Table of Contents
The production of a service or product involves such aspects as the human effort, mind, and working hours. As a factor of production, human resources must be managed efficiently to achieve a goal. Typically, human resources are conceptualized as the workforce within an entity responsible for the production of goods and services. In this regard, the production process relies on the skills, talent, knowledge, and working hours channeled in a process. Management is widely defined as a science or art of coordinating the activities within an entity through a process of strategic decision-making, covering such areas as human resources, sales, and marketing, operations and finance (Hendry, 1995; Wilkinson & Redman, 2013). Daft (2010) defined management as the attainment of organizational goals in an efficient and effective manner through planning, leadership, organization, staffing, and control of organizational resources. In its turn, human resource management (HRM) can be defined as the process of analyzing and managing a firm’s human resource needs to ensure that its strategic objectives are achieved (Bratton & Gold, 2012). Furthermore, HRM can be regarded as a set of processes revolving around employees, including recruitment, selection, orientation, induction and training, development of skills, assessment and compensations to the employees. Other aspects of HR management include maintaining healthy relations with labor and trade unions, complying with labor laws and maintaining employee welfare, health, and safety. Observably, human resource is a broad term that covers various issues regarding the employees and the success of an organization. The current paper provides an overview of human resources by exploring some of its key aspects, including recruitment and selection, individual performance, training and development, psychological contracts, compensation systems and motivation, performance management, HR strategies, as well as diversity and labor economics among others. Specifically, the current paper will discuss the role of HR management.
Human Resource Planning
Human resource (HR) planning is a vital process or component of HRM (Wilkinson & Redman, 2013). HR planning ensures a direct connection between HRM and an organization’s strategic plan. Most large-scale companies such as H&M have strategic plans designed to guide the enterprise towards the achievement of its mission. Based on the strategic plan, an entity develops its strategic human resource plan to ensure that it achieves organizational goals. The developed HR plan also allows the entity to make organizational decisions in order to support its future direction. HR planning is also critical from a budgetary perspective because the costs of recruitment and training can be factored into the operating budgets of the entity. HR planning also guarantees that there is adequate labor to meet the organization’s operational plans and strategic goals (Hendry, 1995). In other words, it guarantees that the organization has enough number of people with necessary skills at the right time. Hendry (1995) asserts that HR planning also ensures that an entity is synchronized with legislative, technological, economic and social trends that have an impact on employees within a geographical location, sector or industry. Furthermore, HR planning should make sure that an entity is flexible to manage change when needed. For example, H&M operates in a very competitive footwear and apparel industry, which require flexibility and aggressiveness to sustain its competitive advantage and meet the ever-changing customer demands. According to Hendry (1995), one of the measures employed to maintain a competitive advantage is to have the appropriate human resources.
Recruitment and Selection
Some of the important issues underlined in the definition of HRM are the significance of HR practices and policies, as well as specific HR activities, including recruitment and selection. Recruitment and selection are critical issues for HRM. Organizations that perceive HR as the primary source of competitive advantage, attracting and retaining the right team, will occupy a leading place at the market (Torrington, Hall, Taylor, & Atkinson, 2011). Recruitment and selection are not just essential for making sure that there are vacant professional or managerial positions. For organizations that value the motivation and commitment of their workforce, it is logical to recruit each worker cautiously to ensure that the company hires employees with the skills, attitudes, and qualities needed. If unqualified individuals are recruited, the whole process can later prove to be too costly for the company.
Training and Development
Once an organization has hired an individual with the desired set of skills, the HR department must ensure that the selected individuals are trained for specific roles and conditioned to develop new skills complying with their roles (Wilkinson & Redman, 2013). Training is also a critical pillar for employee motivation in the sense that employees who feel they continue to develop their knowledge base and improve their set of skills tend to be happier than their counterparts. Consequently, the company benefits from employee retention. Traditional training programs include team building activities, communication training, training on corporate governance and ethics, job skills training and legal and policy training. Besides training, HR personnel must formulate strategies meant to attract and retain high-skilled employees (Daft, 2010). Logically, retention entails keeping and motivating the existing employees. One of the major factors in employee retention is administration of benefits and compensations. Some of the primary reasons for employee turnover include poor workplace environment, rigid organizational culture, challenges with the management or immediate supervisors and lack of trainings and promotions.
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Reward Systems and Performance Management
Human resource professionals need to identify fair compensation systems and ensure that the reward systems meet the industrial standards, so that it is reasonable to attract high-skilled individuals to work for the given organization. Compensation entails the salaries, wages and bonuses received by employees for their work. Additionally, HR personnel must make sure that the compensation is equitable or comparable to what other employees in the same job category are being paid. Therefore, the HR department must set up payment systems that would consider the education, experience, and other characteristics of the future employee. Employee compensation varies with organizations but includes health benefits, bonuses, sick leave, payment and retirement plans among others.
