The Major Challenges to Hrm Essay

Custom Student Mr. Teacher ENG 1001-04 8 June 2016

The Major Challenges to Hrm

Executive Summary

In this report, the issue of what is Human Resource Management (HRM), HRM challenges and the methods its respond to those challenges, learning organization and the ways HRM use learning organization to focus on continuous improvement in organization are emphasized. After reading this report, you will able to understand what HRM is. From the research, the major challenges to HRM today’s market is arise from the internal and external environment. The internal environmental factors include the management and corporate culture of the organization whereas external environmental factor consists of political-legal (P), economical (E), sociocultural (S), and technological (T) environment. The ways HRM respond to those challenges are briefly describe in the contents behind.

Learning Organization refer to those organizations that continue to improve and never end up with research. HRM can use The Network Organization, Total Quality Management (TQM), Management by Objective (MBO), 360 Appraisal System, Performance Ranking Method, Corporate Social Responsibility (CSR), and Six Sigma Approach to focus on Continuous Improvement in organization.

IntroductionDefining Human Resource Management (HRM)

As we know, an organization needs a group of people who work together to achieve common goals. From here, we figure out that the concept of organizations cannot be separated from the need for people or cannot exist without people. HRM is the utilization of individuals to achieve organizational objectives. (R.Wayne Mondy, 2010) It is the development and implementation of systems in an organization for attracting, developing and retaining a high-performing workforce. The purpose of HRM is to ensure that the people employed by the organization are being used as efficiently and effectively as possible and that they are able to continue towards achieving the organizations goals. (Maimunah Aminuddin, 2008)

Major challenges to HRM in today’s market and the ways management respond to it.

The major challenges to HRM today’s market is mainly arise from the external and internal environmental factors. The external environment consists of everything outside an organization’s boundaries that might affect it. The HR manager must have a complete and accurate understanding of the external environment and strive to operate and complete within it or their organizations will not survive or facing a lots of problems.

External environmental factors are primarily arise from the PEST analysis which consists of political-legal (P), economical (E), sociocultural (S), and technological (T) environment.

Political-legal environment reflects the relationship between business and government and it is important for several reasons. The legal system defines and regulates many aspects of what an organization can and can’t do, including advertising practices, safety and health considerations and so on. (Ronald J. Ebert, 2009)Not to forget, the political stability is also an important issue. The HR manager must ensure the company complies with all the rules and regulations stated by the specific country’s government and keep updated.

For instance, in Malaysia, the HR manager must ensure the company obeys the Employment Act 1995, Industrial Relations Act 1967, Employees’ Social Security (general) Regulations 1971(SOCSO), Occupational Safety and Health (OSHA) Act 1970, Employees Provident Fund(EPF) Act 1991 and Pension Act 1980. The challenges here are that the government’s policies and regulations are being amended time by time. Sometimes the amended policies will even cost larger expenses to the company. Hence, the HR manager must aware and find a solution respond to it.

For example, Spritzer Berhad had comply with the Employment Act 1995 by providing its employees training programs, annual leave, medical leaves, EPF, SOCSO and the notice period for termination of contract. In the case of political instability, the company invests in Iraq such as Iraqi Airways Company had ensured that its employees work under safe and healthy condition during the war.

Economical environment refers to relevant conditions that exist in the economy system in which a company operates. For instance, if an economy is doing well enough that most people have jobs, a growing company may find it necessary to pay higher wages and offer more benefits in order to attract workers from other companies. On the other hand, if many people in an economy are looking for jobs or unemployed, a firm may be able to pay less and offer fewer benefits. (Ronald J. Ebert, 2009)

Due to the bankruptcy of Lehman Brothers in 2008, it brings a bad economic downturn impact for the world. The HRM of the companies had come across several ways to resolve the problems arise. Some companies had lowered their employees’ salaries and benefits, cut down the personnel cost, retrenched and transfer their employees due to the financial crisis. Some companies even downsize or shut down its business or began to substitute temporary for permanent employees for cost savings in payroll administration and fringe benefits, and to gain greater flexibility in the face of changing business conditions.

The retrenchment policy used by most on the companies is last in first out policy. The employees that are retrenched will be compensated with retrenchment benefits. Due to the earthquake in Japan, Toyota had faced huge lost but they not retrench their workers but only shorten their working hours for a specific period. Some companies like Lotus Cable Industries Sdn Bhd had provided employment agencies advice for the retrenched workers to refer to other jobs.

