Importance Of Hrm

Q1. Why is the HR department playing a more significant role in the organization today than it did 20years ago? Ans:

The role of HR has changed greatly since medieval times when the major motivational

factors were basic human necessities and the role of HR was to arrange for these in proportion to the work done. Today’s company should consist of fast, flexible and dynamic teams of enthusiastic, motivated, creative and fully self expressed people. Human resource will have to play a substantial role in the business. In order to perform this role HR professionals should have: Thorough Knowledge of business as well as of Human resource functions, the ability to lead any change process, innovation, problem solving , the leadership ability to influence the organization, etc. There is a paradigm shift to align people to the business and so today there is a demand to have HR professionals as business partners. There are 4 basic roles as HR professionals. One as an administrator, two as an agent of change, three as a employee champion (as opposed to employer champion)and four as a business partner. Since there are different sets of people who have different expectations, there have to be newer roles and newer competencies of Human Resources. Role of HR department HR department with the right skills can contribute to a Six Sigma initiative at both strategic and tactical levels. This article describes the areas in which HR should play a role in Six Sigma and discusses how HR professionals can increase their chances of being included in Six Sigma decision-making and implementation.To appreciate the important role HR has in Six Sigma, it is important to begin this discussion by having an understanding of what Six Sigma is, all the roles played by others in a Six Sigma implementation, and the factors critical to a successful implementation. The Challenges of Workplace The future success of any organizations relies on the ability to manage a diverse body of talent that can bring innovative ideas, perspectives and views to their work. The challenge and problems faced of workplace diversity can be turned into a strategic organizational asset if an organization is able to capitalize on this melting pot of diverse talents. With the mixture of talents of diverse cultural backgrounds, genders, ages and lifestyles, an organization can respond to business opportunities more rapidly and creatively, especially in the global arena (Cox, 1993), which must be one of the important organizational goals to be attained. More importantly, if the

organizational environment does not support diversity broadly, one risks losing talent to competitors. Planning a Mentoring ProgramOne of the best ways to handle workplace diversity issues is through initiating a Diversity Mentoring Program. This could entail involving different departmental managers in a mentoring program to coach and provide feedback to employees who are different from them. In order for the program to run successfully, it is wise to provide practical training for these managers or seek help from consultants and experts in this field. Usually, such a program will encourage organizations members to air their opinions and learn how to resolve conflicts due to their diversity. More importantly, the purpose of a Diversity Mentoring Program seeks to encourage members to move beyond their own cultural frame of reference to recognize and take full advantage of the productivity potential inherent in a diverse population. An organization that sees the existence of a diverse workforce as an organizational asset rather than a liability would indirectly help the organization to positively take in its stride some of the less positive aspects of workforce diversity. Conclusion The role of the HR manager must parallel the needs of the changing organization. Successful organizations are becoming more adaptable, resilient, quick to change directions, and customer-centered. Within this environment, the HR professional must learn how to manage effectively through planning, organizing, leading and controlling the human resource and be knowledgeable of emerging trends in training and employee development. At present, there are automated Human Resource Management Systems (HRMS) as well as benefits management systems that assist employees in managing their facilities and incentives. Because of this aspect, the role of HR is changing. A growing trend in modern day HR practice is the need to integrate Decision Support Management Systems (DSM). Just as an organisation’s business and financial development is augmented with the use of sophisticated analytical tools, HR decisions today are supplemented using DSM programmes. HR decisions need to be focused towards the common goal of supporting business decisions. HR managers therefore have to administer systems to foster

effective decision-making abilities in individuals. The ultimate goal is to produce a leader for tomorrow. While making a decision, the quality of the decision itself is very important. To permit DSM, the HR manager should identify vital indicators of success within himself, the employees and the company. The indicators act as a framework to facilitate the decisionmaking process.The quality of the decisions also depends on identifying appropriate outcome measures in all aspects of decision-making. The outcome should be long-term and not shortterm. HR is about administering the system to get an outcome and not ensuring that a system is in place, but still does not provide the necessary outcome.

Q 2 Why should even very small firms (10 to 100 employees) be concerned with HRM? Ans : Small firms, with limited opportunities, limited markets and limited resources, must use every means available for improving performance and insuring survival. Although many human resource management (HRM) practices are advocated as leading to firm improvement and/or survival, little research in this area pertains to small businesses. Small firm owners have been poked and prodded and studied, but we still know very little about their management capabilities. Additional research is needed to provide more understanding of the strengths and weaknesses of these owners. In a study of managerial skills, there are many places to start. But, if small firms are creating new jobs and hiring new employees, then one place to begin would be in the area of human resource management (HRM). HRM also has value because it provides an interface between an owner and the firm's current employees. This study examines determinants of the formalization of HRM practices with small firms. We derive five hypotheses that identify possible determinants of the level of formalization, including

