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University of Mumbai BMS Notes

Need for Reviewing and Updating HR Policies

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HR policies are formulated in the light of given situation. However, the situational variables are not static but they are dynamic and change with the time. Therefore, in order to integrate these changes, there should be periodic review of HR policies in the light of these factors and suitable changes must be incorporated.

For example, when Madura Garments, a division of Madura Coats, was taken over by Kumarmangalam Birla Group, many managerial personnel left the division which created a managerial vacuum and employee morale turned to be quite low.

In order to rebuild the division, many actions were taken in which change in compensation was one of these and there was a hefty salary hike of 50-60 per cent of all employees.

Because of changed situations, Hindustan Unilever, once the choice employer of managerial talents, has incorporated many changes in its HR policies to attract and retain managerial talents such as provision of 2-3 months training abroad for all new recruits in management cadre, direct entry of experienced managerial talents at the middle management level, offering of stock option scheme, and special emphasis on recruiting woman employees.

Update

Step 1: Identify the Need for a Policy

Employers do not need to create policies for every unforeseen event as this will limit management’s ability to address individual employee needs or unique situations. Policies should provide good guidelines and expectations to ensure fair and consistent practices and legal compliance. Employers may want to develop a policy:

  • If employees’ behavior indicates confusion about the appropriate conduct or how to handle certain situations (e.g., attendance policy, cellphone use policy, travel expense policy, code of conduct).
  • If legal protection of the organization is necessary (e.g., investigations policy).
  • If there is a need for government laws and regulations compliance (e.g., the Family and Medical Leave Act, COBRA).
  • If there is a need to create consistent standards and rules (e.g., progressive discipline).
  • If there is a need to create consistency and fair treatment of employees (e.g., paid time off, benefits eligibility).

Step 2: Determine Policy Content

Policies are written guidelines that explain generally what the employer’s requirements are and how employees will be treated. As organizations create new policies, they should be careful to avoid language that conveys rigid rules that must be followed exactly as written in all circumstances. Flexibility should be built into the wording, and promises that could be interpreted as a contract should be eliminated. For example, organizations should not:

  • State that the organization will “only” or “always” do something, or “will” or “must” act in a particular way.
  • Describe employees as “permanent.”
  • State that employees will be terminated only “for cause.”
  • Make promises of job security.
  • Use all-inclusive lists, such as in disciplinary procedures or work rules.

Employers should use terms such as “generally,” “typically,” “usually” and “may” so that managers have flexibility in interpreting and applying the policies based on the circumstances involved and on the severity of any company policy violation(s).

All policies need to be written in clear language. The policy language itself often varies from employer to employer depending on size, industry and sometimes even location. However, most policies have similar components. The typical components are outlined below:

  • Purpose statement. The purpose statement outlines why the organization is issuing the policy and what the desired effect or outcome will be. For example, “Employees contribute to the corporate culture and reputation of [Company Name] in the way they present themselves. A professional appearance is essential to a favorable impression with customers, regulators and company shareholders (owners). Good grooming and appropriate dress reflect employee pride and inspire confidence on the part of such persons.”
  • Specifications section. This section includes details about specific regulations, requirements or organizational behavior standards that the policy is creating. For example, “Employees are expected to dress in business attire Monday through Thursday. On Fridays employees are permitted to wear casual attire unless there is an event at the workplace or the employee has any meetings with external clients or vendors that day.”
  • Implementation section. This section indicates which parties are responsible for carrying out policy statements and how those parties will ensure adherence to the policy. For example, “Managers will exercise discretion in determining appropriateness in appearance.”
  • Effective date. This date indicates when the policy is considered in force. For example, “All employees will be subject to this new policy/revision as of [date].”
  • Glossary. A listing of definitions for terms found in the policy (for example, “casual shirts: All shirts with collars, including collared blouses, golf and polo shirts.”).

Although employers are free to create policies according to business needs, the policies must be written in compliance with pertinent employment laws. This can be more complicated for multistate employers because it is critical to ensure that policies do not conflict with more than one set of state employment laws. Therefore, all policies should be reviewed by experienced legal counsel prior to communicating the policy to employees.

Step 3: Obtain Stakeholder Support

All too often those who are expected to carry out the policies and ensure adherence to the policies are not consulted prior to the implementation of the policy. Once the policy has been drafted, it will be important to communicate (e.g., meetings, e-mails, teleconferences) with managers and supervisors who will be expected to apply the policy. This communication should include why the new policy (or revision) is needed, address the impact the policy will have on the stakeholder’s area(s) and address any potential thoughts or concerns the stakeholders may have. Considerations from these meetings will lead to any necessary revisions before legal counsel conducts its final policy review.

Step 4: Communicate with Employees

Organizations should give employees background information (when possible) as to why the policy is being implemented. Employees should be given enough details to make the organization’s position clear while keeping the communications process short and simple. Employers can determine the best approach to introduce the policy to employees based on the nature, sensitivity and ease in which the policy will be understood. The best means of distributing the policy (e.g., e-mail, memo, or individual/small group/all-employee company meetings) must also be determined. If using e-mail or company memo, these communications should be distinguishable from other routine communications that employees may easily overlook. For example, organizations can specify the topic in the subject heading, change the importance of an e-mail, change the background and font of a memo or e-mail, change the delivery method of memos, or add read receipts for e-mails.

Employers should incorporate a communication method that will give employees an opportunity to ask questions about the policy. The policy should consist of an acknowledgment statement indicating the employee’s receipt and understanding of the new policy along with the effective date of the policy. The policy should contain space for the employee’s signature and date. It should also be added to the organization’s employee handbook or intranet and included in new-hire orientation programs as appropriate. Employers should notify employees where they can access the policy later (i.e., links to intranet site, attachment of policy to print and add to their employee handbook).

Step 5: Update and Revise the Policy

Clear, well-written policies that are regularly reviewed can be effective employee relations tools and communications devices. They illustrate the organization’s commitment to a positive work environment. Although written policies in general are not legally required, they can be used to demonstrate nondiscriminatory employment practices and serve as the basis for an effective defense in employee lawsuits.

Policies should be reviewed on a regular basis to ensure they continue to comply with federal and state laws and the needs of the organization. New laws, regulations and court cases can affect both policy language and how employers implement the policies. Most experts suggest a thorough review of policies at least once a year. Employers should also use resources that will keep them updated in the interim, like subscribing to a service or publication or becoming part of an organization that specializes in HR or employment. SHRM is committed to updating its members of the latest news on state and federal laws and the latest upcoming or proposed legislation through Government Affairs that may have an impact on HR professionals.

University of Mumbai BMS Notes

Process of Developing HR Policies

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HR policies may be of two types, namely formal and informal. About informal HR policies, Michael J. Jucius has rightly observed that many personnel policies undoubtedly have just grown. In such instances, everyone seems to know, without being told and without knowing where it originated, that a certain type of decision will be made in certain situations. Such policies are informal, and as such their framing or establishment cannot be analysed.

However, some useful comments can be made about formal policies.

Most of the HR policies should be framed by the higher level of management with the advice and assistance of staff of the HR department. Framing of HR policies is also affected by the consultation and advice of employees, day-to-day problems by the management, social and political changes, international happenings and so on.

It is the responsibility of an efficient and effective HR manager to frame HR poli­cies and make necessary changes and amendments from time to time, whenever necessary. In the fram­ing of HR polices, weightage should be given to the views, advice and suggestions of such people who are likely to be impacted by those HR policies.

