In today’s rapidly changing and highly competitive environment, the human resource function plays an increasingly important role in an organization’s ultimate success or failure. Where success was once dependent upon an organization’s ability to discover and manage natural resources, success today goes to the organizations that most effectively discover and manage their human resources.
Though organizations widely recognize the need to attract, manage and develop people, today HR professionals must strive to do much more. They must enable their organization to build global HR networks in order to expand and prosper in the international arena. They must also develop human resources that continually build competitive advantage in an ever-changing environment. And, they must add value to their organization’s distinctive competencies
Let us analyze how human resources “add value” to the organization through the followings main HRM functions:
1/Human Resource Planning
Human Resource Planning is the key link between a firm’s strategic plan and its overall human resource management function. It is the sum total of the plan formulated for the recruiting, screening, compensation, training, job structure, promotion, and work rules of an organization’s human resources. It is a process designed to translate the corporate plan and objectives into future quantitative and qualitative employment requirements, together with plans to fulfill those requirements over both the shorter and longer terms, through human resource utilization, human resource development, employment and recruiting and the use of information systems.
To perform its add value function, the human resource planning should be fully integrated with overall organization strategic plan, especially the firm’s growth objectives. Outside influences of economic conditions, technology, the labor market, and so on should be given adequate consideration when developing the human resource plan. Changes in job design should be explicitly recognized in the plan. It should be kept flexible and adaptable so it can change as conditions change.
With HR planning, the firm can ensure that sufficient numbers of properly trained staff are available at all times to carry out the firm’s operations efficiently and effectively.
Staffing is the process of hiring people to perform work for the organization. It comprises two major activities: recruitment and selection. Recruitment is the set of activities an organization uses to attract job candidates who have the abilities and attitudes needed to help the organization achieves its objectives. Selection is the process of choosing individuals who have the necessary qualifications to perform a particular job well. These two activities are key human resource activities in every organization. And these are continuous processes in organizational life.
According to Dawis, 1991; Heneman, Henaman, and Judge 1997, Staffing is a mutual matching process: organizations seek individuals who will help them achieve goals such as profitability, growth, and in some cases survival; individuals seek organizational that will help them achieve goals such as fulfilling needs and obtaining rewards. HR must achieve both types of fit in order to be maximally effective. A better job of recruiting and matching employees to jobs will mean lower employee turnover and greater employee satisfaction and organizational effectiveness.
Moreover, HR should pay attention to align their recruitment and selection practices with their business strategy(ies) and organizations must have the human capabilities that enable them to effectively implement their chosen strategy(ies). Some organizations even consider their human resource talents as a source for competitive advantage and adapt business strategies to fit those organizational capabilities.
With the anticipated shortage in new entrants to the labor force in the next decade, staffing will be a key issue for HR for some time to come. This is especially true during these hard financial times, when the compensation and benefits you can provide to attract and retain staff are limited. HR professionals must work to develop training, leadership, diversity, and work/life programs to turn their organizations into places where employees want to stay. New studies and research back up what HR has been saying for years: The organizations that treat their employees well, give them opportunities, and are flexible are the ones that will keep their key talent.
3/Training and Development
Training refers to providing instruction to develop skills that can be used immediately on the job. Development involves developing knowledge that may be used today or sometime in the future. The terms training and development refer to the total structure of on-the-job training and off-the-job programs utilized by organizations in developing employee skills and knowledge necessary for proficient job performance and career advancement. HR leaders need to understand the role of learning in the contemporary work context and to ensure that training is explicitly linked to organizational strategy.
Paul Navaratnam in New Straits Times mentioned that during recessionary times, most employers take immediate steps to reduce employee training on the misguided assumption that there are no immediate tangible returns (on the cost of training). It is permissible to say that employee training and development is an ongoing function of human resource management, particularly with globalization and accelerated advances in technology and science. Employers are surely aware that businesses are not conducted in isolation neither is it insular; if any company is geared towards growth and profitability, the need to remain competitive involves training and development of its human resources.
However, training and development of employees is an integral part of management responsibility whether in recessionary times or not. In view of the cyclic economic downturns, the training objectives of an organization need to be reviewed. Traditionally, training objectives are to enhance skills, educate and develop individuals for future growth within the organization, as part of the succession planning process. When companies face impending or anticipated recession, now or in the future, perhaps there is a need to rethink and redesign training programs which would:
“h emphasize on quality measures of products and services (total quality management) through continuous improvement programs;
“h prepare employees for outsourcing their services;
“h train employees to think in terms of total quality management such as:
“« Functional teams: to choose their own problems and work out the solutions to improve the quality of work.
“« Cross-functional teams: ongoing teams that identify problems across the organization and resolve work-related issues as priority.
“« Lead teams: a committee of senior management staff to decide which employee serves on which committee.
“h Make total quality management a way of life;
“h provide new values to both work and quality of life; and
“h emphasize the need for employees to analyze their problems and find answers.
