Human Resource management.
Introduction
Never-ending changes in the business arena keep impacting on Human Resource management. In an era of dynamic environments, Human Resources management urges the ability to adapt and cope with all these fluctuations in employee and consumer behaviour, as a critical formula for survival.
The historical development of Personnel management evolving to Human resource Management is still subject to debate and controversy. In this paper we will look at definitions from various authors and accordingly, try to analyse the evolution of the traditional Personnel Management to modern Human resource management. We discuss the validity of Human resource Management coming to be as a result of an increasing emphasis on effective and efficient employee relations or simply a re-titling and a re-conceptualisation to capture current trends.
The paper then, explores why Human resource Management and corporate strategy should be aligned. It is clear that in this continuous changing era, organizations have been forced to reshape the structure and role of Human resources as they are positively correlated to bottom line profits, thus creating the necessity of matching Human resource Management with the organization's corporate strategy.
Thirdly, hospitality strategic issues of Human Resource Management, such as Organizational behaviour, play an essential role in managing people. Unlike physical resources, Human resources manages people who form the major asset of an organization. As the word people suggests the character and qualities, which make someone different from others, and this is the genuine reason why Human Resource Management must be able to cope to the needs and demands of these individuals if success is to be achieved. The concept of the psychological contract is another significant aspect of the relationship between the individual and the organization. This non-written contract covers a range of rights and responsibilities, duties and expectations from both, the employer and employee.
Definitions of Personnel and Human Resource Management
In recent years there has been a shift in the use of the term Personnel Management to the term Human Resource Management, but are these two terms similar in nature or do they truly differ in the end results they aim to achieve? Various authors have different opinions on this matter.
According to Guest (1989), compares with Personnel Management, Human Resource Management is more concerned with a long-term rather than a short-term perspective.
In other words, in the recruiting process, Human Resource managers strictly bear in mind the adaptability and exploitation of the individuals they recruit, so that an organization can deploy them and develop them to their full potential in order to maximise employee performance, thus resulting in a long term investment for the organization. Guest also identifies that Human Resource Management is based on a psychological contract founded on commitment rather than compliance, and this will be further analysed later on.
Within every organization there must exist some kind of control. While PM seems to value external control, HRM seeks self-control of their employees. This relates strongly to the psychological contract based on high commitment, and thus creating a sense of need for self-control, rather than external control.
A Unitarian perspective where the organization is seen as a whole harmonious team, in which there are existing common interests and a common source of loyalty is what HRM searches for, as opposed to, PM which joys a pluralistic perspective where the organization is viewed as one in which there are powerful competing sub-groups with their own objectives and interests.
Finally, compared with PM, HRM seeks an organic rather than a bureaucratic structure; integration with line management rather that specialisation and last but not least important, HRM strives to reach maximum utilization of staff through motivation, empowerment and other HRM issues, rather than deeming staff as a cost.
Crainer (1998), for example refers to the change in PM to HRM as:
" The emerging role of Human Resource Management is radically different from that of the past, when it dealt with bureaucracy of employing people and little else. From being a caring role, HRM has been re-aligned as a strategic role, focussed on the business needs and strategic plans of the organization". In other words, HRM seeks for best practice in recruiting the right people so that organizational goals can be achieved through this human resource. Whilst PM focussed mainly in the caring of employees as human beings, HRM plays a strategic role where this human resource aids to deal with the business needs, hence achieving organizational goals though employees. So it can be said that whilst PM only or mainly had a caring role, HRM has a wider role, in not only caring for employees but also "using" these content employees who are being taken care of to contribute to achieve organizational goals with their own personal development and deployment.
It can be argued that PM is simply an elevation to HRM. According to Cumming (1993), for example, argues that HRM is just a new term to what most good Personnel managers have been already practising. It might be possible that then this more clarified term of HRM, can be used for those managers who were not practising properly their role, and even as a re-enforcement to those managers who have been already practising. All in all, re-enforcing a practice that wishes to be kept and improved for a longer term needs to be maintained not occasionally but on a daily basis. Either way in this matter, it can be said, that HRM is a re-enforcement or an introduction to an improved way to manage such an important resource.
