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To what extent is the 'soft' HRM model achievable and desirable for organisations in the modern business environment?

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To what extent is the 'soft' HRM model achievable and desirable for organisations in the modern business environment? The modern business environment For the past few hundred years the business environment has been mostly based upon turning man hours and materials into hard products (produce). What we are seeing now is a shift away from this production by mass labour, to a system whereby goods are produced by machine and the services needed to facilitate this are produced by man. Taking the UK economy as an example, the latest economic forecast by the TUC (Fig 2) shows a steady decline of manufacturing in favour of service sector jobs. This reinforces the view that the emphasis is shifting from producing goods to providing services. "The only advantage many companies have are the competencies and abilities of their people" (Dewe 2002). With firms using the same machines competitive advantage (or disadvantage) is created by the knowledge and skills of the employees. Tom Watson Jr, former President of IBM recognised the shift: "all the value of this company is in its people. If you burnt down all of our plants & we just kept our people & information files, we would soon be as strong as ever. Take away our people & we might never recover" (People Management 1998:34). Knowledge therefore is power, we are moving from a physical economy to one A UK government report (Competitiveness White Paper 1999) sees this new environment as requiring "...greater receptiveness to know-how and the ability to see its commercial potential; eagerness to keep on learning at all levels in a business; and a flair in spotting new customer needs and fresh business opportunities." This suggests that the modern business environment is a place where knowledge is key. In his speech to the Business Link annual conference, Peter Mandelson MP Secretary of State for Trade & Industry saw the knowledge economy as "transforming old jobs as much as creating new, with implications for manufacturing and service industries alike." ...read more.


These are two very different systems but both however come under the heading of flexible working. To decide which method a particular firm is using will require a broad look at the pay and conditions and the freedom employees enjoy. It is also useful to note that it is seldom a case of an employer operating one form of HRM, it is necessary for firms to allow their workers some freedom but at the same time retain control. A good example of this is Microsoft; they operate a seemingly soft policy on HRM with a whole range of employee benefits and training programmes (24hr nurse line, free entry to local events and professional development programmes). However, to retain the knowledge and skills that they develop the firm insists that if an employee is to leave the company they must not work in the computer industry for a period of 6 months. This shows that the organisation is willing to invest time and money to maintain a highly trained workforce but at the same time keeps a tight control on them. Why is 'Soft' HRM Desirable? To examine the reasons why a firm should adopt policies of soft HRM we must look at the dangers of not doing this. A recent CIPD survey (CIPD 10/2001) has outlined the costs of organisations for not retaining and motivating staff. The survey has shown that one in four employees left their organisation in 1999 (the highest figure since the survey was created in 1995). What was even more alarming was the cost of replacing these lost staff. The average price for replacing a management level employee was �6086 which was an increase of 28 percent on 1999 the highest cost was to replace a professional services employee which was �8316. The danger for organisations is how this turnover effects company performance, two thirds of organisations believe this to have a negative effect with 13 percent claiming that it has a serious negative effect. ...read more.


For HRM to work effectively we must reorganize work to firstly make the most of existing knowledge and human capital but also to develop this human capital to maximise future performance. In this modern business environment knowledge takes the leading place from other drivers of economic change such as labour, technology and markets. The dilemma we face with soft HRM is that (as explained above in the McDonalds example) a lot of routine work is done by workers with minimal training and knowledge and only small numbers of highly skilled employees are required. Thompson pointed out that if employment growth is not dominated by knowledge work it's going to be dominated by something else. There are strong and clear indications that it is dominated by low skill, routine work largely in the service sector. We can't make every job high skill, high wage, and high learning because there are jobs that neither the employee nor employer can grow. One of the reasons they can't be grown is because, in our other guise as consumers, a lot of us want the cheapest possible flights, goods, services and so on. We can't have it both ways. If we want cheap, controllable, efficient service, we're not going to create a lot of high wage, high skill, high learning jobs. There are many dilemmas associated with the ideas of hard and soft HRM. We must realise that we cannot expand the knowledge and skills of all members of society infinitely. There will always be a place for the unskilled worker and as such there must be a place for hard HRM. However, in todays changing environment soft measures must come to the fore. The notion of 'the velvet glove concealing the iron fist of hard HRM' (Beardwell & Holden 2001:93) shows that even soft measures are still measures of control. No matter how soft a companies HRM policies appear to be, they will still be designed for the benefit of the organisation rather than of the individual. The bottom line must always come first. ...read more.

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