Such people make a lot of relevant information available for the formation of HR policies. When the rough draft is made, it should be sent to the representatives of employees, departmental heads and experts for their perusal, comments and suggestions, if any.

Maximum attention should be paid to the comments, criticism and observations made by the employees because these are the people who are most effected by HR policies. Then ultimately, the HR policies should be finally drafted and declared. There is every justification for framing the HR policies by the higher level of management in consultation with other agencies.

It brings consistency and uniformity in the decisions and actions of the Organisation. It can be illus­trated with an example. Take the matter of awarding punishment for the acts of indiscipline. In an Organisation, practically every executive has to take disciplinary actions at one time or another.

In case there is no HR policy laying down the nature and quantum of punishment for different types of acts of indis­cipline, every executive will have to use his/her own discretion in awarding the punishment. Obviously, it will differ from executive to executive, and cases will not be wanting in which the nature and quantum of punishments may differ widely, though the offence may be the same.

This may lead to discontentment among employees and, thus, may prove an obstacle in the way of the accomplishment of the desired objectives of the organisation. Hence, it will be a better proposition if policies on such matters are framed by higher-level management to cover all parts of the organisation so that there may be uniformity and consistency in the decisions and acts of the management.

While framing HR policies, we should also keep in view the objectives, cost and utility of the policies as also the reaction of trade unions. The successful implementation of a policy needs the sincere coop­eration of trade unions. Hence, trade union leaders should also be taken into confidence while framing HR policies or for that matter any policy.

The principles of justice, democracy and equality, and the recognition of the needs of employees, should also be taken care of in the preparation of HR policies. The policies framed having kept in view the aforementioned points, more often than not, prove effective.

Once the HR policies are framed, there comes the problem of their transmission and application. As a matter of fact, it is the middle management and the first-line supervisors who will be more concerned with the transmission and application of HR policies.

Middle management should be responsible for communicating the policy formulation to operating levels. Here, communication involves a lot of functions such as interpretation of policies, clarification of areas of uncertainty and misunderstanding and also imparting training to lower-level staff in policy application.

Formulation of HR policies considers a number of factors- organizational philosophy, HR philosophy, external factors, and internal factors. When all these factors are taken into consideration, there may be a number of policy alternatives in relation to a particular matter, for example, recruitment, development, compensation, etc. That alternative is chosen which matches with the maximum number of factors.

After the choice, a policy is put into action and its results are known. If the policy is workable, it is adopted as a long-term measure. However, each policy should be reviewed periodically to incorporate necessary changes because of changes in any of the factors influencing HR policies.

  1. Organizational and HR Philosophy:

Organizational philosophy is based on the philosophy of those who create and manage an organization. Philosophy is the set of beliefs and assumptions about how things happen and how they should happen. HR philosophy is derived out of organizational philosophy which reflects the approach that would be adopted in managing human resources in the organization.

  1. External Factors:

HR polices are formulated not in vacuum but take into consideration various external factors on which the organization does not have control. These external factors are government’s policy towards management of people in the form of various relevant laws, guidelines, and other specifications; nature of competition for human resources, socio- cultural attitudes towards work, productivity of human resources, and image of the organization in the human resource market.

  1. Internal Factors:

Besides the external factors, there are various internal factors in the organization which influence the applicability of a particular HR policy. These factors are the nature of work in the organization — a computer software company may not have the same HR policies as a manufacturing organization with low-level technology, sudden change in the organization like large-scale diversification or contraction of business activities, pressures from trade unions, etc.

  1. Policy Alternatives:

When these factors are taken into consideration, various policy options may emerge on a particular issue. For example, when a vacancy arises at a middle management, the issues that emerge are- whether the position should be filled-up by promotion of internal person or it should be filled-up by appointing a new manager.

If the policy states that the position should be filled-up by internal promotion, another issue arises whether the promotion should be made on the basis of merit or seniority and defining the yardsticks for measuring merit or seniority. Similar such issues arise on other matters too.

  1. Policy Choice:

The identification of various policy alternatives leads to the level where managers can consider some alternatives seriously and choose one of these which is most acceptable in the light of various factors which influence the workability of HR policies. The chosen policy is not necessarily the best one but it is best one in a given situation. That is why it is referred to as the most acceptable one.

  1. Policy in Action:

When a particular policy is chosen, it is put in action for the guidelines to managers concerned and results are obtained. If the results are in accordance with the objectives of the policy, the policy is workable. However, if the results do not match with the objectives, the same process of policy formulation proceeds with new information inputs regarding all those factors which influence applicability of HR policies.

  1. Review:

HR policies are formulated in the light of given situation. However, the situational variables are not static but they are dynamic and change with the time. Therefore, in order to integrate these changes, there should be periodic review of HR policies in the light of these factors and suitable changes must be incorporated.

For example, when Madura Garments, a division of Madura Coats, was taken over by Kumarmangalam Birla Group, many managerial personnel left the division which created a managerial vacuum and employee morale turned to be quite low.

In order to rebuild the division, many actions were taken in which change in compensation was one of these and there was a hefty salary hike of 50-60 per cent of all employees.

Because of changed situations, Hindustan Unilever, once the choice employer of managerial talents, has incorporated many changes in its HR policies to attract and retain managerial talents such as provision of 2-3 months training abroad for all new recruits in management cadre, direct entry of experienced managerial talents at the middle management level, offering of stock option scheme, and special emphasis on recruiting woman employees.

Regarding the form in which HR policies should be communicated, it may be mentioned that many policies are stated in oral or may be informal, but it is better if policies are in writing. Written policies are definitely an improvement over oral or informal policies. There is no doubt that written policies need more time and labour to prepare, but they are worth it, because written policies impart precision, permanence and ease of transmission.

They can be produced for auditing or evaluation whenever required without any loss of time. They can also be used as training manuals. Hence, it may be suggested that it is always desirable to prepare policies with a careful selection of words and having clarity and should be in printed form.

So far as the line supervisors are concerned, they should be responsible for applying HR policies. In some cases, the HR department should also be responsible for applying HR policies in their respective fields.

University of Mumbai BMS Notes

Purpose of HR Policies

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(i) Facilitates decision-making. Policy helps managers at various levels to act with confidence without the need of consulting the superiors every time. It gives them alternatives to choose from.

(ii) Promptness of action: When situations arise that call for decisions, policy will ensure prompt action within the overall framework of the objectives of the organisation.

(iii) Consistency of action: Effective policies ensure uniform and consistent treatment of all employees throughout the organisation. Sound personnel policies are, therefore, an essential base for sound personnel practices. Policies provide the base for management by principle as contrasted with management by expediency.

(iv) Continuity and stability: Written policies are a means of transmitting the company’s heritage from one generation of executives to another. There would be stability in decision making in the organisation even if some key executives retire or leave the organisation.

(v) Better control: Policy provides a rational and continuous system of achieving results which facilitates better control.

(vi) Eliminates personal hunch and bias: Clearly laid down policy liberates decision-maker from his personal bias and self-interest.

(vii) Welfare of people: By removing momentary and hasty decisions, policy ensures long-term welfare of people involved in the organisational activities.

(viii) Confidence in employees: Policy makes the employees aware of where they stand in relation to the organisation. This will create confidence in them.