Training should take on the role of assisting employees for continuous improvement of themselves not only for their benefit, but to face the challenges of our times. Training of an employee should not be confined solely for the career development of the person within the organization, but elsewhere too and for a variety of purposes (for instance, to be an entrepreneur, profit-oriented, etc) in order to add value to the organization.
Compensation is the HRM function that deals with every type of reward individuals receive in exchange for performing organizational tasks – wages, salaries, bonuses, commissions, benefits, and non financial rewards like praise. The objective of the compensation function is to create a system of rewards that is equitable to the employer and employee alike. For the compensation to be effective and add value to the organization, it should be adequate, equitable, cost-effective, secure, incentive-providing, and acceptable to the employee. The desired outcome is an employee who is attracted to the work, motivated to do a good job for the employer and happy to stay in the organization.
Thus, designing a reward system that reinforces the organization’s business strategy can make the organization more competitive, increase its effectiveness, and help management focus on both short-term and long-term goals. An effective reward system may be comprised of a variety of compensation options.
For example, General Motors set up a new compensation system designed to push its salaried employees to work harder – and to help push those who don’t out the door. The move, affecting 112,000 low-level managers, clerical workers, and other white-collar staffers, is part of a trend to tie compensation more closely to performance to make pay more variable from year to year. GM’s new strategy involves base-pay merit raises, lump-sum payments, and profit sharing. The top 5,000 managers have also seen changes. Their 70-year old bonus plan was scrapped, decreasing annual pay for many executives by 50 percent. Instead of cash and stock right away, these managers receive restricted stock grains that will take years to mature. All of this is to get people to work harder and encourage better cooperation.
Performance management is the process of ensuring that employees understand what is expected of them in their jobs, and that managers provide the
appropriate support and feedback to help them meet expectations. It is also a process by which executives, managers, and supervisors work to align employee performance with the firm’s goals. A successful performance appraisal system should be built around clear objectives, have the support of both management and employees, be flexible enough to adapt to organizational changes, and foster open discussions between supervisors and employees.
When done well, performance management serves to align the efforts of employees with employer goals and values, helps ensure that employees have a clear understanding of what is expected of them, and makes certain that employees receive continuous feedback about their performance. The results of such a program can serve to develop not only individuals, but also organizational systems and processes.
Paul Navaratnam in New Straits Times stated that the majority of line managers are oblivious to monitoring their subordinates’ performance on a regular basis. The annual performance appraisal which all line managers are familiar with, is insufficient to determine quality performance of any subordinate. Moreover, most line managers are unaware that performance appraisal is a tool that is used in manpower planning, that assists in job analysis, compensation management, writing of job descriptions, etc.
Most line managers are mistaken that an annual performance appraisal is merely a measuring tool for the awarding of increment and bonus. It is timely therefore to debunk current thinking that performance appraisal is only for awarding increment and bonus, and consider the uses of performance appraisal in recessionary times. In managing human resources in recessionary times, it is suggested that performance appraisal be undertaken quarterly and used for the following purposes:
“h To identify the latent potential of each employee for multi- skills training;
“h Determining continued employment in the immediate future, and for the future in other related businesses;
“h Using only job performance-related assessment to determine monetary/promotional rewards;
“h Current assessment of employees to benchmark required minimum performance standards for future recruitment; and
“h Where necessary and possible to redesign job processes for greater efficiency and productivity.
The performance of an employee is the end result of the recruitment and selection process. It is therefore imperative for every line manager to consider required minimum performance levels when selecting a potential candidate for a particular job. Intensive testing of performance levels would be a priority, rather than based on mere work experience, to determine the suitability of the person for the job.
Employee relations encompass all aspects of the relationship between the employer and the employee within the work environment. The focus of employee relations is to develop effective relationships between one employee and another, and between groups of employees and levels of employees. Employee relations more broadly encompass cooperation and teamwork among the employees that is necessary for an organization to function effectively.
A cooperative employee relations climate is of crucial importance to productivity and the survival of an organization. Workers are more likely to stay with the company when they are satisfied with their jobs and the way they are treated in the organization by their colleagues and bosses, and when there is enough challenge in the job.
HR can add value to the organization in the aspect of achieving effective employee relations by dissemination of information to all employees in a structured and timely manner so that they can understand what their organization is trying to do, and what is needs to do in order to achieve its objectives.
Meetings with union or worker representative, company newsletter and company handbooks will be important aids in maintaining effective employee relations. Furthermore, employment security provisions, grievance procedures, provisions for childcare, and drug counseling may all be part of employee relations activities.
To conclude, HR comprises of a variety of tasks mentioned above which help the company to deal effectively with any environmental forces and competitors and ensures the company’s long-term achievement of its goals and objectives. It is the vital part of an organization that contributes to its successful and succession. However, with tasks such as selection and interviewing were transferred to line management and other HR tasks such as pension and benefit administration was outsourcing to external suppliers, management started to place increased pressures on HR to visibly contribute more value to business performance and demonstrate its functional efficiency. In light of increasing competitive pressures, major transformation of the HR mission and roles will be needed.