Human Resource Management is the Only Way to Lead in an Organization

Human Beings are not like Machines

A Research Article on

"Human Resource Management is the Only Way to Lead in an Organization"

ABSTRACT:

The success of organizations increasingly depends on people-embodied know-how- the knowledge, skill, and abilities imbedded in an organization’s members. This knowledge base is the foundation of an organization’ core competencies. Management of Human Resource plays important role in creating organizations and helping them survive. Our world is an organizational world. We are surrounded by organizations and we participate in them as members, employees, customers, and clients. Effective use of human resources helps in exploitation of natural, physical and financial resources in a better way. The attraction, preservation and development of high caliber people are a source of competitive advantage for organizations. This is a descriptive paper which looks at the components of HRM from different angles. It intends to elaborate the role and importance of HRM in setting examples for leadership and put forth viewpoints to argue that Human resource management is the only way to lead.

Introduction :

The importance of human resource has received much attention in recent years. Resource based theory states that human capital as a major source for sustained competitive advantage for individual firms (Ferligoj et al., 1997; Koch and McGrath, 1996; Wright et al., 1994). The overall purpose of human resource management is to ensure that the organization is able to achieve success through people. The increased importance of human capital is apparent at both the demand and supply side of the labor market. Companies in the knowledge-based economy are challenged to meet their demand for highly trained employees in labor markets characterized by a shortage of qualified labor (Audretsch and Thurik, 2000, 2001). Human resources are becoming more important, and therefore also the management of these resources.

Human resource management is a modern term that emerged during the 1970s and won final acceptance in 1989. If HRM is simply about managing people this could include a wide and very diverse range of practices from low cost to high commitment strategies.

Although Human Resource Management department as we know them did not generally exist until the 1940s, the activities performed by these departments were not all brand new; in fact, many of the Human Resource practices and programs that we see today ace roots in the earlier times. Human Resource Management (HRM) historically known as personal management, deals with formal system for the management of the people within the organization.

Literature Review:

One of the first explicit statements of the HRM concept was made by the Michigan School (Fombrun et al, 1984). They held that HR systems and the organization structure should be managed in a way that is congruent with organizational strategy (hence the name ‘matching model’).

A distinction was made by Storey (1989) between the ‘hard’ and ‘soft’ versions of HRM. The hard version of HRM emphasizes that people are important resources through which organizations achieve competitive advantage. The soft version of HRM traces its roots to the human-relations school. It emphasizes communication, motivation and leadership. As described by Storey (1989) it involves ‘treating employees as valued assets, a source of competitive advantage through their commitment, adaptability and high quality (of skills, performance and so on)’. It therefore views employees, in the words of Guest (1999), as means rather than objects.

Hawthorne Studies conclusion led the researchers to believe productivity may be affected more by psychological and social factors than by physical or objective influences. Human relations proponents argued that managers should stress primarily employee welfare, motivation, and communication. They believed social needs had precedence over economic needs. Therefore, management must gain the cooperation of the group and promote job satisfaction and group norms consistent with the goals of the organization.

Another noted contributor to the field of human relations was Abraham Maslow. In 1943, Maslow suggested that humans have five levels of needs. The most basic needs are the physical needs for food, water, and shelter; the most advanced need is for self-actualization, or personal fulfillment. Maslow argued that people try to satisfy their lower level needs and then progress upward to the higher-level needs.

The notion that people should be regarded as assets rather than variable costs, in other words treated as human capital, was originally advanced by Beer et al (1984). HRM philosophy, as mentioned by Karen Legge (1995), holds that ‘human resources are valuable and a source of competitive advantage’. Armstrong and Baron (2002) stated that: ‘People and their collective skills, abilities and experience, coupled with their ability to deploy these in the interests of the employing organization, are now recognized as making a significant contribution to organizational success and as constituting a significant source of competitive advantage.’

John Purcell (1993) thinks that ‘the adoption of HRM is both a product of and a cause of a significant concentration of power in the hands of management’

Challenges for organizations at different levels:

I. Environmental Challenges

Environmental challenges refer to forces external to the firm that are largely beyond management’s control but influence organizational performance. They include: rapid change, the internet revolution, workforce diversity, globalization, legislation, evolving work and family roles, and skill shortages and the rise of the service sector.