According to Mills (2002), in the 1960's and 1970's many new federal laws in the United States affected directly the relationship between employer and employee. These laws included the Civil Rights Act of 1964, the Occupational Health and Safety Act of 1970 and the Employee Retirement Income Security Act of 1974 (ERISA). It was then where organizations relied heavily on Personnel Managers to help them follow these Federal regulations regarding hiring, firing and worker Safety. As in any organization, complying with the law is one essential matter. From this change to a more strict regulation, it can be ...
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According to Mills (2002), in the 1960's and 1970's many new federal laws in the United States affected directly the relationship between employer and employee. These laws included the Civil Rights Act of 1964, the Occupational Health and Safety Act of 1970 and the Employee Retirement Income Security Act of 1974 (ERISA). It was then where organizations relied heavily on Personnel Managers to help them follow these Federal regulations regarding hiring, firing and worker Safety. As in any organization, complying with the law is one essential matter. From this change to a more strict regulation, it can be said that Personnel Management had to be reshaped to be able to adapt to these new regulations. New regulations implied that when hiring employees, this process should be treated in careful manner, due to the consequences of, in the near future having to fire them. This lead to a more strategic way of hiring, taking into consideration the potential development of the employees and not only their immediate and temporary labour. It is now how we can appreciate how organizations carefully choose who is able to adapt and more importantly contribute to the overall performance of the organization, like Four Seasons does.
It is not only how high staff turnover leads to increased costs in the Human resource department but also the need to comply with law, what may also lead to the evolution of PM to HRM where there is an existing ideal of not only hiring and firing but to hire adequately and retain and develop employees to their maximum potential in order to reach a greater productivity. This idea of law influencing the evolvement of PM to HRM is re-enforced by Prof. Xiao Zhuoji, (2002) a leading Chinese economist who thinks that after the accession to the World Trade Organization, China not only needed to adjust its governmental functions and law-making orientation but also to formulate policies recognizing the value that HRM can bring to an organization. This value, he said, is more than just the functional role of PM.
Another author contributing to this subject is Baum (1995), where he analyses what he calls the traditional or OLD HR practice and the NEW sustainable HR paradigm. It can be observed that subcategories such as recruitment and staff turnover, promotion and career development, rewards and benefits, education, training and development, management culture and national HR planning for tourism are compared and contrasted in what was the OLD and what is the NEW trend to be followed (see Apex 1). From the word sustainable, conclusions can be drawn into the effectiveness, efficiency and sustainability of the NEW HR paradigm. In other words, the new sustainable HR paradigm suggests that a high staff turnover is seen as problematic and as a barrier to continuity of the organization in terms of recruitment. In terms of development and career planning, a planning does exist with a clearly defined career ladder and promotion with preparatory training programme is encouraged. When it comes to rewards and benefits, the organization should and will offer competitive rewards and benefits, as the flexibility to match individual circumstances and needs. In the education, training and development area, there is an existing, well-planned training and development policies and strategies, and training is linked to opportunities for promotion. In terms of management culture, staff is seen as a key resource and perceived as an important asset to the organization and even more important corporate culture responds flexibly to local cultural needs. Finally when speaking of national and HR planning for tourism, local population is helped and encouraged to recognize their role in tourism and there is an integrated approach of the two. It can be said that the OLD HR practice is what could be called PM and the NEW sustainable paradigm is what HRM is trying to achieve. Theoretically this new paradigm presents a renewed and prosperous image of HRM and not simply a re-title or re-conceptualisation of the PM, but a truly new approach where the long term is being taken into consideration.
There is an argument which remains open to debate on whether the terms PM and HRM are similar or distinctively different. Various authors have differing opinions in the subject matter. What is more important to those involved in this subject is which one will contribute to improved results and bottom line profits. And in this view it can be said that the managers achieve results through "their" people. What is more suitable and convenient for "their" people is what should be practiced. It is possible that some organizations are content with the traditional method and are not willing to adapt to the new one, whilst there can be organizations that desperate to apply and adopt the new method. This will vary due to the values of an organization.