firm size, family business, the availability of an HRM department or HRM manager, and the existence of a formal business plan. We test these hypotheses using data on more than 700 Dutch small firms. We find that, within this sample of small firms, larger firms apply more formalized HRM practices than smaller firms do. However, once we take certain contextual variables into account, the direct relation with firm size becomes substantially less. Indirect relations with firm size also exist: firm size is a determinant of the probability that an HRM department is present, which in turn is related to the formalization of all HRM scales. Finally, family businesses apply less formal HRM practices, as do businesses without a business plan. Small firm owners were contacted by mail and asked to respond to a questionnaire about their HRM practices. In the original study done ten years ago, manufacturers were chosen because it was expected that they would be somewhat labor intensive, and would have a human resource management program in place. That sample was drawn systematically (every fifth firm with less than 500 employees) from a one-state database of manufacturing firms. The limiting of the sample to one state was an attempt at minimizing extraneous variables, since firms in one state all face the same laws, environmental forces, and constraints. Further research is needed to determine if the perceptions of the small business owners are out of step with good management practices. The responses by the small business owners in this study indicated a lack of agreement with textbook theories about HRM practices.

Diversity A broad definition of diversity ranges from personality and work style to all of the visible dimensions such as race, age, ethnicity or gender, to secondary influences such as religion, socioeconomics and education, to work diversities such as management and union, functional level and classification or proximity/distance to headquarters. Diversity are able to implement a range of managed technology solutions that include the following features: •

Management of responsibility for an organisation’s entire contingent workforce

•

Consolidated pay rolling and Contractor Care program across the contingent workforce

•

Contractor performance measurement and reporting

•

Workforce planning and metrics – providing contractor workforce demographic reporting and the effective redeployment of contingents

•

Full reporting across the contingent workforce.

Workplace diversity Workplace diversity has taken on a new face. Today, workplace diversity is no longer just about anti-discrimination compliance. Workplace diversity now focuses on inclusion and the impact on the bottom line. Leveraging workplace diversity is increasingly seen as a vital strategic resource for competitive advantage. More companies are linking workplace diversity to their strategic goals and objectives--and holding management accountable for results. Thus, HR plays a key role in diversity management and leadership to create and empower an organizational culture that fosters a respectful, inclusive, knowledge-based environment where each employee has the opportunity to learn, grow and meaningfully contribute to the organization's success.

Cultural diversity Organizations around the world has been realizing the cultural diversity within organization is not a negative aspect, rather can facilitate organizational stalk for glory. However it is not an easy task to manage employees with different cultural backgrounds. Nevertheless there are many policy guidelines that can make task easy. On a broader perspective, cultural diversity can be manage through communicating (creating awareness among all employees about diverse values of peers through communication), cultivating ( facilitating acknowledgement, support and encouragement of any employee’ success by all other workers), and capitalizing (linking diversity to every business process and strategy such as succession planning, reengineering, employee development, performance management and review, and reward systems) strategies.

CONTINGENT WORKFORCE A contingent workforce is a provisional group of workers who work for an organization on a non-permanent basis, also known as freelancers, independent professionals, temporary contract workers, independent contractors or consultants. Contingent Workforce Management (CWM) is the strategic approach to managing an organization's contingent workforce in a way that it

reduces the company's cost in the management of contingent employees and mitigates the company's risk in employing them .According to the US Bureau of Labor Statistics (BLS), the nontraditional workforce includes "multiple job holders, contingent and part-time workers, and people in alternative work arrangements." These workers currently represent a substantial portion of the U.S. workforce, and "nearly four out of five employers, in establishments of all sizes and industries, use some form of nontraditional staffing." "People in alternative work arrangements" includes, independent contractors employees of contract companies, workers who are on call, and temporary workers. Staffing companies represent a conventional resource of contingent workforce talent, as individuals attempting career independence commonly default to staffing companies for their placement. Staffing companies generally work by charging a fee to the business wishing to engage the consultant on top of the rate that the individual consultant charges. Advantages and Disadvantages of using Contingent Workers

Advantages

Disadvantages

Flexibility in type and amount of labor resources

Loyalty to employer or company

Save costs in benefits and tax

Disturbs organizations core morale and culture

Immediate access to expertise not present internally

Training costs

Savings in long-term compensation costs

OUTSOURCING:Outsourcing involves the transfer of the management and/or day-to-day execution of an entire business function to an external service provider. The client organization and the supplier enter into a contractual agreement that defines the transferred services. Under the agreement the supplier acquires the means of production in the form of a transfer of people, assets and other resources from the client. The client agrees to procure the services from the supplier for the term

of the contract. Business segments typically outsourced include information technology, human resources, facilities, real estate management, and accounting. Many companies also outsource customer support and call center functions like telemarketing, cad drafting, customer service, market research, manufacturing, designing, web development, content writing, ghostwriting and engineering.

Reasons for Outsourcing:•

Cost savings. The lowering of the overall cost of the service to the business. This will involve reducing the scope, defining quality levels, re-pricing, re-negotiation, cost restructuring. Access to lower cost economies through offshoring called "labor arbitrage" generated by the wage gap between industrialized and developing nations.

•

Cost restructuring. Operating leverage is a measure that compares fixed costs to variable costs. Outsourcing changes the balance of this ratio by offering a move from fixed to variable cost and also by making variable costs more predictable.