HRM practices may be challenged by anyone of stakeholders like society, community, customers, employees and shareholders so management for every decision should have legal backing in order to defend and explain its decisions. A firm’s HR department has considerable responsibilities with respect to human resource law.

Major environmental challenges are:

Rapid Change: Businesses today understand that rapid change is needed for sustained competitive performance, and are therefore … All of these elements reflect changes in the management of human resources

Work Force Diversity:Employees of organizations are becoming increasingly heterogeneous. Individual characteristics over which a person has little or no control include biologically determined characteristics such as race, sex, age, and certain physical attributes, as well as the family and society into which he or she is born. It is important to keep in mind the distinction between the sources of diversity and the diversity itself. Without this distinction, stereotyping tends to occur.

Globalization: Economic Liberalization and restructuring have increased foreign takeovers through mergers and acquisitions, resulting in modern distribution circuits associated with new technology, innovative management styles, different approaches to work and new employment arrangements.

Legislation: legislation affects all areas of human resource management including hiring employees, compensation, maintaining discipline, industrial relation, managing and ending employment relationship.

Technology: Recent advances in technology continue to change the delivery of human services, although not without the cost (Woodside & McClam). Many organizations realize that they need to start using new technologies to be able to compete with other businesses. This can have either positive or negative effect on the people working in that organization, but companies still need to keep up-to-date with the latest technological developments to stay ahead of the competition. HR Managers need to understand the technology used to manage the people working in the organization; they also need to know how technology as a whole, in and around the organization, affect the people they manage.

Evolving Work and Family Roles: Organizations exposed to global quality standards, are beginning to introduce policies and procedures to recruit, retain and support employees. ‘Work-Life Balance’ terminology has caught on in the context of the pressures of long working hours and intensity of work. WLB has been identified as the number one concern in an employee survey at one large multinational subsidiary located in India (Gambles, Lewis & Rapoport).

Skill Shortages and the Rise of the Service Sector: Skilled and motivated employees have become critically scarce or are expected to become scarcer in the near future (Boxall and Purcell). The need for competent and committed employees has become decisive with regard to competitive advantages (Brewster and Suutari 2005; Gregersen et al. 1998; Kohonen 2005; Lazarova and Caligiuri 2004, Thom and Zaugg 2004).

II. Organizational Challenges

Organizational challenges refer to concerns that are internal to the firm.

Controlling costs: Traditionally, ‘HR as an expense’ model continues. Controlling cost is an important function of HR. HR must be able to monitor and control the cost of developing and delivering programs. The cost per hire, cost per ERP participant, health-care cost per employee and cost per grievance re examples of measures that can serve as indices for tracking efficiency of HR functions. According to Wilson, cost of benefit is much less that of replacing an employee coaxed away by a more generous employer.

Improving quality: HR plays a central role in improving product and service quality in the organization by improving the efficiency and productivity of employees and other personnel (Florida Power & Light Company Case study)

Creating distinctive capabilities: This means mastering an array of new capabilities, distinctive operational excellence and aligning their human assets with strategies.

Restructuring: A shift in organizational strategy to support business growth will have implications for your people and what you need from them. The role of HR through this significant change is pivotal and HR departments tend to be competent in understanding the process of redeployment and redundancy.

III. Individual Challenges

Productivity: An organization can get higher productivity from the employees by using or practicing effective HRM practice. The HRM practice should be very innovative, realistic as well as based on competency so that an organization can run smoothly and can compete with its internal and external competitor in this globalization era or open world market.

Ethics and Social Responsibility: Greed is no longer good and focusing purely on profits is unacceptable to your existing and potential customers. By embracing business ethics and social responsibility the business can benefit from increased goodwill. The employees of an organization occupy a central place in developing such a culture which underlines CSR values and competencies.

Empowerment: To empower is to give someone power. This is done by giving individuals the authority to participate, to make decisions, to contribute their ideas, to exert influence, and to be responsible. That is why participation is such an effective form of empowerment.

