Tag: University of Mumbai BMS Notes

HRM can be seen as part of the wider and longer debate about the nature of management in general and the management of employees in particular. This means that tracing the antecedents of HRM is as elusive an exercise as arriving at its defining characteristics. Certainly there are antecedents in organizational theory, and particularly that of the human relations school, but the nature of HRM has involved important elements of strategic management and business policy, coupled with operations management, which make a simple ‘family tree’ explanation of HRM’s derivation highly improbable.

What can be said is that the origins of HRM lie within employment practices associated with welfare capitalist employers in the United States during the 1930s. Both Jacoby (1997) and Foulkes (1980) argue that this type of employer exhibited an ideological opposition to unionisation and collective relations. As an alternative, welfare capitalists believed the firm, rather than third-party institutions such as the state or trade unions, should provide for the security and welfare of workers. To deter any propensity to unionise, especially once President Roosevelt’s New Deal programme commenced after 1933, welfare capitalists often paid efficiency wages, introduced health care coverage, pension plans and provided lay-off pay.

Equally, they conducted regular surveys of employee opinion and sought to secure employee commitment via the promotion of strong centralised corporate cultures and long-term cum permanent employment. Welfare capitalists pioneered individual performance-related pay, profit-sharing schemes and what is now termed teamworking. This model of employment regulation had a pioneering role in the development in what is now termed HRM but rested on structural features such as stable product markets and the absence of marked business cycles. While the presence of HRM was well established in the American business system before the 1980s, it was only after that period that HRM gained external recognition by academics and practitioners.

There are a number of reasons for its emergence since then, among the most important of which are the major pressures experienced in product markets during the recession of 1980–82, combined with a growing recognition in the USA that trade union influence in collective employment was reaching fewer employees. By the 1980s the US economy was being challenged by overseas competitors, most particularly Japan. Discussion tended to focus on two issues: ‘the productivity of the American worker’, particularly compared with the Japanese worker, ‘and the declining rate of innovation in American industries’ (Devanna et al., 1984: 33).

From this sprang a desire to create a work situation free from conflict, in which both employers and employees worked in unity towards the same goal the success of the organisation (Fombrun, 1984: 17). Beyond these prescriptive arguments and as a wide-ranging critique of institutional approaches to industrial relations analysis, Kaufman (1993) suggests that a preoccupation with pluralist industrial relations within and beyond the period of the New Deal excluded the non-union sector of the US economy for many years.

In summary, welfare capitalist employers (soft HRM) and antiunion employers (hard HRM) are embedded features within the US business system, whereas the New Deal Model was a contingent response to economic crisis in the 1930s. n the UK in the 1980s the business climate also became conducive to changes in the employment relationship. As in the USA, this was partly driven by economic pressure in the form of increased product market competition, the recession in the early part of the decade and the introduction of new technology.

However, a very significant factor in the UK, generally absent from the USA, was the desire of the government to reform and reshape the conventional model of industrial relations, which provided a rationale for the development of more employer-oriented employment policies on the part of management (Beardwell, 1992, 1996). The restructuring of the economy saw a rapid decline in the old industries and a relative rise in the service sector and in new industries based on ‘high-tech’ products and services, many of which were comparatively free from the established patterns of what was sometimes termed the ‘old’ industrial relations.

These changes were overseen by a muscular entrepreneurialism promoted by the Thatcher Conservative government in the form of privatisation and anti-union legislation ‘which encouraged firms to introduce new labour practices and to re-order their collective bargaining arrangements’ (Hendry and Pettigrew, 1990: 19).

The influence of the US ‘excellence’ literature (e.g. Peters and Waterman, 1982; Kanter, 1984) also associated the success of ‘leading edge’ companies with the motivation of employees by involved management styles that also responded to market changes. As a consequence, the concepts of employee commitment and ‘empowerment’ became another strand in the ongoing debate about management practice and HRM. A review of these issues suggests that any discussion of HRM has to come to terms with at least three fundamental problems:

• That HRM is derived from a range of antecedents, the ultimate mix of which is wholly dependent upon the stance of the analyst, and which may be drawn from an eclectic range of sources;
• That HRM is itself a contributory factor in the analysis of the employment relationship, and sets part of the context in which that debate takes place;
• That it is difficult to distinguish where the significance of HRM lies – whether it is in its supposed transformation of styles of employee management in a specific sense, or whether in a broader sense it is in its capacity to sponsor a wholly redefined relationship between management and employees that overcomes the traditional issues of control and consent at work.

This ambivalence over the definition, components and scope of HRM can be seen when examining some of the main UK and US analyses. An early model of HRM, developed by Fombrun et al. (1984), introduced the concept of strategic human resource management by which HRM policies are inextricably linked to the ‘formulation and implementation of strategic corporate and/or business objectives’. The model is illustrated in Figure(The matching model of HRM).The matching model emphasises the necessity of ‘tight fit’ between HR strategy and business strategy.

This in turn has led to a plethora of interpretations by practitioners of how these two strategies are linked. Some offer synergies between human resource planning (manpower planning) and business strategies, with the driving force rooted in the ‘product market logic’ (Evans and Lorange, 1989). Whatever the process, the result is very much an emphasis on the unitarist view of HRM: unitarism assumes that conflict or at least differing views cannot exist within the organisation because the actors – management and employees – are working to the same goal of the organisation’s success.

What makes the model particularly attractive for many personnel practitioners is the fact that HRM assumes a more important position in the formulation of organisational policies. The personnel department has often been perceived as an administrative support function with a lowly status. Personnel was now to become very much part of the human resource management of the organisation, and HRM was conceived to be more than personnel and to have peripheries wider than the normal personnel function. In order for HRM to be strategic it had to encompass all the human resource areas of the organisation and be practised by all employees.

In addition, decentralisation and devolvement of responsibility are also seen as very much part of the HRM strategy as it facilitates communication, involvement and commitment of middle management and other employees deeper within the organisation. The effectiveness of organisations thus rested on how the strategy and the structure of the organisation interrelated, a concept rooted in the view of the organisation developed by Chandler (1962) and evolved in the matching model.

The Matching Model of HRM

A more flexible model, illustrated in Figure, was developed by Beer et al. (1984) at Harvard University. ‘The map of HRM territory’, as the authors titled their model, recognised that there were a variety of ‘stakeholders’ in the corporation, which included shareholders, various groups of employees, the government and the community. At once the model recognises the legitimate interests of various groups, and that the creation of HRM strategies would have to recognise these interests and fuse them as much as possible into the human resource strategy and ultimately the business strategy.

