The purpose of this report is to analyze how ABC Systems could develop and implement human resource strategies that could improve the HR function and organizational effectiveness. This report is divided into sessions. The first session is a briefing about the most appropriate organizational structure and processes for the company taking into account the current external environment.
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The second session talks about different approaches of personnel management, human resource management and strategic human resource management that would help the company to implement change and overcome resistance to change. The third and fourth session is about the company’s human resource planning and recruitment and selection processes, to see how they could be enhanced and how capable they currently are to cope with the planned expansion. The fifth session deals with an investigation into the contribution that human resource development and knowledge management could make to enhancing individual and organizational performance. The sixth session is a few recommendations on performance and reward strategies that the company should undertake in order to reduce the high level of turnover within the company. Finally, the last session gives a few suggestions on how to develop a harmonious and trusting employment relationship within the existing and ‘new’ expanding company. All these sessions will help ABC systems to achieve its organizational goals and objectives effectively and efficiently.
A firm’s size can affect the nature of external environmental impacts as well as its ability to respond. Small businesses with limited resources, particularly in terms of finance and management, are unable to scan or analyze the environment and therefore react negatively towards environmental changes. However, small firms have certain advantages over large businesses when it comes to adapting to economic changes. They have a smaller decision-making base in terms of leadership and can also make faster changes in the workforce or product offerings. Generally, some types of small businesses thrive in a slow economy. For example, companies that facilitate vehicle and property repossessions show an increase in profits during a slow economy. Firms that have a solid financial backing can increase in expansion opportunities by buying out their struggling competitors or gaining their competitor’s customer bases. Similarly, ABC system, a small but growing company will continue to not only expand its market but its product portfolio as well. The most appropriate organizational structure for ABC system is the matrix organizational structure. Basically, this design groups employees by both function and product. This structure is useful for companies that deal with multiple products and that work in different geographical areas. In this case, individuals would work across teams and projects as well as within their own department or function.
Personnel management is the process of acquiring, using and maintaining a satisfied workforce. Basically, it deals with rules and regulations made for the personnel working in the organization. The main focus here is the achievement of objectives by giving more powers and authority to managers. Human Resource Management on the other hand, is broader than personnel management. Recognizing the importance of employees and dealing with issues related to people such as compensation, hiring, employee motivation etc. are some of its core functions. The main focus here is the co-ordination and development of the personnel of the organization. Effective human resource management enables employees to do a better job and therefore contribute to the accomplishment of the organization’s goals and objectives. Strategic human resource management is defined as linking human resources with the strategic goals and objectives of the company in order to achieve excellent business results. It also helps in developing an organizational culture that foster innovation, flexibility and competitive advantage. In a nutshell, a good HR strategy will always be aligned with the organizational strategy and the HRM policies and programs.
Over the years, HRM processes and functions have changed and will continue to change due to the changes in the internal and external environment. As businesses become more competitive, the practice of HRM has become more strategically focused. There are always rapid changes in industries likes telecommunications and computer technologies. In such cases, ABC systems needs to constantly determine whether or not to increase their capabilities in order to have a competitive advantage. The company needs to continuously identify its competitors, its key success factors, product life cycle and well as the driving forces in the buyer sector. For example, in the PC industry, PC components and the software that run them are provided by different suppliers. This means that the company needs to effectively form a good relationship with not only the buyers; but the suppliers as well. Thus, the Strategic human resource management systems needs to be able to recruit, staff and develop employees to understand the needs of these buyers and suppliers. These in turn, will the firm to achieve the overall organizational goals and objectives. It is vital that every strategic option that the firm considers should have a human resource implication. For example, if the firm has a developed a strategy to implement new technology, then it needs to plan on recruiting and training new staff to understand and use the new technology. HR managers need to play a central role in helping implement change. For example, structural change may require performance reviews to decide who needs to be terminated and who needs to stay. Changing employee attitudes, skills and behavior are efforts that human resource managers need to undertake in an organization undergoing changes.
Psychologist Kurt Lewin formulated a change process that can be implemented in the face of resistance. This includes three steps: 1. Unfreezing: Unfreezing means reducing the forces that strive to maintain the staus quo. In this case, HR managers needs to make people understand that there is a need for change and to search for new solutions. Basically, the HR manager needs to establish a sense of urgency. 2. Moving: Moving means helping employees to develop new behaviors, values and attitudes. The main aim here is to alter individual’s behavior. 3. Refreezing: By implementing reward systems, performance appraisals and procedures, employees would be motivated to support and maintain these new changes.
Human Resource planning is a strategic management process aimed at ensuring that the organization will have the human resources it needs now so that in the future it will be able to achieve the organizational goals and objectives. Through HRP, the organization will be able to match the needs of human resources to those of the business in the short and long term form of a quantitative and qualitative perspective. Furthermore, HRP has a strategic role to play when looking at the ways in which people are employed and developed in order to improve organization performance. Currently, ABC Systems human resource policies and procedures operate on a reactive basis with limited forward planning and strategic thinking. Its structure has evolved rather than being planned. With the planned expansion and increase in competition, ABC Systems would be re-structured. This means new employees would have to be recruited and existing employees need to be trained so that they can adjust easily to these changes. Basically, the company would have to take on a more proactive approach. The Following Steps in the process of Human Resource Planning can be applied to ABC Systems. The HRP is normally done by the HRD manager: 1. Review of Organization’s Objectives The HRD manager studies the objectives of the organization and analyses all the jobs needed to achieve these objectives. 2. Estimation of Manpower Requirements The Manpower requirement is estimated by the HRD manager. Basically, he studies the number of employers and managers required to do the job in the organization. This estimation is done in terms of quantity and quality. 3. Estimation of Manpower Supply The HRD manager then estimates how many managers and employers are available in the organization. 4. Comparison of Manpower Comparisons are done to understand the manpower requirements and manpower supply. 5. Difference In case of no difference, the HRD manager does not take any action. However, if he comes across a difference, the HRD manager should take the following actions: Manpower Surplus In the case of a manpower surplus, the following actions are undertaken: 1. Termination 2. Lay Off 3. Voluntary Retirement 2. Manpower Shortage: 1. Promoting Staff Internally 2. Overtime 3. Training to improve quality 4. Hire staff externally, etc 6. Motivation of Manpower Employees are motivated by providing financial and non-financial incentives 7. Monitoring Manpower Requirements The HRD manager needs to constantly monitor the manpower requirements. When an employee leaves the company, it should not stop the functioning of the day-to-day activities of the firm.
