitive advantages, motivation criteria, alignment and possible changes in the organization.

•

Management Competencies: - These competencies applied on HR professionals able to plan, organize, manage and control the work place outputs whether in terms of business and profits or skills and performance.

•

Functional Competencies: - Functional competencies are to enable a HR professional to enhance his skills, knowledge and capabilities required in all Human resource roles.

2. Level Specific Competencies Specific level competencies applied on different levels of management or leading bodies which enables them to apply strategic Human Resource Management techniques to manage and control the workplace environment and its Human capital. These competing demands are divided into following levels; •

First Level Manager Competencies: - First level managers or leaders are the key personnel or an organization structure that are responsible for strategies formulation. These competing demands make them able to focus on individual or team effectiveness and willpower of goals within a short period of time.

•

Mid Level Manager Competencies: - Mid level managers or integrators focuses on the competing demands of organizational processes, practices, implementation of strategies, action plans and changes in processes and operations, cross team

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collaboration, internal and external focus on action plans and manage them on long term basis. •

Executive Level Competencies: - Executive level competing demands emphasize on environment and culture effectiveness, sight on external environment and market requirements, generating new ideas and directions; and overall organization overall long term basis objectives and policies.

3. Role Specific Competencies Role specific competing demands focus on different roles of Human Resource professionals and factors that make them able to achieve continuous increase of performance in these roles. •

HR Product/Service specialist Competencies: - These competencies focus on the development, delivery, resources selection, managing strategies, and application of developed techniques in products and services to meet competencies and challenges of markets.

•

HR Generalist Competencies: - These competencies mainly focuses on the internal customer of the organization to fulfill their requirements like appointment of new workers on requirements, providing better workplace environments, trainings and development of their skills etc by the use of Human Resource techniques, products and services and working like internal consultants.

•

HR Strategic Competencies: - These are the basic competing demands of an organization for a Human Resource professional to make strategies and provide better strategic direction to the organization goals on the basis of organization capabilities, possible strengths and opportunities keeping weaknesses and threats in sight.

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HR professionals are the key personnel of the organization to meet the competing demands of the organization to manage and change behavior of its human capital and to attain the above competencies which enables the organization to compete and sustain its position in current as well as in new markets. Human Resource professionals meet these competencies keeping following factors in sight which may be said as the standards or control limits for a Human Resource professionals as well as for each and every employee of the organization; •

Vision and Mission of the Company

•

Strategic Terms and changes

•

Customer needs and standards

•

Preferred and possible Resources

•

Internal Alignment of Strategic organizational structure

The world markets are facing many other challenges also and future Human Resource professionals also have to face and make strategies for many global changes in the business environments like; •

Competing with global markets with globalization of business.

•

Advanced technologies entrance in business environments like intranet and work force flexibility.

•

Workforce development on long term business goals and long term team projects to make Human capital able to work with new technologies.

•

Versatility- New challenges in new markets like increased competition in markets.

•

Internet marketing and media enhancements used for advertisements and competitions.

HR professionals use some techniques to calculate and examine their own performance as well which shows their working output and as well as make them able to analyze and enhance the gaps in the organization strategies, individual and team performances and

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also possible changes in their goals and expectations. These also provide vacuum to increase the performance of the employees and meet the competing demands made on them. “Unless you know how you are doing as you move along, you will never know when you’re done, or if you have succeeded.” (Crosby, 1979) Human resource techniques to calculate these competing demands used to analyze the competencies and improve them as per need of organization objectives are mainly dependant on competencies drivers. Human Resource scorecard is one of the basic tools that many organizations have implemented and found helpful in working with Human resource strategies. This HR scorecard was introduced by Robert Kaplan, a Harvard business school professor in one of his article Harvard business review and David Norton in 1992. Kaplan and Norton’s scorecard looks on the competencies, its drivers and then strategy implementation. This scorecard is a protocol developed for CEOs and top level managers to incorporate financial and nonfinancial measures in organization action plans with measureable results of business strategy. This scorecard emphasizes on four main perspectives; i)

Financial Perspective: - This perspectives measures that what is my strategy for the satisfaction of stakeholders?

ii)

Customer Perspective: - What does the customer want? To achieve my goals, how must I look to my customer needs?

iii)

Internal Perspective: - How will I satisfy my customers? What are the critical dimensions of my approach to business processes and how do I reengineer them, focusing them to be consistent with my customer objectives?

iv)

Organization Learning: - To achieve my vision, how must my organization have learnt and improved?

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Within each category there are goals and measures and the competencies required to achieve them. These competencies are graphically distributed for a better understanding of each perspective and their measurable goals as in Appendix 1. “What we are looking at is balancing outcomes, like financial success and customer success, with drivers. The drivers are internal processes, the people, the organization, the learning, and the growth profile.” ( Norton explained, 1992)

1.0 CONCLUSION Human Resource Management is a key technique of managing the behaviors of organization employees, their training and development to enhance their skills and make them able to compete in new market trends and dynamic business environment. With the use of HR professionals skills an organization can boost its business and can make itself able to sustain in current markets and also to enter in new markets to be able to increase its business and compete with global innovative markets. Also Human Resource Management helps the organizations to build a better and competitive structure which enables it to make and implement its strategies to have best possible benefits. Also Human Resource Management enables organization to measure its assets, costs and performances of each individual and as well performance of teams. HRM uses its techniques to train and develop employee performances to make them able to attain organization goals and objectives and to improve their performance to achieve future trend and sustain in dynamic business environment. Human Resource scorecard used measures the performance of HR professionals and their techniques that how much they

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contribute in strategy development of the organization and how they can improve their strategies.

7.0 REFERENCES •

Competency Assessment Methods: History and State of the Art, 1984.

•

Competency-Based Performance Management, Washington D.C., 1998

•

Hussey, D.E. (1996): Business Driven Human Resource Management, New York: John Wiley & Sons.

•

Barney, J.B. (1991): Resources and Sustained Competitive Advantage”, Journal of Management, Vol. 17/1

•

Ulrich, D. (1997): Human Resource Champions: The Next Agenda for Adding Value and Delivering Results,

•

Wright, P.M. and Gardner, T.M. (2000): Theoretical and Empirical Challenges in Studying the HRM Practice

•

HR focus: Special report on HR matrices, EBSCO publishing/ OCTOBER 2003

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APPENDIX 1

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Source: www.pdfcoke.com (HR Scorecard)

APPENDIX 2 Awards Can be Awards or motivation of employees on good performance can be made on provision of following benefits. 1. Money 2. Involvement in Artistic activities 3. Health and Medical facilities 4. Job security 5. Involvement in decision making 6. Motivations on better performance 7. Opportunities of growth and promotions 8. Interesting and challenging jobs

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Expectations from an Employee An employee must be aware of following expectations of organization from him as an individual or in team work. 1. Outcomes of action plans 2. Performance goals 3. Meeting customer requirements 4. Quality and quantity of production or services 5. Time sensitiveness 6. Performance Measures like annual report Performance Measurement Criteria An employee must be demonstrated for the performance viewing criteria that how his performance will be viewed by the company. Those performance measuring criteria are as follows; 2. Constantly being among them as an employee. 3. Scheduled periodic review of their performance. 4. Objective measurement of their performance on the basis of ; •

Unacceptable

•

Fair

•

Good

•

Excellent

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