Sociocultural environment includes the customs, mores, values, and demographic characteristics of the society in which an organization functions. (Ronald J. Ebert, 2009)Nowadays, employers tends to develop lean organizations sufficiently strong enough to face any problems, the workforce is required to become more flexible. (Maimunah Aminuddin, 2008)For example, they want workers who can perform multiple jobs and can be redeployed easily. Besides, with higher levels of education, employees are becoming more concern of their employment rights and therefore more liable to make a complaint to the relevant authorities if they believe their rights are being abused. Workforce diversity is also an important issue under sociocultural environment. Employees in different age groups have different expectations. The HR manager needs to look carefully at the characteristics of the people in different age group. The characteristics of generation X and Y are totally different.

Based on the above situation, the HRM had respond to these challenges by conducting a strategic fix on how to select the right person for the right jobs. This is because recruit the right person for the right jobs is very important. The jobs that offer flexibility, telecommunicating and temporary, but challenging is suitable for generation Y. Back to the environment factor, the employers who tend to develop lean organization as mentioned above and the characteristic of generation Y are able to construct a win-win situation in which both parties gains the benefits. The Microsoft Company had employed many generation Y’s employees who are good in Information Technology (IT) field.

Technological environment generally includes all the ways by which firms create value for their constituents. Technology includes human knowledge, work methods, physical equipment, electronics and telecommunications that are used to perform business activities. (Ronald J. Ebert, 2009)HRM today facing lots of IT challenges because some of the manual tasks need to be performed has been replaced by the machine or advance technology. The employees will worry they will be replaced or redundant.

In order to resolve this problem, HRM should keep on sending their staffs go for training programs to keep them updated or know how to operate the machine or advance technology. Petronas and Proton regularly send their employees for training and development programs so that their employees are familiar or keep updated with the advanced technology and will not fell depressed or demotivated because of the advanced technology. Besides, when recruiting new workers, HRM will select the IT savvy in respond to the technology changes which affecting the job requirements.

The internal environmental factors consist of everything within an organization’s boundaries that might affect it. One of the examples of internal environmental factors is the management and the corporate culture of the company. Corporate culture is the shared experiences, stories, beliefs, and norms that characterize an organization. It helps an organization to define the work and business climate exist. A strong corporate culture and management directs employees’ efforts and helps everyone work toward the same and vice versa. (Ronald J. Ebert, 2009)The challenges faced by HRM here is refer to the negative corporate culture and poor management of the organization. HRM have to do something to overcome this problem.

For the poor management organization whereby its employees always misconduct the disciplinary issue and behavioral mistake, the HRM will sent them the warning letter before terminate them. For the negative corporate culture such as employees always start working late, request for more salary, and using company resources for personal purpose, some companies’ HRM had using reinforcement perspective on motivation respond to this challenges. The workers who fulfill or satisfy the HRM requirements will be rewarded whereas those who misconduct or fail to obey will be punished. The Japan based company always practice punctuality practices in their workplace in order to create a positive corporate culture and increase productivity. Maxis also send its employees attend training to improve their customers’ service skills.

Defining Learning Organization (LO)

LO is an organization skilled at creating, acquiring, and transferring knowledge, and at modifying its behavior to reflect new knowledge and insights. LO is where people in an organization who continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning to see the whole together. (Senge, 1990)It is a vision of what might be possible. It is not brought about simply by training individuals; it can only happen as a result of learning at the whole organization level.

It is an organization that facilitates the learning of all its members and continuously transforms itself. (Pedler, 1991)Learning organizations are characterized by total employee involvement in a process of collaboratively conducted, collectively accountable change directed towards shared values or principles. (Watkins and Marsick, 1992)HRM use LO’s five learning disciplines to focus on Continuous Improvement in organization.

The ways HRM use LO to focus on Continuous Improvement in organization

HRM may use The Network Organization, Total Quality Management (TQM), Management by Objective (MBO), 360 Appraisal System, Performance Ranking Method, Corporate Social Responsibility (CSR), and Six Sigma Approach to focus on Continuous Improvement in organization.

A Network Organization is a collection of autonomous firms or units that behave as a single larger entity, using social mechanisms for coordination and control. (Analytictech, 2001)It is flexible arrangements among designers, suppliers, producers, distributors, and customers where each firm is able to pursue its own distinctive competence, yet work effectively with other members of the network. A very flexible version of network organization is the dynamic network. HRM can use a dynamic network which characterized by temporary arrangements among partners that can be assembled and reassembled to adapt to environment to focus on Continuous Improvement in organization. For instance, Nike had practice dynamic network whereby its designers only responsible for designing the products whereas the production of the products will be done by the other factories, not Nike’s factory.