It can be seen that ABC Systems has a high turnover rate, with a number of employees leaving within a short period after the recruitment and selection process. Through recruitment, an organization aims to attract the most suitable employees to a particular job. The selection process on the other hand, involves choosing suitable individuals for a specific job. However, at ABC Systems, employees are recruited without the application of formal assessment methods. This means that the competent individuals are doing jobs that are unsuitable for them. In order to increase quality outputs and reduce turnover, it is vital that individuals are placed at the right job and at the right time. ABC Systems can achieve this by recruiting employees from inside the organization through techniques such as internal promotions, lateral transfers and job rotation. This type of technique is cost effective and provides opportunities for employees to develop their careers within the organization. However, at the same time, it prevents new ideas from emerging because the present staff continues to work in the existing ways of working. ABC Systems need to take into account both the cost of recruiting employees and the importance of linking this process with other human resource processes. If this recruitment and selection process is ineffective, it may lead to a range of issues including those with performance management, learning and development and ultimately retention.
Human Resource Development involves training employees, providing opportunities to learn new skills, ensuring that employees have the resources to perform day-to-day activities and above all perform their jobs to their full potential. The employees at ABC Systems are not given an induction at the start of the employment. An induction essentially helps employees understand organizational philosophies, goals, objectives, regulations and practices. It also helps the new employee to familiarize with his superiors, subordinators and peers. A good induction programs is the basement of mutual understanding for all parties. Currently, employees are incompetent to carry out their allocated tasks effectively. This results in mistakes and a reduction in quality and output. One way, ABC Systems can eliminate these issues is to give more importance to the training and development of both existing and new staff. Technically, training helps changing attitudes, skills and knowledge of a person and therefore results in an improvement of the behavior and skills of the employee. Trainings should be planned keeping in mind the individual goals as well as the organizational goals. This is in turn, helps the organization achieve effectiveness and sustainability.
Performance Management is a strategic approach which helps in increasing an organization’s overall effectiveness. This can be done through improving the capability, competence and performance of individuals and teams. The main aim here is to align individual objectives to organizational objectives and reward these individuals appropriately for their contribution towards the organization. ABC Systems needs to develop and implement an effective Performance Management System (PMS). This requires the following 1. A clear alignment between the corporate strategy and all other strategies. 2. Engagement of all employees with senior management, which plays an important role in cascading objectives downwards. 3. A review, or appraisal, process, that provides informative feedback on a regular basis.
This is an integral part of PMS, as it allows the employees to discuss their performance with their line manager. This performance review is done by comparing the individual’s performance with the set of agreed objectives. Furthermore, it provides an assessment of the employee’s suitability for promotion, further development and reward levels.
Individuals perform their jobs in anticipation of rewards. All employees look forward to their basic salary in return for their day’s work. Thus, ABC Systems needs to consider the type of payment system used as a part of their reward system in order to attract and retain employees. Basically, effective reward systems would help the organization to be more competitive, increase motivation, retain key employees and reduce turnover. ABC Systems can use extrinsic as well as intrinsic rewards. Extrinsic rewards are external rewards that are tied to certain employee behaviors, skills or roles in an organization. For example, an employee who is overworked may value additional vacation time or reduced workload compared to a few extra pounds. Intrinsic rewards on the other hand are derived from the satisfaction an employee gets because they have done a job well. For this purpose, Job Enrichment needs to be done by the manager. This involves improving work processes and environments so that the job is more satisfying for employees.
Employee Relationship is basically the relationship which exists between the employers and employees in the workplace. Currently, ABC Systems have a poor communication issues amongst employees. This has led to reduction in morale and also has de-motivated the employees. Generally, lack of communication in the organization, such as between managers and employees, results in conflicts which can harm an organization. Following are a few ways that ABC Systems can develop good employment relationships:
One way to develop harmonious and trusting relationships is to enable employers to enter into psychological contracts with their employees. A psychological contract expresses a set of expectations that are exchanged between a set of parties in an employment relationship. Such parties include employers, managers, individual employees and other colleagues. For example, at Designs, employees were allowed to leave work early every Tuesday afternoon. This arrangement was never written, but has always been acknowledged by the management. However, it should be noted that breach of this psychological contract could damage employment relationship and affect the commitment of the employees.
It is essential that the company promote a work environment that recognizes the importance of respect for different races, sexes and backgrounds of individuals within the organization. With the expansion of ABC Systems, the company will be recruiting new employees from different backgrounds and cultures. It is therefore vital that the company put into place policies and practices to build an inclusive and harmonious workplace. Companies that manage an excellent diverse workforce are able to bring about better business performance and higher employee engagement.
With employees from different backgrounds, age groups and cultures; it is likely that the organization will have to deal with conflict situations. In such cases, it is essential that discipline and grievance procedures be implemented. The disciplinary and grievance procedures provide a framework for dealing with conflicts that occur between the employer and employee. Such procedures ensure that employees are treated in the same way in similar circumstances and that issues are deal with quickly.
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