Aligning Corporate Strategy and Human Resource Strategy;
Every well-established organization has a vision. The process of materializing a vision into results is a complex one, yet if illustrated step by step, a clearer picture of what to do will guide and motivate those involved in this process. It is relevant to define this path in order to understand why corporate strategy and Human resource strategy need to be aligned if goals are to be met, and a path has been suggested by Moorby (1990). (see Apex 2)
The word "strategy" is borrowed from military terminology. The closest understanding of this tin relation to business context is "The art of so moving or disposing troops or ships or aircraft as to impose upon the enemy the place and time and conditions, for fighting preferred by oneself. This can be interpreted as so panning one's business to have an advantage over competitors, Moorby (1987). Due to an increased business competitiveness and dynamic external environment important emphasis has been placed on corporate strategy.
According to Quinn (1989), a strategy is a pattern or plan that integrates organizational major goals, policies and action sequences into a cohesive whole. In other words, if an organization desires to achieve these major goals, this plan, referred to as strategy must adhere and include all of its other sub-parts. In a more practical way, the sub-departments must be fully enrolled in this process of moving from vision to results, by using this so called strategy. It is then when Human Resources plays a vital role to be one of the departments which must be aligned to the corporate strategy. The Human resource department is in charge of managing the people who will perform in order to achieve these major goals. It is through the well-being and consequently the performance of this people that an organization will attain these so desired goals. This is the genuine reason why the Human resource strategy needs to be synchronized with the corporate strategy. It is as easy as comparing it with a car engine. If all the parts of the engine are properly aligned and these parts are in a good state, the probabilities of the car running are greater to reach to desired destination. As opposed to if there are disparities in the engine, the most probable result will be that the car will not run! The effort in this "driving" will aid an organization in moving from abstract pictures to a concrete reality.
The Human Resource department should include viable communication channels in their strategy to make every single employee be aware of where the organization is and where they want to be. This is done through thorough communication activity from top to bottom and vice versa (see Apex 3). Through offering a clear picture of the present and the future the path to reach it shall be easier. It is then when the sole of senior management and line management come into play. Them, being role models and setting example for this driving towards results. According to the Asia one careers internet site, they state that HRM is not just about hiring and firing but that a competent HR manager can actually play and active role in his firm's strategic planning and should do so. Ideally, the HR department should work alongside senior management to convert the firm's corporate strategy into a reality. Today's HR practitioners should go beyond fulfilling those basic requirements that the OLD HR practice involved, but he/she must keep in mind a larger picture, anticipating how employees would ultimately contribute to the firm's bottom line.
Though a restriction to this alignment is the involvement of HR managers. It is hard to go outside HR's traditional role. Many practitioners are still motivated to their old routine functions, like payroll and hours worked and compliance of firm's policies. Though these duties are necessary, they do not add value to their jobs or to their organizations. Management also, contributes to the problem; senior managers often view HR as a cost, which does not play an active role in aligning human resources to and systems to a firm's strategy. According to Suriya (2003), this is a great dilemma, though HR practitioners should think and rethink in order to make management understand that HR can highly support the organization's strategy to achieve those desired results. It can be said that productivity is no longer what has to be increased but the value offered to both shareholders and customers. It is not about specialization in roles but to share the responsibility of involving everyone within an organization or aligning people to the organization's goals.
According to a study that Gunnigle and Moore (2003) did for the Water Price Project in Ireland, they used the top1,000 trading companies and the top 500 non-trading bodies. A questionnaire addressed to either the Personnel manager or the Chief Executive was mailed. 269 questionnaires were returned and the results shown that in terms of Personnel/HR involvement in the development of corporate strategy and it's alignment, the picture was positive from a Personnel perspective, with over half the firm surveyed reporting personnel involvement from the outset in the formulation of corporate strategy, as we can see from table 2 (see Apex 3). However, as we can see from table 3 (see Apex 3) less than half of the firms surveyed had a written statement or corporate strategy, while 29 per cent of the firms had a written Personnel/HR strategy. This study was taking into consideration trading companies in Ireland only, therefore has some limitations, though it is a good guide onto how much importance is given to aligning PM/HR strategy to corporate strategy. It can be said that even though there is a need to align HR strategy to corporate strategy, there is still more to be done in the future to make this attempt successful.
