Management Essay – Global Employee & Organisation
“Take our 20 best people away, and I will tell you that Microsoft would become an unimportant company”. Bill Gates (1996)
In a global economy, an organization must recruit and retain the most knowledgeable, talented, skilled, and creative people in order to compete and survive in the changing market. Today, due to globalisation liberalisation and change in technology, world has become a small global village, the market has shrinked, which allows the consumers to expand their wants and demands. Companies like Coca Cola, Cadburys, and Dell etc are well known global brands employing 1000’s of employees over the world. An Organisation is basically a formal group of people with one or more shared goals, the study and application of knowledge about how people, individuals and groups act in the organisation is its organisational behaviour. Its purpose is to build; better relationship by achieving human, organisation and social objectives as the organisations includes employees of different countries having different cultures and ethnicity.
Today, human resources are critical for effective organizational functioning. According to Reece and Grady [1984] human resource management is the “process of acquiring, training, developing, motivating and apprising a sufficient number of employees to perform the activities required for an organisation’s objectives, employee satisfaction, and efficiency of employees”. The primary functions of HRM are human resource planning, recruitment and selection, training, employee retention, performance appraisal, compensation and providing employee benefits and satisfaction.
Unlike personnel management, HRM comprises of the activities directed at attracting, developing, and maintaining an effective work-force. The difference between personnel management and human resource management can be described as philosophical. Personnel management is more administrative in nature dealing with pay roles and complying with employment law on the other hand, human resource is responsible for managing a workforce as one of the primary resources that contributes to the success of an organisation. Human resource is described as much broader in scope than personnel management. Its primary goal is to enable employees to work to a maximum level of efficiency and thus tends to be an integral part of the over all company function. [Madison N. 2007]
In today’s global environment, as mentioned by Armstrong [2003] , organisations also have to keep on updating their plans and policies, therefore in order to provide directions to the organisation as a whole, it needs to have strategies to determine where they are going in relation to its environment. Strategic human resource management as defined by Johnson and Scholes (1993) is “The direction and scope of an organisation over the longer term, which ideally matches its resources to its changing environment and in particular to its market, customers and clients to meet stake holder’s expectations”. Therefore, Strategic HRM is basically an approach of making decisions on the intentions and plan of the organisation concerning the employment relationship and its recruitment, training and development, performance management, reward and employee relationship strategies, policies and practices. Strategies are basically framed in order to face the challenges and obstacles faced by organisation.
Prof. Mani [2006] argues that the major challenges faced by organisation today are- Globalisation, which requires organisation to move people, ideas, products and information around the globe to meet the local needs. The HR executives need to give international orientation to what ever they do- employee hiring, training, development, performance review, remuneration, motivation or industrial relations. International orientation assumes greater relevance as business gets increasingly interlinked across nations. Globalisation as defined by different author’s are- “… integration of business activities across geographical and organizational boundaries” -Ray Reilly, “… the process by which markets expand to include competitors for customers and productive inputs without regards to national boundaries”- Paul Danos. Globalization of business has increased the international competition rapidly. The organizations of today have become increasingly heterogeneous due to globalization. Some organisations actually welcome change and the opportunities it presents, while others are reluctant to give up familiar ways of doing things. Thus globalization has increased the requirement of skill among employees and managers drastically.
The second challenge is to ensure that the organisations have the capability of staffing, selecting and retain human capital in shape of talented individuals who can drive the global organisation. These two challenges have posed a major threat to all organisations over the globe. According to a report issued by- The British Chambers of Commerce [BCC] entitled UK FACING SKILL CRISIS; with a survey including over 300 employers has stated that 55% of the employers surveyed are finding it more difficult to recruit skilled workers now compared to five years ago. For instance- in the survey, according to David Frost, director general of the British Chambers of Commerce said, "As the effects of globalisation are more widely felt, it is imperative that the UK workforce is highly-skilled if our economy is to remain competitive. The current education and vocational training system is failing to provide workers with the skills that businesses need. If this is not effectively addressed UK businesses will be seriously disadvantaged."
All organisations wants to get the best people for their organisations, the hiring department has to spend a lot of time in finding and hiring the right person. According to an article in emerald, [Roselius,W. and Kleiner H.B. 2000] the costs of hiring have increased dramatically. Recruited employees do not quit, and are not terminated; even if they never make a meaningful nor profitable contribution to their organisations. The costs of quality mistakes, injuries, incompetence on the job and overtime costs are extra burdens to the organisations, but as quoted by Roshi Suzuki , “To control your cow, give it a bigger pasture”. According to David Ogilvy, Chairman of Ogilvy & Mather, “If each of us hires people who are smaller than we are, we shall become a company of dwarfs, but if each one of us hires people who are bigger than we are, we shall become a company of giants”. The process of determining the man power requirements that could meet the company’s objectives is known as staffing. According to Sharma and Jain 2003, staffing includes appraising and selecting of candidates to fill these requirements and orienting, training and developing new and existing staff. Staffing thus involves manning the organisational structure through proper and effective selection, appraisal and development of personnel to fill the roles designed into the structure.