Limitations of HR Policies:

HR policies may suffer from some limitations which are as follows:

(i) Policies are repeatedly used plans. They bring about rigidity in operations as they leave no room for initiative by the subordinates.

(ii) Policies may not cover all the problems. Sometimes, unforeseen situations arise which are not covered by the existing policies.

(iii) Policies are no substitute for human judgement. Policies only delimit the areas within which decisions are to be made.

(iv) Policies may not be ever-lasting as they lose their utility with the changes in the internal and external environment of the business.

Effective HR Policies

For making the HR policies more effective, it is necessary that they are established in accordance with good standards. They should be reviewed from time to time. There should be a set of standards to check the effectiveness of a particular HR policy.

Michael J. Jucius has suggested some guidelines to check whether a policy will be effective or not.

According to him, the checks or guide­lines may be whether the policy is based upon a careful analysis of the objectives and ideals of the com­pany; whether it is definite, unambiguous, complete and accurately stated; whether it is reasonably stable and not subject to change because of temporary changes in existing conditions; whether it has sufficient flexibility to handle normal variations in changed conditions; whether it is related to policies of other sections of the company so that proper balance of complementary policies is established; and whether it is known and understood by all who must work with it or are affected by it. In case the answers are in affirmative, it means the policy would be good and vice versa.

HR policies must match employee expectations. Policies aiming to cultivate inclusion must match up with the daily reality of employees.

Through its new research report, ‘The Day-to-day Experiences of Workplace Inclusion and Exclusion’, Catalyst, a USA-based non-profit organisation that promotes inclusive workplaces for women, discov­ered three critical lessons about employee experiences:

(a) inclusion and exclusion happen at the same time for many employees

(b) inclusion is really difficult to grasp and define.

(c) exclusion is powerful and easy to recall.

Through its cross-regional study, the report captures the voices of employees across 42 organisations in 5 countries Canada, China, India, Mexico and the USA to better understand their everyday interaction. The three critical lessons Catalyst discovered often create a dilemma for many leaders because they must both create inclusive cultures while rooting out exclusionary behaviours.

HR policies should also be periodically reviewed. This will help determining which HR policy needs to be dropped or changed or whether there is a necessity of having an additional policy.

For this, Michael J. Jucius has suggested a variety of appraisal methods such as all policies should be subject to some, if not extended, evaluation annually; some policies should be reviewed at specific times such as when collective bargaining agreements must be renegotiated; policies of each department may be reviewed when budgetary requests are made; spot or overall appraisal of policies may be made by out­side consultants (this could be done after trouble develops, but preferably, it should be a constructive preventive measure); policies should be subject to review when the desirability is indicated by employee suggestions, employee grievances or unsatisfactory reports on employee performance or behaviour; and policies should be subjected to review whenever a company plans a major expansion or contraction, a change to a new location or a change of methods.

Thus, we find that Michael J. Jucius has very aptly suggested certain tests to check if the policy will prove good or not. Similarly, a variety of appraisal methods suggested by him for effecting periodical review of policies and introducing changes wherever necessary have got immense practical utility.

Advantages

The following advantages are achieved by setting up HR policies:

  • They help managers at various levels of decision making to make decisions without consulting their superiors. Subordinates are more willing to accept responsibility because policies indicate what is expected of them and they can quote a written policy to justify their actions.
  • They ensure long term welfare of employees and makes for a good employer-employee relationship as favoritism and discrimination are reduced. Well-established policies ensure uniform and consistent treatment of all employees throughout the organization.
  • They lay down the guidelines pursued in the organization and thereby minimizes the personal bias of managers.
  • They ensure prompt action for taking decisions because the policies serve as standards to be followed. They prevent the wastage of time and energy involved in repeated analyses for solving problems of a similar nature.
  • They establish consistency in the application of the policies over a period of time so that each one in the organization gets a fair and just treatment. Employees know what action to expect in circumstances covered by the policies. Policies set patterns of behavior and permit employees to work more confidently.
Management Notes

Requisites of a Sound HR policies: Recruitment, Selection, Training and Development, Performance Appraisal, Compensation, Promotion, Outsourcing, Retrenchment

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A policy is somewhat a permanent feature of an organization. It being a standing plan, provides guidelines to managerial decisions. Therefore, policies should be developed on a sound basis. If this is not done, managers have to make decisions again and again. However, what features constitute a sound policy cannot be prescribed universally because situations vary so greatly and an organization may differ in respect of policy formulation and implementation from others.

A sound policy must Have

(i) specify more precisely how the decision will come what is to be done, who is to do it, how it is to be done, and when it is to be finished

(ii) establish a follow-up mechanism to make sure that the decision intended will take place

(iii) lead to new strengths which can be used for decisions in future.

Characteristics of Sound HR Policy

  1. Relationship to Organizational Objectives:

A policy is formulated in the context of organizational objectives. It tries to contribute towards the achievement of these objectives. Therefore, in formulation of a policy, those functions or activities which do not contribute to the achievement of objectives should be eliminated.

For example, if a policy of filling higher positions from within produces hindrance in attracting talents at higher level but the organization needs them, the policy can be changed because in the absence of suitable manpower, the organization may not be able to achieve its objectives.

  1. Planned Formulation:

A policy must be the result of careful and planned formulation process rather than the result of opportunistic decisions made on the spur of the moment. Since policies are relatively permanent features of the organization, ad hocism should be avoided because it is likely to create more confusion.

It is true that it is not possible to solve every problem in the organization on the basis of policies because new situations may arise, however, for matters of recurring nature, there should be well-established policies.

  1. Fair Amount of Clarity:

As far as possible, policy should be clear and must not leave any scope for ambiguity. If there is a problem of misinterpretation, the organization should provide the method for overcoming the ambiguity. Further, policy provides some discretion for managerial decisions but it should minimize the number of cases where decisions are based on personal judgement. If this happens frequently, there should be close scrutiny of the policy and suitable amendments should be made.

  1. Consistency:

The policy should provide consistency in the operation of organizational functions. Often the organization formulates policies in various functional areas and each function is related to other functions of the organization. If the policy in one area is inconsistent with another area, there may be conflict resulting in inefficiency.

This happens very frequently in functions having close relations such as production and marketing or finance and other functions. Therefore, the formulation of policies should be taken in an integrated way so that policies in each area contribute to other areas also.

  1. Balanced:

A sound policy maintains balance between stability and flexibility. On the one hand, a policy is a long-term proposition and it must provide stability so that members are well aware about what they are required to do in certain matters. On the other hand, the policy should not be so inflexible that it cannot be changed when the need arises.

In a changed situation, the old policy becomes obsolete. Therefore, there should be a periodic review of policies and suitable changes should be incorporated from time to time. The changes may be in the form of addition, deletion, or substitution of the existing policy.

  1. Written:

A policy may be in the form of a statement or it may be interpreted by the behaviour of the people at the top level. However, clearly-specified policy works better than the one which has to be interpreted by the organization’s members. When the policy is in writing, it becomes more specific and clearer. It creates an atmosphere in which individuals can take actions with confidence knowing fully the impact of a particular action.

A written policy is easier to communicate through the organizational manuals. However, written policy has certain disadvantages in the form of being inflexible, too much emphasis on written words and their interpretation, and leakage of confidential policy. However, if the policy has been formulated carefully, many of the dangers will be overcome. Of course, confidential policies cannot be made part of organizational manuals.