This recognition of stakeholders’ interests raises a number of important questions for policy-makers in the organisation: The acknowledgement of these various interest groups has made the model much more amenable to ‘export’, as the recognition of different legal employment structures, managerial styles and cultural differences can be more easily accommodated within it.

This neopluralist model has also been recognised as being useful in the study of comparative HRM (Poole, 1990: 3–5). It is not surprising, therefore, that the Harvard model has found greater favour among academics and commentators in the UK, which has relatively strong union structures and different labour traditions from those in the United States. Nevertheless, some academics have still criticised the model as being too unitarist, while accepting its basic premise (Hendry and Pettigrew, 1990).

The Map of the HRM Territory

The first two main approaches to HRM that emerged in the UK are based on the Harvard model, which is made up of both prescriptive and analytical elements. Among the most perceptive analysts of HRM, Guest has tended to concentrate on the prescriptive components, while Pettigrew and Hendry rest on the analytical aspect (Boxall, 1992). Although using the Harvard model as a basis, both Guest and Pettigrew and Hendry have some criticisms of the model, and derive from it only that which they consider useful (Guest, 1987, 1989a, 1989b, 1990; Hendry and Pettigrew, 1986, 1990).

As we have seen, there are difficulties of definition and model-building in HRM, and this has led British interpreters to take alternative elements in building their own models. Guest is conscious that if a model is to be useful to researchers it must be useful ‘in the field’ of research, and this means that elements of HRM have to be pinned down for comparative measurement. He has therefore developed a set of propositions that he believes are amenable to testing. He also asserts that the combination of these propositions, which include strategic integration, high commitment, high quality and flexibility, creates more effective organisations (Guest, 1987).

• Strategic integration is defined as ‘the ability of organisations to integrate HRM issues into their strategic plans, to ensure that the various aspects of HRM cohere and for line managers to incorporate an HRM perspective into their decision making’.
• High commitment is defined as being ‘concerned with both behavioural commitment to pursue agreed goals and attitudinal commitment reflected in a strong identification with the enterprise’.
• High quality ‘refers to all aspects of managerial behaviour, including management of employees and investment in high-quality employees, which in turn will bear directly on the quality of the goods and services provided’.
• Finally, flexibility is seen as being ‘primarily concerned with what is sometimes called functional flexibility but also with an adaptable organisational structure with the capacity to manage innovation’.

The combination of these propositions leads to a linkage between HRM aims, policies and outcomes as shown in Table. Whether there is enough evidence to assess the relevance and efficacy of these HRM relationships will be examined later.

A Human Resource Management Framework

Hendry and Pettigrew (1990) have adapted the Harvard model by drawing on its analytical aspects. They see HRM ‘as a perspective on employment systems, characterised by their closer alignment with business strategy’. This model, illustrated in Figure, attempts a theoretically integrative framework encompassing all styles and modes of HRM and making allowances for the economic, technical and socio-political influences in society on the organisational strategy. ‘It also enables one to describe the “preconditions” governing a firm’s employment system, along with the consequences of the latter’ (Hendry and Pettigrew, 1990: 25). It thus explores ‘more fully the implications for employee relations of a variety of approaches to strategic management’ (Boxall, 1992).

Model of strategic change and human resource management

Storey studied a number of UK organisations in a series of case studies, and as a result modified still further the approaches of previous writers on HRM (Storey, 1992). Storey had previously identified two types of HRM – ‘hard’ and ‘soft’ (Storey, 1989) – the one rooted in the manpower planning approach and the other in the human relations school. He begins his approach by defining four elements that distinguish HRM:

1. It is ‘human capability and commitment which, in the final analysis, distinguishes successful organisations from the rest’.
2. Because HRM is of strategic importance, it needs to be considered by top management in the formulation of the corporate plan.
3. ‘HRM is, therefore, seen to have long-term implications and to be integral to the core performance of the business or public sector organisation. In other words it must be the intimate concern of line managers.’
4. The key levers (the deployment of human resources, evaluation of performance and the rewarding of it, etc.) ‘are to be used to seek not merely compliance but commitment’.

Storey (1992) approaches an analysis of HRM by creating an ‘ideal type’, the purpose of which ‘is to simplify by highlighting the essential features in an exaggerated way’ (p. 34). This he does by making a classificatory matrix of 27 points of difference between personnel and IR practices and HRM practices. The elements are categorised in a four-part basic outline:

• beliefs and assumptions;
• strategic concepts;
• line management;
• key levers.

This ‘ideal type’ of HRM model is not essentially an aim in itself but more a tool in enabling sets of approaches to be pinpointed in organisations for research and analytical purposes.

Twenty-seven points of difference

Storey’s theoretical model is thus based on conceptions of how organisations have been transformed from predominantly personnel/IR practices to HRM practices. As it is based on the ideal type, there are no organisations that conform to this picture in reality. It is in essence a tool for enabling comparative analysis.

Strategic HRM is the improved version of HRM over a period of time under drastically changing business environment and stiff competition. For survival, growth stabilize and excel in business performance, the need for willing cooperation was needed from employees.

To do so the approach of human resource management went under drastic changes with the interest to match the HR requirement with the business strategies so that the goals are achieved. The new concept of SHRM developed and it is nothing but HRM plus strategy.

The main objectives of SHRM are the following:

(a) Plan for manpower requirements for its business located in national and international markets.

(b) Conduct scientific selection and appointment of employees for business operation of right type and right in number.

(c) Train the employees on technology in use and working procedure for developing their skills and knowledge.

(d) Place the employees at jobs according to their areas of specialization.

(e) Provide opportunities for the employees deserving on the scientific basis.

(f) Compensate employees according to their skills, experience and contributions.

(g) Maintain employees motivated, satisfied and cooperative in organisation.

(h) Improve industrial relations, industrial peace and harmony at workplace.

(i) Encourage employees for their cooperation, commitments and higher performance at work.

(j) Contribute through manpower in improvement of organisational performance and organisational effectiveness in business.

(k) Contribute in profitability, progress and image of the organisation.

(l) Stay competitive and effective in business for growth and excellence in global market.

For effective accomplishment of the objectives the Strategic HRM should keep in mind the interests of all concerned parties or stakeholders in the organisation in designing its strategies. The main stakeholders are employees, employer and management. The focus of SHRM should be on human relations, regular development, empowerment of employees; leadership, communication, welfare and security of employees, quality of work life.

The efforts should be there and must be considered these as investment in human resources in the interest of the organisation and its business. Strategic HRM should put the efforts and achieve the proper balance between organisational requirements and employees’ requirements. Every organisation uses its resources effectively and efficiently for achieving an objective.