Staffing has been an integral part of human resource process. The subject and demand of staff has grown over the years. This growth reflects the increasing environmental complexity and greater organisational sophistication. Today, traditional staffing function is just one part of the more encompassing human resource management. Staffing is concerned with ensuring a business enterprise that it has the right number of people and right kind of people at the right places, at right time and they are doing right things for which they are economically most useful. The staffing process includes the following: Man power planning: Human resource planning is forward looking-function. The focus of this plan is to get the right number of qualified people into the organisation at the right time. Man power requirements are estimated through job analysis. Job analysis: It refers to careful study of each job to determine the task and responsibility involved in the job, relation of one job to the other and conditions under which job performance is carried on. Job analysis is an intensive way of obtaining the main facts about jobs, as it is said, “Define your business goals clearly so that others can see them as you do”. George F. Burns.
Recruitment: Recruitment function [Riley, Geoff. 1999] is concerned with attracting the potential employees to offer their services to the working organisation. The basic purpose of recruitment function is to seek out the potential employees so that they can be evaluated. Many human resources managers agree that the best source for recruiting is within the organisation itself. Different sources are used for tapping the manpower requirements. Internal sources of recruitment like; Transfer: It involves shifting of an employee from one job to another; transfer does not involve any change in the responsibilities, ranks, and rate of compensation or prestige of the employee.
Promotion: It refers to shifting of an employee to a higher position carrying higher responsibility and prestige. Lay off: It refers to temporary separation of the employee from his post. Mostly it is due to lack of work. Employee can be recalled when ever there is a need. External sources of recruitment are; Waiting list: Firms maintain their application files in which casual application are kept pending, in case of any situation in which any of the short listed employees did not turn up, then the companies use the waiting list and accept the application. Recommendations of present employees: Many firms encourage their existing employees to recommend names of their relatives and friends for employment. Personnel consultants: There are firms of personnel or management consultants, which specialise in recruitment of managerial personnel. College, universities and technological institutes: Universities and institutes may be used for recruiting graduates to be trained for position of responsibility and younger applicants as technicians, engineers, chemists, accountants etc. Media advertising: Advertising is an extremely important method of recruiting staff. Advertisers can choose the most appropriate means of media like newspaper, journals.
The various advantages of internal recruitment are that it gives existing employees greater opportunity to advance their careers in the business; it may help them to retain staff who might otherwise leave; it requires a short induction training period; employer would know more about the internal candidate’s abilities which means there will be a reduced risk of selecting an inappropriate candidate; it is usually quicker and less expensive than recruiting from outside but the various disadvantages of internal recruitment are that it limits the number of potential applicants for a job; the external candidates might be better suited or qualified for the job post; business may become resistant to change as by recruiting from outside, new perspectives and attitudes are brought in.
Selection: After the recruitment function, the appropriate applications are secured and the selection process begins. Even with the most efficient methods of recruitment, not all candidates are acceptable for the required post. Therefore selection is required. Steps involved in the selection process are: scrutiny of the application received, preliminary interview, specialised application, testing, interview, checking references, medical examination, final selection. Placements and orientation: Placement is asking the selected candidates to occupy the position in the organisation for which they have been considered. Orientation basically means introducing every selected candidate to his fellow employees. Rules and policies of the organisation are explained. Training and development: Training is basically concerned with teaching the technical skills whereas development is concerned with imparting technical, human and conceptual skills, which means equipping the new candidate with required knowledge and skills needed with reference to their jobs. The basic need and importance of training are reduces learning time, improved performance, benefits to employees themselves. Training is basically meant for operatives and development is meant for managers. Training aims to improving a special skill relating to a job, whereas development aims at improving the total personality of an individual. (Anon 1996)
Retention: “Recently, I was asked if I was going to fire an employee who made a mistake that cost the company $600,000. No, I replied, I just spent $600,000 training him. Why would I want somebody to hire his experience?”- Thomas J. Watson. Employee relations are usually a part of human resources, which should serve as a neutral source of information and support for all employees whether they are in management or in front line. By providing proper training and development, the organisation reduces the risk of turnover.
Managers considering dismissing any employee for any reason other than violence or other behaviour that threatens the safety of others in any way should contact employee relation. Kei, an application service provider which provides help for increasing the probability of hiring and retaining staff who are right for the business started by Brewer Phil in 1999. Among the countless inducements offered, only those identified in the centre of KEi’s Employee Retention Wheel are truly what give employees a consistent reason for saying ‘no’ when tempted with a ‘sweeter offer.’ After lots of studies and experience, KEi has determined, and presented in the Retention Wheel, based on factors which have the greatest impact on keeping employees.
KEi has used this information to give employers the tools to meet the core needs that keep employees successful at their jobs, thus reducing the high costs associated with unwanted employee turnover. KEi’s Employee Retention Strategy is based upon two primary beliefs- It is difficult for employers to retain good employees if they don’t have a process to hire the right people in the first place; Retention processes must directly support the reasons that successful, satisfied employees stay. According to the KEi, definition of successful employees is that ‘my job is helping me to grow personally, professionally and financially’ and the definition of satisfied employees is ‘my employer is providing what I need to perform my job successfully’.