  1. Communication:

It is not just sufficient to formulate policies. Unless these are communicated properly to the persons concerned, no meaningful purpose will be served. Therefore, a system should be developed to communicate the policies to those who are to make decisions in the light of those policies.

While written policies can be communicated easily, problems exist for communicating unwritten ones. In such cases, there should be more interaction between policy framers and policy implementers.

HR Policies

  1. Recruitment and selection policy: To procure suitably educated and efficient personnel by offering those tempting wages, good working conditions, safety and security, and better future prospects.
  2. Training and development policy: To make available all possible facilities for the training and development of employees to enable them to do their job efficiently and to prepare them­selves for future promotions; to take effective steps including training and development pro­grammes to equip the employees in the latest techniques of production, management and so on; to get the performance appraisal done; and to provide adequate opportunities and facilities for the development of employees.
  3. Job evaluation, wage and incentive policies: To determine reasonably good wage rates and dearness allowance, and to work out incentive plans for workers after undertaking job evalu­ation and other necessary steps and also keeping in view the prevalent wage rates for similar jobs in other industries.
  4. Labour welfare policy: To improve industrial relations by evolving a suitable machinery for the settlement of disputes; to encourage mutual negotiations; to prepare and execute labour welfare programmes; and to arrange all possible facilities for the health, education and other welfare programmes.
  5. Retrenchment: All progressive companies keep good exit policies, so that feedback can be obtained and improvement can be brought about.

University of Mumbai BMS Notes

Barriers to SHRM

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Nothing is free from obstacles. SHRM also suffers from some barriers. These barriers are related to mentality, strategy and outcomes Barriers are classified into seven main types. All these barriers to strategic human resource management are briefly discussed below:

Barriers to Strategic Human Resource Management

  1. Short term mentality: Short-term mentality and focus on the current performance of SFIRM is the first barrier. Every manager act, long-term focus, because the organization has been established with long-terms objectives/focus.
  2. Strategic inability: Very often SHRM does not think strategically and he cannot think it to due in capability. This type of inability may arise for many reasons as lack of technical knowledge, insufficient training and the like.
  3. Lack of appreciation: Sometimes top managers do not recognize the activities of strategic human resource management. So SHR manager does not get interested in doing any innovative venture. A few appreciations may get them a substantial mental boost up.
  4. Failure understands role: General managerial roles may not be fully understood by be managers. This failure is due to lack of knowledge about the specialty of a degree of responsibility. This failure may create distance between these managers.
  5. Difficulty in quantifying outcomes: Many outcomes may not be quantified. But SHRM tries to enjoy the contribution. This is not always possible. Participation, work etc. type function cannot be quantified because of their intangibility.
  6. Wong perception on human assets: Investment in human assets may be regarded as high risk than that of technology and information. Though these technologies are run by the human resources. This wrong perception may inhibit the progress.
  7. Resistance: SHR Managers may be resisted because of the incentives for change that might arise. The change implemented demand some incentives for efforts to execute the changed program. If these incentives are not given reasonable, they may create barriers SHRM.

The key role of strategic HR management is already known and there are some issues that HR strategy may address:

  1. Structure

The success of the company depends a lot on whether there is a proper management structure in place.

  1. Team-working

By withdrawing old traditional hierarchies a background of creating a team building is created. In a lot of cases, the less layers there are between the workers and director there are, the more harmonized is the working environment. Also the communication between staff is easier and more effective. In addition to that, it could have far-reaching effects on flexibility and performance and to achieving a better coordination of business.

  1. Performance

This strategy is based on an analysis of the critical success factors and the performance levels reached in relation to them. The performance can be improved by taking the steps to improve training, development, reorganization, the development of performance management processes, business process re-engineering, etc. A lot of companies have already adopted performance management processes in which the emphasis is on performance improvement and development and not reward. This scheme brings new priorities of involvement, teamwork and self-development.

  1. Quality and customer care

The aim of most companies is to achieve the competitive advantage. The competitive advantage is often measured by customer satisfaction and hence loyalty and retention. Innovation and cost reduction is still important but the main focus of attention should be the customers because if they reject the product due to it not meeting their expectations then everything else looses the sense. Therefore the strategy for quality should be built into the business strategy.

Achieving a complete integration of HR and business strategies is quite complicated. Partly the reason for that is that in the past HR manager in the company was not considered to be a part of a general management team. Furthermore, the personnel advice was not a part of strategic direction. However, in today’s modern business HR is indispensable.

Management Notes

High Commitment Management Model

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High-commitment management emphasizes personal responsibility, independence, and empowerment of employees across all levels instead of focusing on one higher power; it always intended to keep commitment at high level “calling all the shots”.

A high commitment system is unusual in its job design and cultural structure. These practices emphasize getting the tasks complete, but do it in a way that their employees enjoy doing it. According to Harvard Business School Professor Michael Beer, “leaders develop an organizational design, business processes, goals and measures, and capabilities that are aligned with a focused, winning strategy.” This kind of environment allows employees to approach tasks at ease, wearing jeans instead of suits and staying home to watch their children get on the bus for school before coming to work. Technology also plays a role in this system. Recently, technology has slaughtered barriers of communication, which makes this high-commitment model fit that much better. That father waiting for the bus can still answer phone calls and check emails for work, so is he working or is he spending time with his daughter? He can be doing both. As long as the job gets done, this system is casual on how it gets done, relieving employees of constant stress.

A flat organizational structure is one of the biggest success factors. Individuals are responsible for their own decision-making and these decisions, their skill, and their performance is how they get paid. Instead of putting too much weight on the individual, “people are likely to see the locus of the control coming from ‘within’ through the adoption of self-created demands and pressures as opposed to external and making them feel subordinate.” While these companies allow each employee to be a manager in their own way and try not to distinguish its structure by higher levels of employment, it doesn’t mean that they lack these higher powers entirely. It’s that under this system people aren’t relying on the general managers, CEOs, or other employees to do their work for them. This personal discipline is what drives the employees to help the company be successful. and eliminates the chance at a thought like, “Why would I want to help my company become better if I know I’m just going to get yelled at?”

Another focus of high commitment practices is their employee relationships. They only hire people who are flexible, determined, and are willing to handle challenges. Because this system relies on individual performance, there is a big emphasis on hiring the right people for the job. The detailed recruitment process can consist of many interviews with different members of the company, an induction course, and in some cases, team-building exercises. Once found, the right employees help create a strong bond and high trust throughout the entire company.

High commitment workplaces are successful through their importance on an individual’s responsibility in order to help the team prosper. By creating a culture that motivates individuals to want to succeed while sustaining high commitment, “these firms stand out by having achieved long periods of excellence.”

These models of best practice can take many forms; while some have advocated a universal set of HR practices that would enhance the performance of all organisations to which they were applied (Pfeffer, 1994, 1998), others have focused on high-commitment models (Walton, 1985; Guest 2001) and high-involvement practices (Wood, 1999) which reflect an underlying assumption that a strong commitment to the organisational goals and values will provide competitive advantage.

Others have focused on ‘high-performance work systems/ practices (Berg, 1999; Applebaum et al., 2000). This work has been accompanied by a growing body of research exploring the relationship between these ‘sets of HR practices’ and organisational performance (Pfeffer, 1994; Huselid, 1995; Huselid and Becker, 1996; Patterson et al., 1997; Guest, 2001). Although there is a wealth of literature advocating the best-practice approach, with supporting empirical evidence, it is still difficult to reach generalised conclusions from these studies.