But management should keep always human consideration in mind. Employees should be considered as human being and must be treated accordingly. They should not be ignored for the sake of organisational gains. Generally, the problem is that in dealing the organisation comes first and it not a healthy practice.

So, for strategic dealing there should be proper balance between these two aspects. Quinn Mills supported this point and advocated that they should plan with people in mind, taking into accounts the needs and aspirations of all the members of the organisation.

Strategic HRM is concerned with the relationship between human resource management and strategic management in an organization. It caters to provide overall direction to the organization in order to achieve its goals through people.

As people or the intellectual capital is a major source of competitive advantage, and it is the people who implement the strategic plan, top management must take these key considerations fully into account for developing its corporate strategies. Strategic HRM is an integral part of such people strategies.

Strategic HRM addresses broad organizational issues relating to organizational effectiveness and performance, changes in structure and culture, matching resources to future requirements, the development of distinctive capabilities, knowledge management and the management of change.

It is concerned with both meeting human capital requirements and the development of process capabilities, that is, the ability to get things done effectively. On an overall, SHRM considers any major people issues that affect or are affected by the strategic plan of the organization. The critical concerns of HRM such as choice of executive leadership and formation of positive patterns of labour relations form the core strategic concern in any firm.

Advantages of SHRM:

1. Identifying and analyzing external opportunities and threats that may be crucial to the company’s success.
2. Provides a clear business strategy and vision for the future.
3. To supply competitive intelligence that may be useful in the strategic planning process.
4. To recruit, retain and motivate people.
5. To develop and retain of highly competent people.
6. To ensure that people development issues are addressed systematically.
7. To supply information regarding the company’s internal strengths and weaknesses.
8. To meet the expectations of the customers effectively.
9. To ensure high productivity.
10. To ensure business surplus thorough competency

Disadvantages of SHRM:

Barriers to successful SHRM implementation are complex. The main reason is the lack of growth strategy or failure to implement one.

1. Inducing the vision and mission of the change effort.
2. High resistance due to lack of cooperation from the bottom line.
3. Interdepartmental conflict.
4. Lack of commitment of the entire senior management team.
5. Ineffective plans that integrate internal resource with external requirements.
6. Limited time, money and the resources.
7. Resistance of employees.
8. Resistance of senior level managers to take up strategic steps.
9. Diverse work-force with competitive skill sets.
10. Fear towards victimization in the wake of failures.
11. Improper strategic assignments and leadership conflict over authority.
12. Ramifications for power relations.
13. Vulnerability to legislative changes.
14. Resistance that comes through the legitimate labour institutions.
15. Presence of an active labour union.
16. Economic and market pressures influencing the adoption of strategic HRM.

SHRM is about managing employees within an organization whereas in Strategic HRM there are different people who are skilled in specific areas. It is not that the same persons will handle recruitment, training, and employee appraisal.

As the term itself denotes, Strategic HRM deals with strategic aspects of HRM. Unlike SHRM, Strategic HRM mainly focuses on the programs with long-term objectives. Though SHRM and Strategic HRM focus on increasing employee productivity, Strategic HRM uses many strategic methods.

Unlike SHRM, Strategic HRM uses more sophisticated methods for improving overall employee motivation and productivity. Unlike the SHRM, Strategic HRM uses more systematic tools.

Strategic HRM expresses about company objectives, plans and the ways in which the business goals need to be achieved through people, Strategic HRM focuses on partnerships with internal and external customers. When HRM has only short-term goals, Strategic HRM has long-term goals.

When considering job design, Implementing the strategic plan through people in SHRM. On the other hand, the job division in Strategic HRM is flexible. When HRM has staff specialists, Strategic HRM has line managers.

	Traditional HRM	Strategic HRM
Responsibility for HRM	Staff Specialists	Line Managers
Focus	Employee Relations	Partnerships with internal and External Customers
Role of HR	Transactional, Change follower	Transformational, Change leader & initiator
Initiatives	Slow, Reactive fragmented	Fast, Proactive & Integrated
Time Horizon	Short term	Short, Medium, Long Term
Control	Bureaucratic policies	Organic, flexible based on needs
Job Design	Tight division of labour, Specialization	Broad, flexible, Cross-training, teams
Key Investments	Capital, Products	People, Knowledge
Accountability	Cost centre	Investment centre

 SHRM involves the process of employing people, developing their skills/capacities, and utilizing their services. Strategic HRM can be termed as a branch of HRM.

1. While SHRM focuses mainly on employee relations, Startegic HRM focuses on partnerships with internal and external customers.
2. When SHRM has only short-term goals, Strategic HRM is for long-term goals.
3. When SHRM has staff specialists, Strategic HTM has line managers.
4. When considering job design, there is a tight division of labor and independence specialization in SHRM. On the other hand, job division in Strategic HRM is flexible.

The strategic management process means defining the organization’s strategy. It is also defined as the process by which managers make a choice of a set of strategies for the organization that will enable it to achieve better performance.

Strategic management is a continuous process that appraises the business and industries in which the organization is involved; appraises it’s competitors; and fixes goals to meet all the present and future competitor’s and then reassesses each strategy.

Strategic management process has following four steps:

Environmental Scanning: Environmental scanning refers to a process of collecting, scrutinizing and providing information for strategic purposes. It helps in analyzing the internal and external factors influencing an organization. After executing the environmental analysis process, management should evaluate it on a continuous basis and strive to improve it.

The process begins with the scanning of the environment, i.e. both the external and internal factors of the organization. The external environment encompasses the political, legal, technological, economic, social and cultural forces that have a great impact on the functioning of the business. The internal factors include the organizational culture, hierarchy, business processes, SWOT analysis, industrial relations, etc. that play a crucial role in performing the business operations.

The role of the HR department is to collect all the information about the immediate competitors their strategies, vision, mission, strengths, and weaknesses. This can be done through the resumes being sent by the candidates working with the other rivalry firm. Through these, HR professionals can identify the workforce, work culture, skills of the staff, compensation levels, reasons for exit and other relevant information about the competing firm.

Strategy Formulation: Strategy formulation is the process of deciding best course of action for accomplishing organizational objectives and hence achieving organizational purpose. After conducting environment scanning, managers formulate corporate, business and functional strategies.

Strategy Implementation: Strategy implementation implies making the strategy work as intended or putting the organization’s chosen strategy into action. Strategy implementation includes designing the organization’s structure, distributing resources, developing decision making process, and managing human resources.