A research by Mercer 2006 titled- ‘The China Employee Attraction and Retention Survey 2006′ stated that the Chinese companies are struggling to retain their professional and support staff. The survey included 114 organisations in the greater China. The survey found that 54 per cent of organizations have experienced an increase in turnover for professional staff since last year, while 42 per cent have reported higher turnover for support staff. The survey also reveals that the average tenure for the age group most targeted by multinational companies (25-35 year-olds) fell from an average of 3-5 years in 2004 to just 1-2 years in 2005. Therefore in order to retain the most knowledgeable and skilled employee, organisations have to adapt the best modern HRM model/approach according to the need of the organisation.
There are many theories and models but the few which are relevant to the context of the topic are: best practice, best fit. The primary concern of most organisations is to attract and retain employees. During recessions, organisations are concerned with finding and securing the efforts of qualified individuals. The terms ‘best fit’ and ‘best practice’ are used in strategic human resource management and are applied to the specific policy area of reward systems. Each approach attempts to explain the way that HR policies in general and reward policies in particular can lead to greater organisational effectiveness. Some people believe that the development of the best fit model is derived from the Harvard, Michigan and New York models.
Some HR specialist claim that these models could be classified as ‘matching models’ because of their common aim which is to match the human resources strategy with that of the corporation. Both approaches believe that HR practices should be complimentary. However, according to Purcell (1999, p. 27), “…what is most notable about the best practice model is that there is no discussion on company strategy at all.” which means that organisations adopting a set of best practices attract super human resources, talent and competencies. “These superior human resources will, in turn, influence the strategy the organisation adopts and is the source of its competitive advantage.”
“Best practice (Sanger 2001) is a management idea which asserts that there is a technique, method, process, activity, incentive or reward that is more effective at delivering a particular outcome than any other technique, method, process etc.” The idea is that with proper process, checks and testing, a desired outcome can be delivered with a fewer problems and unforeseen complications. Best practices can also be defined as the most efficient that is, least amount of effort and effective way that is the best results of accomplishing a task, based on repeatable procedures that have proven themselves over time for large number of people.
The notion of best practise is not new to the world, Taylor F 1911, said many years ago, “Among the various methods and implements used in each element of each trade there is always one method and one implement which is quicker and better than any of the rest”. This viewpoint came to be known as the ‘one best way’ of doing things. A more recent example founded in 1968 in the summer Olympics where a young man named Dick Fosbury revolutionized high-jumping technique. Using an approach that the became known as the Fosbury Flop, He won the gold medal and made a new Olympic record of height 2.24m, by going over the bar, back first instead of traditional technique of putting the head-first.
If he had relied on ‘best practice’ as followed by all other fellow competitors, he probably would not have won the event. Instead, by ignoring Best practice, he raised the performance bar for everyone. At the same time, however he without any prior intention created the new best practice, which has become the only high jump technique ever since. In real world application, best practice is a very useful concept as well.
Despite the need to improve on processes as times change and things evolve, best practice is considered by some as a ‘business buzz world’ which is used to describe the process of developing and following a standard way of doing things that multiple organisations can use for management policy for example- employee security, selective hiring etc, where as the best fit approach is entirely opposite to the best practice model of HRM, it is based on the belief that there is no universal prescriptions for HRM policies and practicies. Best Fit model according to an HRM guide, has a harder, less humanistic approach towards people, assuming the employees to be resources in the same way as any other business resource. People should be managed in a similar manner in context to equipment and raw materials. Human resources must be obtained as cheaply as possible, used sparingly, and developed and exploited as much as possible. Thus both best practice and best fit models are important in todays organistions to face the global challenge.
Therefore, human resource management is definitely affected by the globalisation and technological advancements, with some positive and negative aspects. The organisations should try to get the maximum out of the positive side of it and think globally. One important response has been the introduction of flexibility in the employment relationship to increase the capacity of an organisation to adapt rapidly to market changes. This has resulted in flexible working hours, part-time work and different types of employment contracts, due to which, employees who are multi-skilled are not confined to the performance of only one task.
They can cover up for absenteeism, and make some jobs redundant. Globalization have led to the re-organization of production systems and methods of work, like: Reduction of narrow job classifications and demarcation lines between managers and workers, accompanied by skills enhancements needed to perform jobs with a broader range of tasks. A greater focus on workplace relations, policies and practices can lead to better motivation and performance.
These responses have increased the necessity for employers to make more investments in skills training, to offer incentives to employees, to improve their skills and for workers to take some responsibility for their own development. The competition generated by globalization and rapid technological changes accompanied by shorter product life are destroying countless jobs in industrialized countries and are creating opportunities for multi-skilled and easily trainable workers and for the most significant group of emerging employees known as the knowledge worker.
Knowledge and skills have become the most important determinants of employment opportunities. The impact has basically made work more mobile, capable of being performed in different parts of the world without the need to actually set up physical facilities in other countries. Thus modern organisations, in a global economy need the most knowledgeable, talented and skilled employee.
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