This is mainly as a result of conflicting views about what constitutes an ideal set of HR best practices, whether or not they should be horizontally integrated into ‘bundles’ that fit the organisational context and the contribution that these sets of HR practices can make to organizational performance.

  • Universalism and high commitment

One of the models most commonly cited is Pfeffer’s (1994) 16 HR practices for ‘competitive advantage through people’ which he revised to seven practices for ‘building profits by putting people first’ in 1998. These have been adapted for the UK audience by Marchington and Wilkinson (2002).

Pfeffer (1994) explains how changes in the external environment have reduced the impact of traditional sources of competitive advantage, and increased the significance of new sources of competitive advantage, namely human resources that enable an organization to adapt and innovate. Pfeffer’s relevance in a European context has been questioned owing to his lack of commitment to independent worker representation and joint regulation (Boxall and Purcell, 2003), hence Marchington and Wilkinson’s adaptation, highlighted in Table.

HR practices for ‘competitive advantage through people’

With the universalist approach or ‘ideal set of practices’ (Guest, 1997), the concern is with how close organisations can get to the ideal set of practices, the hypothesis being that the closer an organisation gets, the better the organization will perform, in terms of higher productivity, service levels and profitability. The role of Human Resources, therefore, becomes one of identifying and gaining senior management commitment to a set of HR best practices, and ensuring that they are implemented and that reward is distributed accordingly.

The first difficulty with the best-practice approach is the variation in what constitutes best practice. Agreement on the underlying principles of the best-practice approach is reflected in Youndt et al.’s (1996: 839) summary below: Lists of best practices, however, vary intensely in their constitution and in their relationship to organisational performance. A sample of these variations is provided in Table. This results in confusion about which particular HR practices constitute high commitment, and a lack of empirical evidence and ‘theoretical rigour’ (Guest 1987: 267) to support their universal application. Capelli and Crocker-Hefter (1996: 7) note:

  • Integrated bundles of HRM: horizontal integration

A key theme that emerges in relation to best-practice HRM is that individual practices cannot be implemented effectively in isolation (Storey, 1992) but rather combining them into integrated and complementary bundles is crucial (MacDuffie, 1995). Thus the notion of achieving horizontal integration within and between HR practices gains significance in the best-practice debate.

HR practices for ‘competitive advantage through people’

The need for horizontal integration in the application of SHRM principles is one element that is found in the configurational school of thought, the resource-based view approach and in certain best-practice models. It emphasises the coordination and congruence between HR practices, through ‘a pattern of planned action’ (Wright and McMahan, 1999). In the configurational school, cohesion is thought likely to create synergistic benefits, which in turn enable the organisation’s strategic goals to be met.

Roche (1999: 669), in his study on Irish organisations, noted that ‘organisations with a relatively high degree of integration of human resource strategy into business strategy are much more likely to adopt commitment-oriented bundles of HRM practices’. Where some of the best-practice models differ is in those that advocate the ‘universal’ application of SHRM, notably Pfeffer (1994, 1998). Pfeffer’s argument is that best practice may be used in any organisation, irrespective of product life cycle, market situation or workforce characteristics, and improved performance will ensue.

This approach ignores potentially significant differences between organisations, industries, sectors and countries however. The work of Delery and Doty (1996) has highlighted the complex relationship between the management of human resources and organisational performance, and their research supports the contingency approach (Schuler and Jackson, 1987) in indicating that there are some key HR practices, specifically internal career opportunities, results-oriented appraisals and participation/ voice, that must be aligned with the business strategy or, in other words, be context-specific.

The ‘bundles’ approach, however, is additive, and accepts that as long as there is a core of integrated high-commitment practices, other practices can be added or ignored, and still produce enhanced performance. Guest et al.’s analysis of the WERS data (2000a: 15), however, found that the ‘only combination of practices that made any sense was a straightforward count of all the practices’. As with many high-commitment-based models, there is an underlying assumption of unitarism, which ignores the inherent pluralist values and tensions present in many organisations. Coupled with further criticisms of context avoidance and assumed rationality between implementation and performance, the best-practice advocates, particularly the universalists, are not without their critics.

Self-directed work teams

In a study of illumination in the workplace of Hawthorne and the Western Electric Company, a sociologist from Harvard Business School, Elton Mayo, concluded that when the organization established experimental work groups, “the individuals became a team and the team gave itself wholeheartedly and spontaneously to cooperation.” Through a natural system of collaboration, the teams are not only responsible for the work but also the management of their group. Mayo’s research uncovered that teams under their own direction established a capacity for self-motivated learning and change. This concept of designing the work system with the full participation of the people proved to be a breakthrough for organizations during the 1990s. During that time, employees closest to the product and customer began to have increasing decision making capacities and capabilities.

Interview programs

The Hawthorne Experiments sought to determine a correlation between light levels and productivity. Researchers had divided the employees into teams of six and interviewed the individuals to determine the effect of the lighting. Mayo discovered that the interview program set up by the study inherently gave the employees a sense of higher purpose.[9] Exposure of employee thoughts and concerns to managers appeared to be a fundamental aspect of the relation between managers and employees. Evidently, by having the ability to speak to their managers, the employees at Western Electric exhibited a dramatic improvement in their attitudes towards work. Essential to a highly committed work force, the interview program formally developed and sustained cooperation with management.

Problem-solving teams

The Hawthorne experiment further highlighted that teams working without coercion from above or limitation from below could astonish even their own expectations of themselves. Sociologist Fritz Roethlisberger argued that this informal organization left the team responsible for addressing the myriad of problems that continuously arose. Roethlisberger noted by studying the chemistry of informal groups that human interactions and collaboration have the potential to set when teams have to face problems on their own. Together the individuals of the team strive to improve the processes of the team by adapting to different demands and learning from each other.

Cross training

Cross training began to be heavily examined through the scope of modern Japanese management in the automobile industry in the 1970s. Sociologists examined the way in which the Japanese automobile firms cross-trained its employees through a company wide orientation and training program. As Japanese firms trained their employees in a multitude of aspects in the production process, sociologists discovered that the training brought the employees together and formed a connection in which all the employees were dedicated to the company’s mission. These established connections appeared to solicit cooperation among the work force. The Japanese auto plants revealed that flexibility within the production teams allowed employees to work on their own tasks while keeping others efficient.

University of Mumbai BMS Notes

High Involvement Management Model

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Money isn’t everything when it comes to keeping employees happy. While compensation is an important factor contributing to overall job satisfaction, other criteria matter more, according to a CareerBliss.com study reported by “Forbes” writer Meghan Casserly. Control over daily tasks is one of the most important work characteristics for producing happiness on the job. High involvement work teams improve productivity and happiness by giving workers more autonomy and encouraging cooperative work efforts.

High Involvement Management Practices (HIMPs) are policies and procedures that seek to increase employee involvement in management decision making, and to equip employees with the skills and autonomy to identify improvements in firm processes.

The aim of encouraging such involvement is to increase employee job satisfaction and effort, encourage employee investment in their own productivity and improve commitment. If successful, HIMPs could increase productivity and wages, and reduce turnover, building further firm specific human capital. This increased job stability may allow employees to build further firm specific knowledge and make employers more willing to invest in training and internal promotion, thus increasing progression.