Strategy Evaluation: Strategy evaluation is the final step of strategy management process. The key strategy evaluation activities are: appraising internal and external factors that are the root of present strategies, measuring performance, and taking remedial / corrective actions. Evaluation makes sure that the organizational strategy as well as its implementation meets the organizational objectives.

These components are steps that are carried, in chronological order, when creating a new strategic management plan. Present businesses that have already created a strategic management plan will revert to these steps as per the situation’s requirement, so as to make essential changes.

Monitor and Evaluation: The final step in the strategic human resource management process is to compare the performance of the HR strategy against the pre-established standards.

At this stage, certain activities are performed to evaluate the outcomes of the strategic decision: establishing the performance targets and tolerance levels, analyzing the deviations, executing the modifications.

Thus, to have an effective HR strategy the firm follow these steps systematically and ensures that the purpose for which it is designed is fulfilled.

Components of Strategic Management Process

Strategic management is an ongoing process. Therefore, it must be realized that each component interacts with the other components and that this interaction often happens in chorus.

The term ‘strategy’ is widely used in and presupposes importance. In the words of the Oxford Concise Dictionary, strategy means ‘generalship’. Thus, strategy is associated with the long-term decisions taken at the top of the enterprise. The original literary meaning of strategy is ‘the art and science of directing military forces’.

The term strategy is frequently being used in the present-day corporate world. It envisages thinking ahead to survive and grow in a highly competitive environ­ment’. Strategy is concerned with determining which option will provide maximum benefits. According to Jauch and Glueck.

“Strategy is a unified, comprehensive and integrated plan that relates the strategic advantages of the firm to the challenges of the environment. It is designed to ensure that the basic objectives of the enterprise are achieved through proper execution by the organization”.

Characteristics of Strategic Human Resource Management (SHRM)

1. Recognition of the outside Environment: Outside environment presents some opportunities and threats to the organization in the form of:

• Laws
• Economic conditions
• Social and demographic change
• Domestic and international political forces
• Technology and so on.

Strategic human resource strategy explicitly recognizes the threats and opportunities in each area and attempts to capitalize on the opportunities while minimizing or deflecting the effect of threats.

2. The impact of Competition: The forces of competition in attracting, rewarding, and using employees have a major effect on corporate human resource strategy. Forces play out in local, regional and national labor markets. Labor market dynamics of wage rates, unemployment rates, working conditions, benefits levels minimum wages legislation and competition reputation all have an impact on and are affected by strategic human resource decisions.
3. Long-Range Focus: A strategic human resource management should be long-range focus cause this is not easy to change the strategic human resource policy.
4. Choice and Decision-making focus: In other words, the strategy has a problem solving or problem preventing focus. Strategy concentrates on the question, “what should the organization do and why?” this action orientation requires that decisions be made and carried out.
5. Consideration of all Personnel: A strategic approach to human resources is concerned with all of the firm’s employees, not just its hourly or operational personnel. Traditionally, human resource management focuses on hourly employees, with most clerical exempt employees also included.
6. Integration with the Corporate Strategy: Human resource strategy adopted by a firm should be integrated with the firm’s corporate strategy.

The key idea behind overall strategic mgt is to coordinate all of the company’s resources, including human resources; in such a way that everything a company does contribute to carrying out its strategy.

Synergy means the extra benefit or value realized when resources have been combined and coordinated effectively. This concept often referred to as economies of scope, makes the combined whole of the company make valuable than the sum of its parts. It is a true benefit of good strategic management of resources.

The key features of SHRM are

• There is an explicit linkage between HR policy and practices and overall organizational strategic aims and the organizational environment
• There is some organizing schema linking individual HR interventions so that they are mutually supportive
• Much of the responsibility for the management of human resources is devolved down the line

Approaches of the SHRM

• Attempts to link Human Resource activities with competency based performance measures
• Attempts to link Human Resource activities with business surpluses or profit

Steps to Build Up HR Strategy

Step 1: Get the ‘big picture’

Understand your business strategy.

• Highlight the key driving forces of your business. What are they? e.g. technology, distribution, competition, the markets.
• What are the implications of the driving forces for the people side of your business?
• What is the fundamental people contribution to bottom line business performance?

Step 2: Develop a Mission Statement or Statement of Intent

That relates to the people side of the business.

Do not be put off by negative reactions to the words or references to idealistic statements it is the actual process of thinking through the issues in a formal and explicit manner that is important.

• What do your people contribute?

Step 3: Conduct a SWOT analysis of the organization

Focus on the internal strengths and weaknesses of the people side of the business.

• Consider the current skill and capability issues.

Vigorously research the external business and market environment. High light the opportunities and threats relating to the people side of the business.

• What impact will/ might they have on business performance?
• Consider skill shortages?
• The impact of new technology on staffing levels?

From this analysis you then need to review the capability of your personnel department. Complete a SWOT analysis of the department consider in detail the department’s current areas of operation, the service levels and competences of your personnel staff.

Step 4: Conduct a detailed human resources analysis

Concentrate on the organization’s COPS (culture, organization, people, HR systems)

• Consider: Where you are now? Where do you want to be?
• What gaps exists between the reality of where you are now and where you want to be?

Exhaust your analysis of the four dimensions.

Step 5: Determine critical people issues

Go back to the business strategy and examine it against your SWOT and COPS Analysis

• Identify the critical people issues namely those people issues that you must address. Those which have a key impact on the delivery of your business strategy.
• Prioritize the critical people issues. What will happen if you fail to address them?

Remember you are trying to identify where you should be focusing your efforts and resources.

Step 6: Develop consequences and solutions

For each critical issue highlight the options for managerial action generate, elaborate and create don’t go for the obvious. This is an important step as frequently people jump for the known rather than challenge existing assumptions about the way things have been done in the past. Think about the consequences of taking various courses of action.

Consider the mix of HR systems needed to address the issues. Do you need to improve communications, training or pay?

What are the implications for the business and the personnel function?

Once you have worked through the process it should then be possible to translate the action plan into broad objectives. These will need to be broken down into the specialist HR Systems areas of:

• Employee training and development
• Management development
• Organization development
• Performance appraisal
• Employee reward
• Employee selection and recruitment
• Manpower planning
• Communication

Develop your action plan around the critical issues. Set targets and dates for the accomplishment of the key objectives.

Step 7: Implementation and evaluation of the action plans

The ultimate purpose of developing a human resource strategy is to ensure that the objectives set are mutually supportive so that the reward and payment systems are integrated with employee training and career development plans.