The modern work environment is rapidly changing since it is restructured by new socio-cultural values, changing demographics, globalization, and advanced technologies (Wilkinson & Redman, 2013). While HR-based processes and tasks can be automated, it is imperative to implement strategic HRM practices that would sustain the entity’s competitive advantages or position in the industry it operates in. It is from this perspective that most companies utilize a total reward system (TRS). In this context, TRS is a promotion and compensation system that considers both merit and experience (Bratton & Gold, 2012). Following the limitations of seniority-based promotion and compensation system, new companies have shifted to a hybrid of experience-based and merit-based promotion and compensation system. Gradual de-emphasis of seniority implies that an organization focuses more on the ability and performance of employees. Besides deemphasizing seniority-based promotion, organizations also strive to retain competencies within autonomous teams through regular training and development programs to improve the skills of all employees. Promotion based on merit, experience, and performance guarantees that workers who are best qualified for the vacant positions are given priority (Gruman & Saks, 2011). When a worker applies for a position, his or her experience is also considered, while age and tenure are given less attention. Employees in the company can have a chance to experience various jobs on their way up the promotional hierarchy, so long as they stay within the company and openings emerge. Trust in these systems can be improved through an effective and transparent performance appraisal system.
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Bratton and Gold (2012) have conceptualized performance management as a system or a set of processes aimed at managing the accomplishment of an organization’s strategy. That is to say, performance management entails translation of strategic plans into results. Performance management is a broad concept that integrates various business transformation methodologies and technologies. For this reason, the scope of performance management (PM) goes beyond HR systems. Performance management consists of metrics, methods, and software tools (Neely, 2005). Some of the primary benefits of efficient PM processes include a better understanding of job expectations, regular feedback about the performance, collaboration and alignment towards common goals, recommendations for the performance improvement, and rewards for high performance (Bratton & Gold, 2012). PM system can also play an important role within an organization by strengthening organizational goals, motivating employees and catalyzing discussion of opportunities and ideas for the improvement of organizational and functional areas. The pre-requisites of effective PM at an organizational level include clear purpose, fairness, system integrity and a strong business culture (Hendry, 1995). A good ethical climate is marked by policies and rules that describe how employees should behave in the company’s internal and external environment.
The implementation of performance management involves attainment of the predefined objectives in the strategic plan while maintaining flexibility and caution to new opportunities as they unfold. HR managers face numerous barriers while implementing PM systems. This includes vague job descriptions, uncertain organizational objectives, and blurred methodology to address poor performance. Unless the responsible parties address the causes of the hurdles, performance management is bound to fail. One of the key issues that keep on resurfacing is the lack of integration. Characteristically, PM must be approached from an integration perspective. That is to say, synergy should be created between a PM system and HRM processes, including organizational culture, strategic planning and other critical organizational processes. Other barriers to the implementation of PM systems include design challenges, lack of monitoring and evaluation, lack of sufficient leadership support, communication challenges, incompetence, lack of reward schemes, and lack of inspiration. Leadership is crucial for the HRM since it is a management concept through which an executive as well as manager can direct, influence, or guide the behavior and work of subordinates in order to achieve their objectives in a particular situation. Leadership style is a manner of providing direction, monitoring employees’ performance and implementing plans. Some of the major leadership styles include autocratic, democratic and Laissez-faire.
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Transformational leadership style is given preference in performance management because it promotes delegation of authority, sharing of responsibility and continual consultation. If an organization implements PM processes, the confidence of employees is is likely to grow compared to being under bureaucratic leadership. Performance management induces democracy among employees. In other words, there is increased delegation of tasks to other subordinates along with the responsibilities to make them accountable for their actions and tasks. Transformational HR managers are more open to feedback or initiatives. Furthermore, they inspire employees to become effective leaders and develop their management skills in various spheres within the organization in the course of its development. Additionally, HR managers in charge of performance management consult on all decisions and issues within the organization. By introducing democratic leadership and allowing employees to be part of the decision-making processes, employees become more committed to their roles. Transformational leadership is effective in HR department, especially where everyone’s opinion is taken into account regarding the formulation of HR policies and strategies. Democratic leadership also reduces any existing communication gaps. The tension between employees also decreases, and eventually fear of denial or rejection vanishes. For democracy to prevail in an organizational environment, teamwork or employee engagement must be engraved in the culture of the organization. Effective leadership also stands for a positive working environment. In other words, the culture of junior leaders and employees to get fair responsibility and manage challenges is encouraged. Work becomes more pleasurable because of the induced healthy atmosphere among the employees.
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Performance management is important because it promotes interaction and feedback between the management and employees. It is also valuable because it serves as the groundwork for rewarding top employees. Performance management also establishes expectations for employee performance (Gruman & Saks, 2011). Taking into account that change management is an integral aspect of PM, HR department should approach performance management strategically. In this regard, the management team should take the lead as change agents because employees must be inspired and motivated to improve both individual and organizational performance. Effective implementation of performance management strategies improves productivity, program delivery, and employee engagement. To implement a performance management process successfully, there must be a robust strategic plan in place. In other words, the plan must be feasible and well-grounded in terms of the economics of the organization’s capital.