HIMPs also typically involve providing employees with management information and implementing procedures to improve information flows from workers to management. It is hoped that this will increase innovation within the firm, encourage job autonomy and increase the likelihood of workers being ‘noticed’ for potential career progression.

Highly Skilled Workers

For high involvement teams to work, workers need to be knowledgeable in their fields. High involvement work teams are most common at organizations who recruit well-educated, accomplished individuals for all positions. Giving these workers autonomy is the best way to keep them happy and get the most out of your talent pool. Although a team’s success depends on the strategies used, coming up with effective strategies depends on people who are creative and hard-working in the first place.

Autonomy

Some companies operate with a top-down approach. A manager tells lower-level employees what to do, outlines sub-tasks, defines deadlines and assigns responsibilities. High involvement work teams are less hierarchical, giving everyone more freedom to decide the specifics of approaching a larger project. A manager provides an overview of what needs to get done then it’s up to the team to collectively decide who does what and how individual tasks will be handled. The most mundane tasks aren’t passed to lower-level employees. Everyone handles a variety of different responsibilities, which prevents boredom and disillusionment.

Focus on Learning

High performance work teams are focused on learning and continuous improvement. The team’s mandate isn’t just to get a job done, but to use competitive intelligence, market information and internal statistics to find better ways to do things. To make high performance work teams their most effective, managers need to focus on employee continuing education and career development, too. Sending people to conferences and footing part of the bill for education upgrades produces a workforce equipped to think outside of the box.

Flexibility, Efficiency and Productivity

Although high involvement work teams do increase workplace satisfaction, the reason why most companies choose this structure is because it gets results that drive a healthy bottom line. When team members feel comfortable taking on a number of different responsibilities, the organization is more flexible to react quickly to changes in demand or market conditions. According to an article published in “Quality Insider” magazine, introducing high involvement work teams helped Johnson & Johnson reduce inventory by $6 million. 3M increased production gains by 300 percent at one of its facilities.

There are three other organizational resources that need to be decentralized in order for employees to have the capacity to create high performance organizations:

  • Knowledge that enables employees to understand and contribute to organizational performance. Knowledge includes both technical knowledge to do the job or provide the service; business knowledge for managing the organization; and interpersonal, problem-solving and decision skills for working together as a team.
  • Information about the performance of the organization. Such information includes data related to production (revenues, costs, sales, profits, cost structure); customer satisfaction; and benchmarks with other companies.
  • Rewards for high performance, including adjusting the compensation structure to be aligned with the behaviors, outcomes, and capabilities required for high performance. Employees may be paid on the basis of the knowledge and skills needed in the work environment to get the job done. There also may be performance-based pay that is allocated on a group or team basis and may include, for instance, profit sharing, gain sharing or group-based salary bonuses.
Management Notes

High Performance Working Model

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Features

  1. Work Design:

High Performance Work Systems generally start with a new work design.

  1. Total Quality Management (TQM) and reengineering are important components in new work designs.
  2. In HPWS, instead of separating jobs into separate units, the focus is on the key business processes that drive customer value and creating teams that are responsible for the processes.
  3. Employees are given liberty to alter their work schedule.
  4. Advanced communication systems are employed in effective HPWS.

In HPWSs, the various components of HRM stress certain important activities.

  • Work Flow:
  1. Self-managed teams
  2. Empowerment
  • Staffing:
  1. Selective recruiting
  2. Team decision making
  • Training:
  1. Broad skills
  2. Cross-training
  3. Problem solving
  4. Team training
  • Compensation:
  1. Incentives
  2. Gain sharing
  3. Profit sharing
  4. Skill-based pay
  • Leadership:
  1. A few layers
  2. Coaches/Facilitators
  • Technologies:
  1. HRIS
  2. Communications

By redesigning the work flow around key business processes, companies are able to establish a work environment that can facilitate teamwork, utilize the skills/knowledge effectively, empower employees and provide meaningful work.

  1. HR Practices:

Work design, quality management or reengineering alone or in combination cannot bring in any desired change unless they are supported by adequate HRM elements. An environment of high performance and satisfaction is possible only when work resigns are combined with relevant HR practices to encourage skill development and employee involvement.

Staffing Practices:

  1. HPWSs generally start with highly directive recruitment and selection practices.
  2. Recruitment is broad as well as intensive to get the best pool of candidates to choose from.
  3. Organizations compensate the expenses and time invested in selection by selecting the skilled individuals Capable of learning continuously and working cooperatively.
  4. Human Resource Information System is extensively used to compile an inventory of talents to enable the HR managers select the people with specific skills needed.

Training and Development:

  1. Training focuses on ensuring that employees have the needed skills to take higher responsibility.
  2. Beyond individual training, a training certification process is established to make sure that intact teams progress through a series of maturity phases.
  3. Teams are required to certify their abilities to function effectively. Teams are certified only after effective demonstration of knowledge and skills in areas such as customer expectations, business conditions and safety.
  4. Skills must be continually updated.
  5. Certified teams are required to review their competencies periodically.

Compensation:

  1. In HPWS, there are alternative compensation systems.
  2. To link pay and performance, employee incentives are included.
  3. There are incentives for goal achievement and even training.
  4. Incentive schemes such as gain sharing, profit-sharing and employee stock ownership schemes are common in HPWSs.
  5. Scanlon plan, Rucker plan and Improshare are used in HPWSs to elicit employee suggestions and reward them for contribution to productivity.
  6. In some companies there are skill-based pay plans. Paying employees based on the number of different skills they possess, it is possible to create both a broader skill base among employees and a more flexible pool of people to rotate among interrelated jobs.

  1. Leadership Role:

Leadership issues assume importance in every level in the HPWS. To support the HPWS environment, to bring changes in the culture and to modify business process, the role of leadership plays an important role.

  1. Many companies have found that the success of any HPWS depends on first changing the roles of managers and team leaders.
  2. Fewer layers of management and focus on team-based work culture bring in substantial improvement in productivity.
  3. In HPWS, managers and supervisors are seen as coaches, facilitators and integrators of team efforts.
  4. There is no place for autocratic leadership style in a HPWS. Managers always share responsibility for decision making with employees.
  5. In HPWS, the term manager is replaced by the term team leader.
  6. In many cases leadership is shared among the team members.
  7. Some companies rotate team leaders at various stages in team development.
  8. HPWS allows individuals to assume functional leadership roles when their particular expertise is needed most.

4. Information Technology:

  • Communication and information technologies are important components of HPWS. Technologies of various kinds help creating a system for communicating and sharing information which is vital to any business.
  • IT in service sector is used to help employees monitor its service, communicate with customers and identify and solve problems quickly.
  • Computerized system helps budget and track the employee time spent on different projects. Information needs to be about business plans/goals, unit and corporate operating results, hidden problems/ opportunities and competitive threats.
  • HPWS cannot succeed without timely and accurate communications.
  • Information technologies need not always be very high-tech as the best communication occurs face to face.

High performance work system (HPWS) is a specific combination of HR practices, work structures and processes that enhances employee skill, knowledge, commitment, involvement and adaptability. The key concept in HPWS is the system. HPWS is composed of many interrelated sub-systems that complement one another to attain the goals of an organization, big or small.