Steps

• Aligning business and HR needs

The business’ goals that is its strategic imperatives sit at the heart of any HR strategy and in order to align business and HR needs one key question must to be answered, “Can your organisation’s internal capability deliver its business goals?”

This is where HR receives most criticism. The function is frequently accused of failing to fully understand its business, goals and strategy for achieving these goals, and its business model and how it delivers to its customers. For those who already understand the demands of their business, it is easy to identify where the business has strong core competencies and where the business is weakest.

Sometimes these weaknesses are related to essential systems or processes, but more often and significantly for HR these weaknesses relate to the quality of the workforce, its motivation and ability to deliver organisation performance. Taking steps to understand your business and where it has competitive advantage is an essential first step towards determining the key HR interventions that form the basis of an HR strategy.

• Developing your HR strategy

Deeper knowledge and understanding of your business goals and business model can identify potential threats and opportunities in the quantity and quality of human resource required by your organisation. This in turn identifies the key components of your HR strategy and the virtuous circle of providing whatever your organisation needs for success.

It is also critical that the HR team has a high level of expertise in aligning major HR interventions and their relevance to business performance. This calls for expert HR thinking and identifies the requisite interventions and, equally important, how they fit together to leverage organisation performance.

If there is a strong need for the organisation to develop its management capability, for instance, should you align your compensation strategy to reinforce this objective? If the organisational structure defines the accountabilities clearly at every level of the organisation, is your HR team selecting and developing against them? This is joined-up HR at work.

Another concern for HR is when it should make strategic interventions. Easy, it either follows your business cycle, or is triggered by other key events such as a merger, an acquisition or a change in business direction.

• Organisational performance

Organisational performance is the process by which business goals and objectives are cascaded and managed across and down an organisation. It provides a link and rationale for all other HR activity and, in addition, the greatest opportunity to directly impact business success, enhancing HR’s reputation and contribution.

HR needs to create and install a robust performance management process that sets out performance objectives for all levels of staff within a business. This is an opportunity to develop line managers’ skills in being able to disseminate and set stretch targets for their business.

A critical part of this process is a robust performance review process, which gives people feedback about what has been achieved what people have done well and not so well.

The third element is a personal development review process where individual strengths and weaknesses are identified for the purposes of assessing and meeting organisational development needs.

• Organisational design and structure

Organisational design is the shape, size and structure of the organisation required to meet customers’ needs. It reflects the management processes that drive the business model and determines organisational agility and flexibility. These processes can be a source of competitive advantage or sources of frustration, unnecessarily absorbing time, cost and resources.

Decisions affecting the shape, size and cost of the organisation will be aligned with the business strategy. It should be relatively easy to see whether an organisation invests in marketing, sales or manufacturing, for instance, and whether the organisation is maximising its work flow capability.

As people experts, the role of HR is to add value to the structure and operation of the business. Structural weaknesses offer an opportunity to revamp any part of the organisation by identifying and making appropriate changes, reductions in size or cost; or improvements to the quality of the operation.

Conversely, structural strengths are a signal to the HR team to reinforce organisational competence.

• Strategic resourcing

Achieving clarity throughout the organisation’s structure is critical in order for resourcing strategies to work well. If the organisation is transparent about its key roles and accountabilities, this will define the skills and knowledge required to undertake the work and determine strategic resourcing requirements.

Deciding on your resourcing strategy means identifying a number of critical components. These range from the processes needed to determine resourcing needs, the processes to attract the right people and the processes for assessing and selecting the right people. HR has a strong traditional involvement in all of the above. In addition, it is essential to ensure each stage of the resourcing activity is aligned and in direct response to the strategic imperatives.

Another important component determining the effectiveness of any resourcing strategy is the need to create a ‘recruitment brand’ how the image (or brand) of the organisation appears to the recruitment market can either support or undermine the success of a resourcing strategy.

• Organisation development

If strategic resourcing is about providing a pipeline for importing external talent, then an organisation’s development strategy is the way in which the HR team decides what changes and improvements need to be made to the current workforce.

Usually, these responses work at three levels the individual, team and organisation and all are geared to achieve high levels of organisational performance. It requires a close examination of the strategic imperatives and clarity about the capabilities to execute it.

Development responses will aim to increase business skills, the application of business skills (sometimes called competencies) and the behavioural elements all of which contribute to an organisation’s effective performance. It is important at an individual level, particularly for senior people, that they feel their development needs are agreed and that they are provided with the skills to do their jobs.

At a team level, it defines individuals’ ability to work with others flexibly and align individual and team skills and activity to business goals all of which ensure that the organisation is equipped to deliver its goals.

• Compensation and benefits

Often called reward strategy, the purpose of compensation and benefits systems is to align the performance of the organisation with the way it rewards its people, providing the necessary incentives and motivation required for an organisation to deliver its goals.

Its components are a combination of base pay, bonuses, profit sharing, share options, and a range of appropriate benefits, usually based on market or competitor norms and the organisation’s ability to pay. Typically, the components of an organisation’s reward strategy will reflect the particular performance culture of a business.

There is evidence that organisations see compensation as a strategic management lever and are increasingly experimenting with new practices – team bonuses, for example, aimed at improving team performance or skills/behaviour payments to upskill the workforce or reinforce culture or behaviour change. A company’s reward policy in particular benefits from clarity about which other elements of the HR strategy it aims to support.

• Organisation culture

Culture is usually described as the “way we do things round here” the way the organisation acts, reacts and interacts. The trend in the last 10 to 15 years has been to align organisational behaviour more strongly with customers’ needs, creating customer-facing units and customer-sensitive behaviours. This has been as a direct result of the increased competition around product, quality, prices and packaging. In re-aligning an organisation’s culture there can be real benefit and competitive advantage through improved service.

HR teams which are closely involved with the organisation’s cultural ambitions can lead these initiatives through their knowledge of organisation psychology such as describing new behaviours and work styles; and through their skills in organisational development and being able to provide development solutions to deliver the improvements.

• Production of the HR strategy

The eight components described here form a generic model of the most commonly used elements of HR strategies. It is important to select those that are most relevant to any particular organisation.

When the key elements are decided, there are a number of simple questions that the HR team should be asking itself as each element of the strategy is considered in turn:

START: What are we not doing yet, that the business needs from us?

STOP: What should we stop doing because it does add not value?

CONTINUE: What are we already doing that supports the business plan?

For the organization to perform better it is important that the employees are comfortable with each other, share a good rapport and work in close coordination towards a common objective. People feel responsible and motivated to do good work and enjoy their work rather than taking it as a burden.