Diversity and Equal Opportunities
Diversity refers to variation regarding culture, race, nationality, gender and sexual orientation among other demographic variables (Kulik, Pepper, Roberson, & Parker, 2007). Typically, workspaces include people from different backgrounds. For this reason, it is important for employers to create effective communication strategies or channels that would guarantee that all employees have equal opportunities irrespective of their race, nationality or religion (Patrick & Kumar, 2012). In the same light, there is a need for diversity training, which would help most companies to create awareness, convey knowledge and educate employees on the significance of diversity. Diversity training also helps leaders to dismantle the cultural, political and ethnic barriers that HR leaders or managers in globalized companies may face, especially when assigned with missions related to foreign affairs.
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According to Patrick and Kumar (2012), diversity management is a strategy or process of creating and maintaining a positive work setting where differences and similarities of individuals are valued. Successful diversity management strategies lead to satisfied, committed and highly performing employees. Ultimately, the whole process will improve the financial performance of an organization. Affirmative action refers to an initiative by the government and some private entities designed to improve the educational and employment opportunities for women and minorities (Blanchard & Crosby, 2012). The initiative commenced as a means of remedying the persistent mistreatment of minorities in the country. It consists of policies, procedures, and programs seeking to guarantee that minority groups and women have a higher preference on admission to higher education institutions, granting of government contracts, and employment recruitment among other social welfares (Cahn, 2013; Klingner, Nalbandian, & Llorens, 2015). The usual criteria used for affirmative action include age, ethnicity, gender, disability and race. Equal opportunity programs outline results-oriented policies and commitment to efforts to achieve equality and fairness in the administration of employment practices including hiring, recruitment, benefits and compensations, promotion, leave and job assignments. Equal opportunity programs also encourage the creation of an inclusive and open work setting that is free from harassment and discrimination based on nationality, gender, race, religion/creed, age, sexual orientation and marital status.
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Evidently, affirmative action, diversity management, and equal opportunity programs are intertwined. Undeniably, affirmative action is an integral part of equal opportunity programs. Affirmative action entails positive steps taken to overcome the barriers to equity at the workplace (Klingner et al., 2015). It ensures that there is equitable participation irrespective of race, disability or gender. Affirmative action also discourages and remedies discriminatory actions; hence, promoting equal opportunity and diversity. Observably, organizations that embrace these strategies are better equipped to serve a diversified human resource sector and the diverse clients or customers in the public and private sectors. Such entities have a better understanding of the legal, social, political, environmental, cultural and economic requirements. Valuing cultural diversity and promoting equal opportunity can significantly improve administrative performance (Klingner et al., 2015). The improvement in performance is attributed to an increase in flexibility and adaptability; reduction of costs is associated with low productivity, absenteeism and turnover enhancing efficiency and serving the needs of diversified customers.
All organizations, small or large, use a variety of capital or factor of production to run their businesses. Capital entails assets and cash used to generate income for the organization. No matter what industry or sector an organization operates in, all organizations have people or human resources. Human resource is used to produce revenue by exploiting capabilities and skills.
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Organizational success depends on various aspects. The main issue is that an entity must offer the right products at the appropriate time. This requires a range of competencies, such as right choice of technology and strategic product development. Organizations that do not control their costs in the long-term tend to fail. Obviously, cost control is essential in extremely competitive activities. There are numerous sources of costs, including the cost of capital, labor cost and cost of raw materials or supplies. All the mentioned costs are worth controlling, but labor or human capital costs deserve special attention for several reasons. First, labor cost is one of the largest single cost sub-units in many organizations. This is primarily applicable for most companies in the service industry, where HR cost can amount to 70% or more of the total costs and expenses. Additionally, even in organizations where labor cost is the smallest cost sub-unit, they are often the main sub-unit that the organization controls. For example, for companies manufacturing similar products, the cost of procuring components may be the same, implying that the manufacturers have little control over the procurement costs. However, the situation is different regarding labor costs in the sense that each manufacturer can institute distinctive policies that would cut the costs and give the company a sustainable competitive advantage.
Dealing with Employment Laws and Worker Protection
HR departments must be aware of all the regulations and laws that affect the workplace. Some of the laws that HRM professionals might come across include labor laws, discrimination laws and work safety laws, compensation requirements like the set minimum wages and healthcare requirements. Health and safety are key considerations for all firms. Frequently, new laws and regulations are formulated with an intention of setting state and federal standards to guarantee work safety. Trade unions and contracts can also influence the requirements and conditions for work safety in an organization. Therefore, it is the responsibility of HR managers to be aware of the work safety regulations and ensure that their workplaces meet both union and federal standards. Some of the workplace protection issues include heating and air conditioning requirements, chemical hazards and protection of personal/private employee information.