Hospitality strategic Issues of Human Resource Management
The image of the Hospitality Industry is not one, which attracts employees to form part of a hospitality organization by pleasure but by mere necessity. Issues of pay, long working hours and even split shifts are reflected in a high staff turnover. Managing this image can and is a hard task for employers in the Hospitality industry. Nowadays HR department is primarily concerned in attaining and improved image for the potential and already employees to be retained and further developed. Organizational Behaviour, the science studying behaviour of people will facilitate the HR department of an organization to understand individual and group behaviours, thus providing a guideline to improve this image. It is only when knowing the people, their perceptions, and feelings and motives when and organization can try to match it to their needs, thus improving this poor image of the industry.
According to the Financial Times Mastering Management Series 2, sited in Mullins (2002), Organizational Behaviour is one of the most complex and perhaps least understood academics and modern general management, but since it concerns with the behaviour of people, it is one of the most central ones. Organizational Behaviour is a behavioural science with three main disciplines, (see Apex 4) and this is why it is strongly correlated to Human Resource Management, after all it is people who are managed. Understanding why people behave the way they behave is of extreme importance because it is through people that an organization accomplishes their goals, and especially with industries such as the hospitality industry which by nature the so-called "human touch" is so necessary for a high quality service. After all individual will vary according to his or her ethics, culture and values. As individuals we work in groups and behaviour will be influenced in a group situation. Therefore there is a need to consider that individuals match the structure and mission of the organization they are working for like Ritz Carlton does when recruiting their staff, in other words there must be a match between the personality of the potential employee and the organization's personality; this will result in impacting the successfulness of the organization.
One important concept to look at when speaking about behaviours is the psychological contract. According to Schein (1980), the psychological contract may be defined as an "unwritten set of expectations operating at all times between every member of an organization and the various managers and other in that organization". In other words, it is a process of giving and receiving between employer and employee outside the legal contract, due to loyalty and commitment. Relating back to the poor image of the hospitality industry, the nature of the psychological contract is trying to be changed to a more committed one to reduce staff turnover, increase employee loyalty, thus having a direct effect in bottom line profits.
In a study done by Rousseau (1990), in the UK, where the main objective being to examine the differences between the psychological contracts of permanent and non-permanent employees. The sample involved 797 staff employed in customer service capacity by large organizations on the holiday sector. Overall 1145 questionnaires were returned. Items to asses the nature of employees perception of the organization's obligations and items to asses the nature of employer obligations in the psychological contract can be seen in (Apex .5). From the table in (see Apex. 6) some conclusions can be drawn. Permanent staff has a much greater loyalty and therefore commitment to the organization, due to personal desires, like career development, promotion consequently implying greater salaries. As compared to non-permanent staff, whose main purpose is to work temporarily for fast cash.
From this it can be said that the psychological contract initiates commitment of both employees and employers is much more efficient when staff are permanent; a greater commitment leads to improved results, improved results lead to greater profits, which is the objective of most organizations. Thought the issue of flexibility, using temporary staff to be able to meet demand with supply comes into conflict with this theory. The issue of flexibility will be discussed later on as a trend in HRM.
Trends in Human Resource Management:
A Conclusion
Throughout this paper, a comparison, contrast and critique analysis has been made for Personnel and Human Resource Management, using various authors' opinions. The importance on how Human Resource Strategy should be aligned to Corporate Strategy has been highlighted, as well as some relevant Hospitality strategic issues of Human Resource Management have been included and analysed. But it is not only the past what makes up the future but the actual present. Trends in Human Resource Management are in this matter of great importance to the discussion. There are vast numbers of trends today in HRM. Two main trends will be looked at. Firstly empowerment, followed by Flexibility.