Every individual shares a certain relationship with his colleagues at the workplace. The relationship is either warm, so-so or bad. The relationship can be between any one in the organization – between co workers, between an employee and his superior, between two members in the management and so on. It is important that the employees share a healthy relationship with each other to deliver their best performances.

An individual spends his maximum time at the workplace and his fellow workers are the ones with whom he spends the maximum hours in a day. No way can he afford to fight with his colleagues. Conflicts and misunderstandings only add to tensions and in turn decrease the productivity of the individual. One needs to discuss so many things at work and needs the advice and suggestions of all to reach to a solution which would benefit the individual as well as the organization.

No individual can work alone. He needs the support and guidance of his fellow workers to come out with a brilliant idea and deliver his level best.

Employee relations refer to the relationship shared among the employees in an organization. The employees must be comfortable with each other for a healthy environment at work. It is the prime duty of the superiors and team leaders to discourage conflicts in the team and encourage a healthy relationship among employees.

It is important that the management promotes healthy employee relations at workplace to extract the best out of each individual. Competition is essential but it should not promote negativity or any kind of enmity among the employees.

Let us go through some steps and strategies for a healthy employee relationship in the organization.

• Involve your team members: They should feel important and indispensable for the organization. An individual must be assigned responsibilities according to their interests and responsibilities. Don’t impose work on them. Let them willingly accept challenges. They must enjoy whatever they do otherwise they would end up fighting with their superiors and fellow workers.
• Encourage individuals to share their work with each other: This way people tend to talk with each other more, discuss things among themselves and thus the comfort level increases. Let them work together and take decisions on their own. A team leader should intervene only in extreme cases of conflicts and severe misunderstandings.
• Assign them targets and ask all your team members to contribute equally and achieve the target within the desired time frame. Motivate them to work in groups. This way employees have no other choice than to trust their fellow workers and take each other’s help as well. An employee must have the liberty to express his ideas and all of them should sit together to decide on something which would be beneficial to all.
• One should try his level best that all the employees must have their lunch together at the same time. Half an hour to fourty five minutes must be dedicated to lunch and one should not discuss work during lunch time. There are other topics as well. Discuss movies, sports, shopping or any other thing under the sun. There will be no harm if the employees go out together once in a while for get togethers, picnics or shopping. Ask them to bring their family members as well.
• Encourage effective communication among the team members. It has been observed that poor communication leads to confusions and misunderstandings. The communication has to be precise and relevant. One should not play with words and be very specific about his expectations from his fellow workers as well as the organization. If you are not very happy with your colleague’s proposal, don’t keep things to yourself. Voice your opinion and do express your displeasure. It will definitely prevent a conflict among employees later and improve the relations among them. Be straightforward. Don’t pretend things just to please your boss. If you find anything unacceptable, discuss with your superior but in a polite way.
• Written modes of communication must be promoted among the employees for better transparency. Verbal communication is not as reliable as written communication. The agendas, minutes of the meeting, important issues must be circulated among all through emails. Make sure that all the related employees are in the loop. Don’t communicate individually with any of the employees as the other one might feel neglected and left out.
• Morning meeting is another effective way to improve the relation among the employees. Let everyone come together on a common platform and discuss whatever issues they have. The meetings must not be too formal. Allow the team members to bring their cups of coffee. Start your day with a positive mind. Greet everyone with a warm smile. Exchange greetings and compliments. If any of your team member is not in a pleasant mood, do take the initiative and ask what is wrong with him. Try your level best to provide him a solution.
• Organize birthday parties, Christmas parties, New Year parties etc. at the workplace. These small initiatives actually go a long way in strengthening the bond among the employees. Ask all of them to decorate the office, their work stations and make all the necessary arrangements themselves. You will actually be surprised to find out that everyone would be ready with some thing or the other. Employees would actually take the initiative and organize things on their own. Let them enjoy with each other and have fun.
• Praise the individual if he has done something exceptionally well. Reward him suitably. The names of the top performers must be displayed on the notice boards for others to draw inspiration from them. Encourage everyone to perform well to live up to the expectations of the superiors as well as the management.

A healthy relation among employees promotes a positive ambience at the work place and employees feel happy and satisfied at work. They look forward to going to office daily and also work hard to realize their team’s as well as organization’s goals.

Adopt a Conducive Workplace Culture

Employees want to feel good about what they do and where they do it. Decide with your team what values represent your company and then promote them transparently. Articulate them to every person in the organization; they will drive expected behaviors. It should go without saying that leadership must live the cultural platform.

Involve Your Team Members

Employees should feel important to your company. Let them willingly accept new responsibilities and challenges. But, make sure they enjoy whatever they do. Encourage employees to share their work with each other. This way people tend to talk with each other more, discuss things among themselves and thus the comfort level increases. Let them work together and make some decisions on their own. A team leader should intervene only if necessary.

Insist Upon Proper Communication

Employees need to know what’s going on.Encourage effective communication among team members. They can’t work in a vacuum and they need an avenue for articulating needs, wishes, complaints and goals. Poor communication leads to confusion and misunderstandings. The communication has to be precise and relevant. Be very specific about expectations. Be straightforward. Written modes of communication must be promoted among the employees for better transparency. Don’t just communicate to employees; ensure there are flexible ways for employees to communicate back.

Recognition

Praise the individual for exceptional results and provide suitable rewards. Encourage everyone to perform well to live up to the expectations of the management team. Put measures in place so people can be recognized and applauded when they live up to those values.

Regular Team Meetings

Let everyone come together on a common platform and discuss whatever issues on their mind. The meetings must not be too formal. Leaders should start and end the meeting with a positive tone, provide updates and get the group involved.

Events

Celebrate birthdays, holiday parties, and other occasions at the workplace. These small initiatives actually go a long way in strengthening the bond among the employees. Allow them to decorate the office, their work stations and make all the necessary arrangements themselves. Employees will actually take the initiative and organize things on their own. Let them enjoy each other and have fun.

Strong and effective employee relations generally lead to a better performing organization. Employees want a culture where they are comfortable with each other, share a good rapport and work in close coordination towards a common objective. A healthy relation among employees promotes a positive workplace and employees feel happy and satisfied at work. They look forward to going to work and contributing to the mission, vision and goals of their employer.

During times of economic hardship or when a company adopts more efficient processes, a business can find itself with workers who do not have enough work to do. Called a labor surplus, this circumstance of having too many available worker hours is not ideal. It is costly when a business has idle employees to whom they must pay salaries and benefits. Handling a labor surplus is tricky, but some solutions can help in the short and long term.