Brain Drain : it is posited that High Commitment Management (HCM) Human Resource Management (HRM) systems could be applied to help stem the brain drain

Job Insecurity: The consequences of job insecurity for the organizations have been harder to study, owing to the smaller amount of research undertaken in this area and to the inherent and complex difficulties of assessing organizational effectiveness. Nevertheless, the efforts of employee’s psychological withdrawal and stress documented may combine to reduce the organization’s effectiveness and efficiency.

Matching People and Organizations Research: Researchers in recent years have looked at matching people to organizations as well as to the jobs. If an organization faces a dynamic and changing environment and required employees who are able to readily change tasks and move easily between teams, it’s more important that employees’ personalities fit with the overall organization’s culture than with the characterstics of any specific job.

Role of Training & Development in developing Human Resource:

Upgrading employees’ performance and improving their skills through training is a necessity in today’s competitive environment. Adjustments in external and internal environments necessitate change. Once the need for change is recognized and the factors that influence intervention are considered, the process of determining Training needs begins. The Value of an Effective Training Program on Leading Change Building the skills of change leadership in any organization will have a tremendous impact on the results one achieve (Russel). Training has to do more than just filling the gaps in people for carrying out assigned tasks but also involves career development; developing people for “the next job”, for retirement, and for their roles in society outside the employing organization.

Motivation to Lead People:

Motivation is important in getting and retaining people. Motivation tools act as the glue that links individuals to organizational goals, In addition, make individuals go beyond the job and be creative. There has been importance of motivation in determining. A number of studies emphasize importance of organization, participation and motivation along with public action in achieving development goals. Social achievement and influence motivation play an important role in collective action and teamwork (Pragya Mehta).

Handling Conflicts:

The human relation position argued that conflict is a natural occurrence in all groups and organizations. Since, conflict is inevitable, the human relations school advocates acceptance of conflicts. They rationalize their existence; it cannot be eliminated, and there are even times when conflicts may benefit a group’s performance (Robbins). The HRD manager has to diagnose the conflict management style and take necessary steps to improve organizational effectiveness.

Leadership for success:

Researchers have studied the traits of successful leaders for many years in an effort to identify a set of core traits that would predict success as a leader. Recent research indicates that there are certain core traits that significantly contribute to success for a business leader. These include drive, the desire to lead, honesty/integrity, self-confidence, cognitive ability and knowledge of the business.

A recent survey of 240 major public and private U.S. companies on effective leadership development notes that the 20 top companies have formal leadership programs and 90% have formal leadership competency models. In addition, these companies integrate their leadership competencies into processes for selecting, developing and assessing leaders.3
Further, research shows that organizations that approach leadership development with a process, such as the recommendations outlined below, are among the most successful and high-performing organizations.

  • Assess leader styles and motives and determine their impact on climate and performance.
  • Create customized, competency-driven leadership models to support the organization’s strategic goals.
  • Focus on and expand the emotional intelligence of their leadership (e.g., self-awareness, self-management, social awareness, and social skills).
  • Demonstrate a strong commitment to extensive development and coaching efforts.
  • Measure and reward both leadership development and performance.
Conclusion:

The human beings are not like machines. They should be provided with information, their opinion and suggestions should be listened to and an opportunity should be provided to them to participate in decision making at appropriate levels. Of all the controllable factors that can affect organizational performance, a workforce that can execute strategy is the most critical asset in most organizations.

The past as well as recent researches underline the importance of people management in the organizations. Researches also demonstrate a link between human resource management and organizational performance and state that in the event of distinctive approach to people management having a marked impact on corporate performance it must be taken seriously. A number of approaches focus on the way human resource system supports competitive advantage and organizational learning through people. Multifunctional system of human resource practices will lead to sustainable competitive advantages, if they add value. Practices with external fit create capabilities that maintain the organization’s overall strategy and support multiple strategic dimensions in order to lead to sustainable competitive advantage.

HRM can take an active role in the organization’s change process, acting as a linking-pin between stakeholders and the business and survival through understanding of SWOT. The Guest and Conway (1997) research established that the reports of workers on outcomes showed that a higher number of HR practices were associated with higher ratings of fairness, trust and management’s delivery of their promises.

Authors:

  • Nishant Saxena (HR Consultant)
  • Dr. J. H. Vyas (Professor)