Nike had distributed the production of the products to other company’s factories which located at Combonia, China, Vietnam and Indonesia. This can help HRM to focus on continuous improvement by saving the production and labor cost, improve employees’ skill, increase management efficiency and effectiveness because each parties have its responsibility and then increase the motivation and satisfaction of the employees because they will not ambiguity with their jobs and hence lead to higher productivity, market share and growth.

Total Quality Management (TQM) is all about doing things better and never being satisfied with an existing process or procedure. It involves all workers in the organization at all levels. Hutchins says, the objective of TQM is to create an organization where everyone is working to make that organization the best in its field. HRM can use the 5S Activities popularized by Japanese employees as tools to practice TQM. Benchmarking is a useful tool in the struggle to improve and become better. The National Productivity Corporation has organized a number of benchmarking groups in different sectors. (Maimunah Aminuddin, 2008)Kentucky Fried Chicken (KFC) had practice TQM by always compare their products and services with McDonald so that they can improve their products and services quality and become the best organization in the fast food industry. Maxis and Digi as well compare with each other to become the best company in telecommunication industry.

Management by Objective (MBO) is a process of identifying objectives within an organization so that management and staff agree with it and understand what they need to perform in the company. The objectives must be clear and achievable, and the plan must include a time frame and evaluation criteria. For example, a manager might set a goal of increasing sales by 20% over five year. MBO is primarily used as a tool for strategic planning, employee motivation, and performance enhancement. HRM can use it to improve communication between employees and management, increase employee understanding of company goals, focus employee efforts upon organizational objectives, and provide a concrete link between pay and performance. An important factor in an MBO system is its focus on the results achieved by employees rather than the activities performed in their jobs. (Answers, 2011)America Express had practice MBO whereby its main focus is 100% customers’ satisfaction. The management and employees had met this objective efficiently and effectively. When the fly is delayed, they send each of their customers a sorry letter. Most of their customers satisfied with its services and willing to experienced its services again.

360 Appraisal System access the performance of an employee based other different people ideas such as customers, suppliers, peers and direct reports. It is vital that the process be implemented by the HRM so that the subordinate staffs are ensuring that all their assessments on performance are kept anonymous. (Human Resources, 2010)Performance Ranking Method is used to evaluate workers’ performance from best to worst for a specific period of time. For instance, out of 12 months you had worked, your successful cases will be recorded here. Tunku Abdul Rahman College (TARC) had distributed the evaluation forms to its students to evaluate its staff performance. This can help TARC understand the students’ needs from its employees, the actual performance of the lecturers and tutors and from here, they can find the solution respond to the problems exist, if any. The employees with good performance will be rewarded and make them satisfy with their jobs. This can increase customers’ loyalty, market share and growth of the organization when the problems found from the employees’ appraisal is resolved.

Corporate Social Responsibility (CSR) is about how companies manage the business processes to produce an overall positive impact on society. Its goal is to embrace responsibility for the company’s actions and encourage a positive impact through its activities on the environment, stakeholders and all other members of the public sphere. Carlsberg have integrated CSR practices into their operations to ensure their existing business units and new ventures operate in an environmentally sound and socially responsible manner. It participated in the anti-global warming movement, Earth Hour 2009, on March 28, fully sponsored 2010 Top Ten Charity Campaign (Top Ten) and hosting a golf coaching clinic for a group of 40 underprivileged children from four Indian charity homes.

Company practice CSR will increase its reputation and able to retain its customers loyalty. HRM also can use Six Sigma Approach to emphasis on continuous improvement in organization. Six Sigma Approach can reduce the mistake done during the production process. Honda, Toyota, and Nissan had applied this approach which can minimize the mistakes in their production process. This can help the management save the time and cost for repairing the unsatisfied products, increase customers’ satisfaction, retains their loyalty and resulting positive reputation.


HRM plays an important role in an organization. Without proper HRM, an organization cannot or unable to survive in the market. The efficiency and effectiveness of HRM affect the performance of an organization. Hence, an organization must emphasis or more concern on the HRM planning and functions.

There are many challenges faced by HRM in today’s market. Those challenges might arise from internal and external environment. HRM must come across with appropriate solutions in respond with the challenges. They even have to think out of the box to resolve the problems or challenges exist because if the problems are not settling, it will affect the performance of the organization.

Many companies had practiced learning organization in their workplace. An efficient and effective learning organization applied will lead the organization to increase its employee’s satisfaction, productivity, customer’s satisfaction, customer’s loyalty, benchmark, reputation, market shares and growth because the organization is continue to improve and never end up with research.

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