Generally, companies try to blend the important competitive challenges (adapting to global business, assimilating technology, managing change, responding to customer needs, mobilizing and developing intellectual capital and reducing costs) and the employee concerns (managing a diverse workforce, recognizing employee rights, accepting new work attitudes and balancing work and family demands) to attain competitive advantage.

But, nowadays, the successful companies go beyond simply balancing these requirements; they create work situations that combine these demands to get the best out of the employees to meet the short-term and long-term needs of the companies. E.g., Google, Toyota etc.

  1. Shared Information:

In the past, organizations did not bother to supply information about the organizations to the employees and employees were also not interested to ask for information. But, nowadays, sharing of information between the managements and employees is highly critical.

  1. When employees are given timely and useful information about business performance, plans and strategies, they are more likely to offer suggestions to improve the business.
  2. Sharing of information leads to better cooperation in effecting major organizational changes.
  3. Employees feel more committed to new courses of action if they have adequate information from the management.
  1. Sharing of information results in the shift from the mentality of command and control to focus on employee commitment.
  2. Relationship between management and employees improves by sharing information.
  3. Employees are more likely to be willing to work to attain the goals in a culture of information sharing, and
  4. Employees will know more, do more and contribute more when information is shared.
  1. Knowledge Development:

Information sharing and knowledge development coexist. As organizations compete through people, they must concentrate and invest in developing employees.

Knowledge development takes place through many activities:

  • Selecting the best and brightest candidates available in the labour market
  • Providing opportunities to all the employees to sharpen their knowledge continuously
  • Training to improve the employees’ technical, problem-solving and interpersonal skills to work either individually or in teams
  • Arranging for the right environment to learn in ‘real time’ on the job, using innovative new approaches to solve real problems
  • Making employees aware of the firm’s progress and
  • Displaying vital statistics of the firm including production and cost of production
  1. Performance-Reward Linkage:

The personal objectives of employees and the organizational goals of management, naturally, cannot go hand in hand. Employees, by nature, pursue outcomes that bring in personal benefit to them and not necessarily to the organization as a whole.

When the goals of employees and that of the organization are aligned through some means there will be benefits both to the employees and the organization. It has been found that when rewards are connected to performance, employees pursue outcomes that are mutually beneficial to themselves and the organization.

  • When rewards are connected to performance, supervisors need not have to constantly watch to make sure that employees do the right thing.
  • Appropriate performance-reward linkage makes people to go out of the way to make certain that co-workers are getting the help they need, systems and processes are functioning are functioning efficiently and customers are happy.
  • Connecting rewards to organizational performance also ensures fairness and tends to focus employees on the organization.
  • Performance-based rewards ensure that employees share in the gains that result from any performance improvement.
  1. Egalitarianism:

In HPWS, conflicts among managers, employees and labour unions are increasingly being replaced by more cooperation approaches to managing work. Present day employees feel that they are a part and parcel of the organization, not just workers.

  • In an egalitarian environment where everyone is treated alike, status and power differences are eliminated.
  • There will be more of collaboration and teamwork.
  • When people work together as a team without inhibition, productivity improves.
  • Egalitarian environment ensures employee loyalty.
  • Empowering employees in HPWS give them more control and influence over decision-making.
  • With decreasing power distances, employees can become more involved in their work and their quality of work is improved simultaneously.

Design

Now it is your turn to design a High-Performance Work System (HPWS). HPWS is a set of management practice that attempts to create an environment within an organization where the employee has greater involvement and responsibility. Designing a HPWS involves putting all the HR pieces together.

A HPWS is all about determining what jobs a company needs to be done, designing the jobs, identifying and attracting the type of employee needed to fill the job, and then evaluating employees’ performance and compensating them appropriately so that they stay with the company.

E-HRM:

At the same time, technology is changing the way HR is done. The Electronic Human Resource Management (e-HRM) business solution is based on the idea that information technologies, including the Web, can be designed for human resources professionals and executive managers who need support to manage the workforce, monitor changes, and gather the information needed in decision making. At the same time, e-HRM can enable all employees to participate in the process and keep track of relevant information.

For instance, your place of work provides you with a Web site where you can login; get past and current pay information, including tax forms (i.e., 1099, W-2, and so on); manage investments related to your 401(k); or opt for certain medical record-keeping services.

More generally, for example many administrative tasks are being done online, including:

  1. Providing and describing insurance and other benefit options;
  2. Enrolling employees for those benefits;
  3. Enrolling employees in training programs; and
  4. Administering employee surveys to gauge their satisfaction.

Many of these tasks are being done by employees themselves, which is referred to as employee self-service. With all the information available online, employees can access it themselves when they need it.

Part of an effective HR strategy is using technology to reduce the manual work performance by HR employees. Simple or repetitive tasks can be performed self-service through e-HRM systems that provide employees with information and let them perform their own updates.

Typical HR services that can be formed in an e-HRM system include:

  1. Answer basic compensation questions.
  2. Look up employee benefits information.
  3. Process candidate recruitment expenses.
  4. Receive and scan resumes into recruiting software.
  5. Enroll employees in training programs.
  6. Maintain training catalog.

Organizations that have invested in e-HRM systems have found that they free up HR professionals to spend more time on the strategic aspects of their job. These strategic roles include employee development, training, and succession planning.

Management Notes

Changing Role of HR Professionals

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The role of Human Resource (HR) professionals has undergone significant transformation in recent decades, adapting to the dynamic needs of organizations and evolving economic, technological, and social environments. Traditionally, HR was seen as an administrative function primarily focused on hiring, payroll, and compliance with labor laws. However, with the increasing importance of human capital in driving organizational success, the role of HR professionals has expanded to include strategic, developmental, and advisory functions. This shift reflects the growing recognition that HR is a key player in fostering a culture of innovation, employee engagement, and long-term organizational sustainability.

  • From Administrative to Strategic Partner

One of the most significant changes in the role of HR professionals is the shift from an administrative to a strategic role. Historically, HR’s focus was on administrative tasks such as recruitment, benefits administration, and maintaining employee records. Today, HR professionals are seen as strategic partners in achieving business goals. They are involved in decision-making processes, helping to shape organizational strategy, and ensuring that the human resource policies align with the company’s objectives. HR plays an essential role in organizational planning, talent management, and creating a work environment that supports the achievement of long-term goals.

  • Talent Management and Development

As organizations recognize the importance of retaining top talent and fostering leadership potential, HR professionals have taken on the responsibility of talent management and employee development. HR now focuses not only on recruitment but also on identifying future leaders, ensuring ongoing skill development, and facilitating succession planning. Through training, mentorship, and career development programs, HR professionals work to nurture a workforce capable of meeting the challenges of an evolving business landscape. Their role in helping employees grow and advance ensures that the organization remains competitive in the talent marketplace.

  • Employee Engagement and Well-being

In the modern business world, employee engagement and well-being are seen as critical factors in driving productivity and job satisfaction. HR professionals now focus on creating a positive organizational culture, fostering open communication, and building trust between employees and management. They develop initiatives that promote work-life balance, mental health, and overall well-being. HR professionals also focus on improving employee morale and motivation by recognizing achievements, offering flexible working arrangements, and encouraging a healthy work environment. Employee engagement is central to organizational success, and HR plays a crucial role in cultivating it.