•

Improve quality. Achieve a step change in quality through contracting out the service with a new service level agreement.

•

Knowledge. Access to intellectual property and wider experience and knowledge.

•

Contract. Services will be provided to a legally binding contract with financial penalties and legal redress. This is not the case with internal services.

•

Operational expertise. Access to operational best practice that would be too difficult or time consuming to develop in-house.

•

Staffing issues. Access to a larger talent pool and a sustainable source of skills.

•

Capacity management. An improved method of capacity management of services and technology where the risk in providing the excess capacity is borne by the supplier.

•

Catalyst for change. An organization can use an outsourcing agreement as a catalyst for major step change that can not be achieved alone. The outsourcer becomes a Change agent in the process.

•

Reduce time to market. The acceleration of the development or production of a product through the additional capability brought by the supplier.

•

Commodification. The trend of standardizing business processes, IT Services and application services enabling businesses to intelligently buy at the right price. Allows a

wide range of businesses access to services previously only available to large corporations. •

Risk management. An approach to risk management for some types of risks is to partner with an outsourcer who is better able to provide the mitigation.

Criticism of Outsourcing:Public opinion There is a strong public opinion regarding outsourcing (especially when combined with offshoring) that outsourcing damages a local labor market. Outsourcing is the transfer of the delivery of services which affects both jobs and individuals. It is difficult to dispute that outsourcing has a detrimental effect on individuals who face job disruption and employment insecurity; however, its supporters believe that outsourcing should bring down prices, providing greater economic benefit to all. There are legal protections in the European Union regulations called the Transfer of Undertakings (Protection of Employment). Labor laws in the United States are not as protective as those in the European Union. A study has attempted to show that public controversies about outsourcing in the U.S. have much more to do with class and ethnic tensions within the U.S. itself, than with actual impacts of outsourcing. Failure to realize business value The main business criticism of outsourcing is that it fails to realize the business value that the outsourcer promised the client. Language skills In the area of call centers end-user-experience is deemed to be of lower quality when a service is outsourced. This is exacerbated when outsourcing is combined with off-shoring to regions where the first language and culture are different. The questionable quality is particularly evident when call centers that service the public are outsourced and offshored. There are a number of the public who find the linguistic features such as accents, word use and phraseology different which may make call center agents difficult to understand. The visual clues that are present in face-to-face encounters are missing from the call center interactions and this also may lead to misunderstandings and difficulties. Social responsibility Outsourcing sends jobs to the lower-income areas where work is being outsourced to, which provides jobs in these areas and has a net equalizing effect on the overall distribution of wealth.

Some argue that the outsourcing of jobs (particularly off-shore) exploits the lower paid workers. A contrary view is that more people are employed and benefit from paid work. On the issue of high-skilled labor, such as computer programming, some argue that it is unfair to both the local and off-shore programmers to outsource the work simply because the foreign pay rate is lower. On the other hand, one can argue that paying the higher-rate for local programmers is wasteful, or charity, or simply overpayment. If the end goal of buyers is to pay less for what they buy, and for sellers it is to get a higher price for what they sell, there is nothing automatically unethical about choosing the cheaper of two products, services, or employees. Quality of service Quality of service is measured through a service level agreement (SLA) in the outsourcing contract. In poorly defined contracts there is no measure of quality or SLA defined. Even when an SLA exists it may not be to the same level as previously enjoyed. This may be due to the process of implementing proper objective measurement and reporting which is being done for the first time. It may also be lower quality through design to match the lower price. There are a number of stakeholders who are affected and there is no single view of quality. The CEO may view the lower quality acceptable to meet the business needs at the right price. The retained management team may view quality as slipping compared to what they previously achieved. The end consumer of the service may also receive a change in service that is within agreed SLAs but is still perceived as inadequate. The supplier may view quality in purely meeting the defined SLAs regardless of perception or ability to do better. Quality in terms of end-user-experience is best measured through customer satisfaction questionnaires which are professionally designed to capture an unbiased view of quality. Surveys can be one of research. This allows quality to be tracked over time and also for corrective action to be identified and taken. Staff turnover The staff turnover of employee who originally transferred to the outsourcer is a concern for many companies. Turnover is higher under an outsourcer and key company skills may be lost with retention outside of the control of the company. In outsourcing offshore there is an issue of staff turnover in the outsourcer companies call centers. It is quite normal for such companies to replace its entire workforce each year in a call center. This inhibits the build-up of employee knowledge and keeps quality at a low level. Company knowledge

Outsourcing could lead to communication problems with transferred employees. For example, before transfer staff have access to broadcast company e-mail informing them of new products, procedures etc. Once in the outsourcing organization the same access may not be available. Also to reduce costs, some outsource employees may not have access to e-mail, but any information which is new is delivered in team meetings. Qualifications of outsourcers The outsourcer may replace staff with less qualified people or with people with different nonequivalent qualifications. In the engineering discipline there has been a debate about the number of engineers being produced by the major economies of the United States, India and China. The argument centers around the definition of an engineering graduate and also disputed numbers. The closest comparable numbers of annual gradates of four-year degrees are United States (137,437) India (112,000) and China (351,537).