Labor Surplus Basics

While a labor shortage is a challenging problem, a labor surplus can be equally difficult to manage. Perhaps your business recently implemented new policies or processes that made work more efficient, and now your company employs too many workers for the jobs you need to have done. In this situation, laying off your skilled workers is not your only option. Available alternatives are worth considering, particularly if your business plans to branch out and accelerate growth in other areas.

Perhaps business has dried up due to an economic downturn or changing trends that affect your industry. In this situation, where the prospects of profitability for your company are dim, you might choose to handle your labor surplus differently from the first scenario. If it doesn’t seem like work is coming back anytime soon, it isn’t prudent to keep on employees who don’t have enough work to do and can’t drive profits.

Ways to Handle a Labor Surplus

The path your business chooses to handle a labor surplus depends on your current financial situation and corporate goals. If you have succeeded in implementing efficient processes or production techniques and no longer need all your factory staff, you can shift the responsibilities of some workers to a similar area to help your company grow vertically or horizontally. Layoffs are not your only option.

However, if you are struggling to make payroll and there is no sign that business is going to pick up in the near future, it is probably best to let some of your staff go. This way, your workers can collect unemployment benefits and search for new jobs to further their careers, while you maintain some profitability for the business.

In any situation involving a labor surplus, don’t hire new workers. A hiring freeze is a necessary step while your company’s management team determines the best path forward. In addition, you should end contracts with outsourced talent and transfer those tasks to internal labor instead.

Additional Labor Surplus Techniques

Other ways to deal with a labor surplus include pay cuts and reduced working hours for your staff. It’s better to avoid these strategies when possible because they can lead to problems with employee morale or reduced effort by disenchanted staff.

You might also consider encouraging older employees to take early retirement. Older employees are often the highest-paid workers in a company. If early retirement is handled properly, this strategy can free up a great deal of money for your company while reducing the excess labor capabilities you have.

Shortage

Labour Market Shortages in the Domestic Context

While the above examples refer to labour shortages in the international context, there are instances where there such shortages have been met from the domestic labour pool. For instance, India has long suffered a chronic shortage in the jobs related to IT and other services sector despite having a sizeable graduate population which is among the world’s largest labour pool. The reasons for the shortage of skilled workers in IT and other allied sectors was because many of the professionals were emigrating to the West and in addition, the domestic labour pool was unemployable in the sense that though the Technical institutions such as the Engineering colleges were churning out graduates in large numbers, many of them were simply unemployable meaning that despite having a degree, they did not have the skills necessary to work in the IT firms.

Labour Market Shortages in the International Context

Labour market shortages are created whenever there is a gap between demand and supply for a particular skills, job, role, or occupation. For instance, in the 1980s, there was a shortage of skilled workers in the Persian Gulf countries because of which the governments in those countries took steps to address the shortage by opening their doors to immigrants from other countries. Similarly, there was a shortage of IT (Information Technology) professionals in the United States in the 1990s and the last decade. The answer again was to pursue to an immigrant friendly policy and to encourage the large-scale migration of IT workers from India and other countries to the United States and other Western countries.

Strategies to Overcome Labour Market Shortages

The answer to this labours shortage in India was to expand the recruitment base by including non-Computer Science and IT graduates in the eligible pool of workers. For instance, many Indian IT firms resorted to recruiting graduates from all branches and then training them so that they have the required skills for the jobs. While this is a far from ideal situation and the solution was stopgap, it went a long way in addressing the chronic shortage of workers in the IT sector. Indeed, the numbers of graduates from other disciplines who were recruited into the IT firms was so huge that the joke, Trespassers will be recruited began to be identified with the Indian IT sector. The point to note here is that this is a simple demand and supply equation wherein whenever there is excess demand, companies tend to look for all available alternatives to address the demand.

Temporary and Permanent Labour Market Shortages

Labour market shortages can be temporary or permanent. An example of a temporary shortage is the kind that was discussed about the Gulf region earlier wherein a shortage of skilled and semiskilled workers was addressed by bringing in guest workers for the shorter term. After the jobs were done, most of these workers had to return home or be replaced by other workers since those countries did not really want to have workers for the longer terms in the occupations that were hired for. Further, this model was extended to the whole world wherein temporary shortages for workers were met by simply bringing in workers from high population countries such as India, Philippines, and other Asian countries. The rationale for the continuous replacement of workers was that in sectors such as construction and heavy industry, there was always a demand and a churn which meant that workers were needed for shorter term durations.

On the other hand, longer term labour market shortages such as the ones experienced by the West and the United States in particular meant that their strategy was to create and nourish a pool of professionals in high skill and high value jobs such as IT for the longer term since these jobs created value as the professionals progressed. The economics of addressing labour shortages are indeed driven by purely commercial considerations as whenever there were a need for low skill and low value jobs, workers were brought in for the shorter term, and whenever there was a need to invest in social capital and build a workforce that added value with time, such professionals were accorded permanent residency and were paid handsomely so that all parties benefit.

Criticism of the Present Strategies

However, there has been much criticism about these strategies and especially the ones such as the Indian IT firms hiring non-IT graduates to tide over the labour market shortage. For instance, the common refrain that is heard is that if all engineers work in IT, who will build the bridges and who will work in the manufacturing sector that is so crucial to the success of these countries. In addition, such strategies have also been criticized because they introduce distortions in the labour market wherein policies put in place by the governments to train engineers to work in industry fail because these engineers have been employed in the IT sector. In other words, addressing supply shortages in one sector can lead to problems for other sectors.

Conclusion

Therefore, the clear insight that we gain from the discussion so far is that unless all stakeholders come together and create longer term strategies to address labour market shortages, the end result would be that the labour market is going to be skewed in favour of one sector or the other. Moreover, the strategies discussed in this article would result in the semi-skilled and unskilled workers losing out in the longer term once the need for them is over. In conclusion, addressing labour market shortages is a vast topic and this article touched upon some salient aspects of the topic.

Retention strategies are policies and plans that organisations follow to reduce employee turnover and attrition and ensure employees are engaged and productive long-term. The key challenge for businesses is ensuring a retention strategy aligns with business goals to ensure maximum return on investment. Corporate social responsibility is a key growth area of retention strategies employees may be more likely to remain with an employer that shows a commitment to the local community or the environment. At the same time, CSR is increasingly aligning with the bottom line as consumers increasingly do business with companies that display strong social responsibility policies.