  • Use of Technology and Data Analytics

The digital age has brought about an increased reliance on technology and data analytics in HR functions. HR professionals now use advanced software systems for payroll, recruitment, performance management, and employee engagement. They also leverage data analytics to make informed decisions regarding workforce trends, compensation packages, and employee retention strategies. By using data, HR professionals can better understand employee needs, predict turnover, and develop tailored policies to improve performance and satisfaction. Technology has also streamlined administrative tasks, allowing HR professionals to focus on more strategic initiatives.

  • Diversity, Equity, and Inclusion (DEI)

The role of HR professionals has also evolved to include a strong emphasis on diversity, equity, and inclusion (DEI). In response to growing social awareness, HR departments are now at the forefront of creating diverse and inclusive workplaces. HR professionals are responsible for implementing programs that promote diversity in hiring, ensuring equal opportunities for all employees, and fostering a culture of inclusivity. This involves addressing unconscious biases, creating mentorship opportunities for underrepresented groups, and actively promoting workplace equality.

  • Change Management and Organizational Development

HR professionals are now integral to change management and organizational development. In today’s fast-paced business environment, organizations must adapt quickly to market shifts, technological advancements, and evolving customer needs. HR plays a pivotal role in managing change by supporting employees through transitions, providing training for new systems or processes, and ensuring that the workforce remains engaged and adaptable. Additionally, HR professionals work to shape organizational culture and structure to support growth and innovation.

University of Mumbai BMS Notes

Linking SHRM and Business Performance

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Identifying and implementing workforce strategies in a challenging global economy is a high-priority issue for top executives. To be successful, human resource professionals and business leaders together must grapple with the many variables that affect the organization’s ability to attain its strategic objectives. They must develop quantitative and qualitative approaches to efficiently and effectively attract, engage and retain human capital. Specifically, to be effective, business leaders must focus on the five key areas:

  • Workforce planning.
  • Organizational capability assessment.
  • Organizational development and structure.
  • Diversity and Inclusion.
  • Change management

Workforce planning involves analyzing the workforce implications of a business plan and developing solutions to address them. Steps include:

  • Analyzing the organization’s strategic goals.
  • Determining competencies required to attain those goals (needs analysis).
  • Conducting a talent assessment of the employee population.
  • Performing a labor market analysis (availability).
  • Identifying the gap between the current capabilities and the needs, which forms the basis of a talent-build (employee development), borrow (use of a contingent workforce and project-based work) or buy (staffing) matrix.

The resulting talent acquisition strategy will depend in part on the organization’s life-cycle stage. Organizations in the introduction phase, for example, will emphasize acquiring exceptional as opposed to acceptable talent or building or moving talent.

Attraction

Efficient and effective methods of attracting and acquiring talent are critical to success. In a strengths, weaknesses, opportunities and threats (SWOT) analysis, “strengths” refers to the organizational qualities that would be difficult for a competitor to replicate. Because methods for producing products tend to be similar, an organization can distinguish itself from its competitors by developing and communicating its unique people advantage.

Filling the talent gap involves implementing robust methods of attracting, sourcing, screening, interviewing, hiring, onboarding and retaining human capital, as well as developing staffing management metrics to measure efforts within each of these areas.

Attracting talent includes creating or refining an employment brand, as well as communicating the message through people, process and technology solutions. Categorizing channels according to the 7 Sourcing Segments®, identified by the consulting firm Kaufman, VonStuben and Associates, helps streamline these efforts:

  • Mass media.
  • College relations.
  • Affinity groups.
  • Referral programs.
  • Direct talent scouting.
  • Special events (e.g., open houses, career fairs).

Working within each segment before identifying specific needs allows organizations to consistently communicate an employment brand and further decrease acquisition time by inviting talent to apply and prequalify in advance of actual needs.

Motivation

To perpetuate and build on a competitive people advantage, organizations must understand what attracts and motivates employees. Motivational factors frequently cited in research include:

  • Training, development and career.
  • Immediate management.
  • Performance management.
  • Equal opportunities and fair treatment.
  • Pay and benefits.
  • Health and safety.
  • Family friendliness.
  • Job satisfaction.

Leaders of high-performing organizations must strive to understand the mix and multitude of motivational and engagement factors and to introduce efforts to influence them. Diversity and individual values also play an important role in engagement.

Retention

Effective retention strategies revolve around how the organization’s managers and employees interact, how the organization develops and presents talent, and how these behaviors come to life within the work environment and brand. Organizations must develop and implement human capital strategies that encourage, support and hold people managers responsible for retention. These strategies include ensuring that talent-buy and talent-build efforts feed a culture in which people are appreciated and included. This begins with an organization’s values statement and is carried out via its performance management system. Accordingly, managers should hire individuals who mirror organizational values as well as demonstrate those values through their behaviors. If diversity and inclusion are values, for example, behaviors related to them are included in performance plans and measured, rewarded or corrected.

Quantitative and qualitative analysis of an organization’s capabilities will contribute to achieving defined business goals through skills analysis, job design, role clarification and performance measures. These measures also benefit the employee populations, the shareholders, and the communities in which the organization operates.

Human resource professionals, for example, must continually employ efforts to analyze redundancies within organizations and be willing to make tough, courageous decisions and recommendations. This is not necessarily a negative for employees: These activities can contribute to more clearly defined responsibilities, expanded roles, enriched careers and more appropriate compensation.

Not only must organizations look at human capital from a business (versus from a historical personnel) perspective, but they must also consider the implications of decisions. For example, if analysis dictates a workforce reduction, organizations must incorporate strategies to mitigate lower productivity as a result of “survivor guilt,” maintain stock prices (if publicly traded), continue attracting and retaining customers, and maintain corporate and social responsibilities. Not taking these steps may result in a failure to realize the full benefits of a reduction. Organizations that reduce the workforce to save money but subsequently suffer losses in productivity do not realize the anticipated savings.

Diversity and Inclusion

Diversity and inclusion strategies should focus on how to unleash the power of inclusion within organizations by helping employees understand how decisions can be made together, how teams operate more effectively, how to better appreciate employees’ respective “otherness” and how the collective “otherness” can have a positive impact on the marketplace served. When addressed correctly, diversity and inclusion can have dramatically positive outcomes for the business. Conversely, when misunderstood and misapplied, they can leave a workforce with a “flavor of the day” attitude or, even worse, bitter and resentful.

Historically, organizations have focused diversity efforts primarily on visual diversity and frequently communicated diversity attributes, including gender, age, physical ability, national origin, sexual orientation, race and religion. However, organizations have evolved beyond that to a point where they must also consider how an individual’s acculturation (the habits formed as a result of experience or communal or family upbringing) affects how work is accomplished. Organizations must ponder how they can become more competitive by understanding and exploiting differences for the benefit of fellow employees, stockholders, the community and customers. They must also consider how to prove the value of diversity and inclusion strategies through quantifiable and business-related metrics. Depending on where an organization is on the diversity continuum, it could take years to go from concept to completion. Inclusion is a journey, not a destination.

Change Management

Organizations often fail in implementing strategies. It is not uncommon to have a consultant and cross-functional team come together to address an issue and assemble volumes of data, and then to have the results sit in dusty binders on executives’ bookshelves. When decisions are made about a different way to conduct business, implementation of those ideas is critical, and change management is the vehicle by which to do so.

“Change management is the process of continually renewing an organization’s direction, structure and capabilities to serve the ever-changing needs of external and internal customers.

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