Studies have shown that employees typically follow four primary paths to turnover, each of which has different implications for an organization:

• Employee dissatisfaction. Attack this issue with traditional retention strategies such as monitoring workplace attitudes and addressing the drivers of turnover.
• Better alternatives. Retain employees by ensuring that the organization is competitive in terms of rewards, developmental opportunities and the quality of the work environment. Be prepared to deal with external offers for valued employees.
• A planned change. Some employees may have a predetermined plan to quit (e.g., if their spouse becomes pregnant, if they get a job advancement opportunity, if they are accepted into a degree program). However, increasing rewards tied to tenure or in response to employee needs may alter the plans of some employees. For example, if a company is seeing exits based on family-related plans, more generous parental leave and family-friendly policies may help reduce the impact.
• A negative experience. Employees sometimes leave on impulse, without any plan for the future. Generally, this is the result of a negative response to a specific action (e.g., being passed over for a promotion or experiencing difficulties with a supervisor). Analyze the types and frequencies of work-related issues that are driving employees to leave. Provide training to minimize prevalent negative interactions (e.g., harassment, bullying, or unfair and inconsistent treatment) and provide support mechanisms to deal with those problems (e.g., conflict resolution procedures, alternative work schedules or employee assistance programs).

Additional predictors of turnover that merit careful attention include:

• Organizational commitment and job satisfaction.
• Quality of the employee-supervisor relationship.
• Role clarity.
• Job design.
• Workgroup cohesion.

Following are some of the employment practices which will help create an impact on employee retention:

• Recruitment and Hiring: Right and correct resource should be hired in the first place. It calls for quite a lot of time and effort. When the bond between the employees and the organization is cordial and the mix between the required skill set for a particular job requirement is also right, retention is less likely to be an issue.
• Orientation and Onboarding: Treating employees the right way in the early stages of employment is vital and enhances retention.
• Training and Development: Training and development are the key factors in helping employees grow with your company and stay marketable in their field.
• Performance Evaluation: When employees are aware of what they are doing and the areas they need to improve on, it is beneficial both for the organization and the employee.
• Pay and Benefits: While today many employees tend to rate factors such as career development higher than pay, good pay and benefits still count to be the deciding factors for employee retention.
• Internal Communication: Effective communication will help reduce the communication gap in an organization and curb employee attrition. Employees need to know and be reminded on a regular basis how the organization is doing and what they can do to help.
• Termination and Outplacement: Employees who leave on good terms are much more likely to recommend your company, and in doing so, help you attract and retain future employees.

Broad-based strategies

Broad-based strategies are directed at the entire organization or at large subsystems and are intended to address overall retention rates. Examples include providing across-the-board market-based salary increases, changing the hiring process to incorporate retention-related criteria and improving the work environment.  

The data needed to help a company determine which broad-based strategies to implement typically come from three places:

• Retention research can shed valuable light on the primary drivers of turnover. Attendance at conferences and membership in professional associations such as SHRM can provide access to the latest research on turnover and retention.
• Effective practices encompass the strategies that other organizations are using and are finding effective or ineffective.
• Benchmarking surveys can provide information about how a company compares to competitors on issues such as pay, benefits, bonus plans and the like.

Targeted strategies

Targeted strategies are based on data from several key sources, including organizational exit interviews, post-exit interviews, stay interviews, employee focus groups, predictive turnover studies and other qualitative studies. This information can lead an organization to determine more specifically where a problem exists and to develop highly relevant and linked strategies to address the issue. For example, if female professionals are departing the organization in significant numbers, a company could review common reasons that women give for leaving a company and develop strategies to specifically deal with this group of employees.

A total rewards strategy is a system implemented by a business that provides monetary, beneficial and developmental rewards to employees who achieve specific business goals. The strategy combines compensation and benefits with personal growth opportunities inside a motivated work environment.

Designing and implementing a total rewards strategy requires a large-scale approach that drives organizational change. Top executive and management buy-in are critical for the success of a total rewards strategy. Your project team should be made up of decision-makers as well as front-line employees to ensure that your approach is well-rounded and fits the needs of everyone at the table. If you operate in a union environment, it is important to understand that collective bargaining may affect the implementation of your strategy.

Developing a total rewards strategy is a four-step process consisting of:

Assessment: A project team assesses your current benefits and compensation system and determines the effectiveness of those systems in helping your company reach their goals. Activities that take place during the assessment phase of the process include surveying your employees on their opinions and beliefs regarding their pay, benefits and opportunities for growth and development as well as examining your current policies and practices. The most important outcome of the assessment phase is the project team assessment report, which includes your recommendations for the new total rewards system. The assessment report should include suggested solutions to questions such as:

• Who should be eligible for the rewards?
• What kinds of behaviors or values are to be rewarded?
• What type of rewards will work best?
• How will the company fund this?

Design: The senior management team identifies and analyzes various reward strategies to determine what would work best in their workplace. It decides what will be rewarded and what rewards will be offered to employees for those achievements. In a total rewards strategy, pay rewards for achievement of goals will not be the only consideration. HR strategists will also determine additional benefits (flexible work schedule, additional time off) or personal development opportunities (training or promotional) that employees will receive as a result of meeting the established company objectives.

Execution: The HR department implements the new rewards system. It circulates materials that communicate the new strategy to employees. Training also commences so that managers and decision-makers are able to effectively measure the achievement and employees are able to understand what they need to obtain to receive the rewards.

Evaluation: The effectiveness of the new plan must be measured and the results communicated to company decision-makers. Based on this, modifications can be proposed to the strategy for future implementation.

A total reward approach looks at what your organisation is trying to achieve, what your people want, what is affordable and the structures needed in place to achieve this. The four areas covered are:

• Cash compensation

Every organisation must pay its employees for the services that they provide (i.e. time, effort and skills). This includes both fixed (salary and allowances) and variable (bonus and incentives) pay. The cash compensation provided to employees increases over time and can be linked to a number of different factors such as performance or career development.

• Benefits

Organisations use benefits to supplement the cash compensation they provide to employees. These vary depending on the size of the organisation and affordability but can provide security and comfort to the employees and their families. The benefits include holidays, medical cover, income protection and pension schemes.

• Personal Growth

Providing personal and professional growth opportunities to employees is an essential part of any reward strategy. These can be skills acquired on the job as well as formal training programmes valued by the employees that also serve the organisations strategic needs. Alongside this development, however, is the need to manage expectations, assessing performance and constantly striving to improve.

• Work Environment

A positive work environment can often be the defining factor in retaining key talent in an increasingly competitive market. Ultimately, we all want to work in an environment where there is genuine feeling of team spirit and togetherness. With a leader that inspires and supports us to achieve success at both work and home.