Part of the problem with understanding and applying Empowerment is the difficulty in defining it precisely. Richard Carver, managing director of the Coverdale organization, defines Empowerment in terms of encouraging and allowing individuals to take personal responsibility for improving the way they do their jobs and contribute to the organizational goals. Empowerment requires the creation of a culture which both encourages people at all levels to feel they can make a difference and helps them to acquire the confidence and skills to do so. Empowerment occurs when employees are allowed greater freedom, autonomy and self-control over their work. Employers to employees encourage responsibility and decision-making.
According to the Management Writer Peter Kizilos (1987) empowerment is the corporate equivalent of the fountain of youth. While other critiques arise as " Oh those words! Empowerment? Non-sense! They need to know what their jobs are" as Deming (1981) a founder of TQM once said. Empowerment is a contradictive concept. While some people believe that it is a threat to standards, other people differ in opinion, believing that the more empowered employees are, the more committed they will become, consequently loyalty will play a significant role in bottom line results.
For almost two decades now, Empowerment has been pioneering small companies. For example, Australian Electronics company, has approved employees to decide amongst them what jobs should be done and by whom; and settled each other's salaries. The California Retailer implemented too, personal decisions on how much they should be paid and how much time off they should take. The challenge today is how to extend such high-trust, high commitment cultures into organization employing hundreds or thousands of people. Though when applying these to multinational companies, which are massive in comparison to the SME's, then someway or another control must be accompanied with this so-called concept of empowerment.
In today's competitive world the budgetary process is an important aspect of HR. organizations are constantly pressured to reduce overhead costs, and HR department is seen as the most expensive resource. Organizations look to downsizing, restructuring and multi-skilling as methods to reduce HR costs. It is then, when Flexibility comes into play.
Flexibility can be defined as " The ability of an organization to adapt the size, composition, responsiveness and cost of the people inputs required to achieve organizational objectives", Atkinson (1984).
Matching supply to demand in the hospitality industry as with many other industries is a complicated task. The term flexibility has been considered as an alternative to this new era of uncertainty. With the increasing need to adapt quickly to changes in market demand and production, flexibility is becoming increasingly applied.
Although there are various types of flexibility (see Apex 7), a significant approach was Atkinson's idea of the flexible firm. He suggested that organizations are mainly looking for three kinds of flexibility (see Apex. 8). With the use of zero hour contracts, the use of agency staff and sub-contracting numerical flexibility can be used to match demand for labour and supply. By applying an increase in team working, multi-skilling, re-skilling and project working functional or task flexibility can provide the opportunity of employees exploring new areas of work. This is positive if there is a willingness and desire from the employees' side in participating. This will be determined by their orientation, bureaucratic orientated people will be keener to participate in this kind of flexibility whilst, instrumental orientated people will object to the change, and will not see it as an opportunity to learn more but as a disruption from their already known job. Finally financial flexibility, in theory will motivate employees perform better, though in reality, for example Performance Related pay (PRP) can end in a problematic experience due to the perception of some employees in seeing it as "unfair".
The flexible firm model is not prescriptive in its approach or must be strictly followed. Again as in most of things in life, there is no on right way. A combination of different kinds of flexibility may be the answer for some organizations that are looking for a competitive advantage. As to how this is to be applied to an organization, depends on the organizations values and beliefs. Flexibility is simply a trend that is enhancing many organizations, but the success of its implementation will be up to the adaptability of an organization towards flexibility.
There are still mainly complex issues to be resolved around Human Resourcing and this is only made harder by the dynamic changes taking place in today's global economy. Some argue that the speed of change creates a costly Pandora's box of cost increments by eternal change in management practises. But in the words of one Winston Churchill " we shall do some thing, or the other, but definitely not nothing at all." The only way to survive in the world to today is to move with it or faster than in but not against it. HRM and its practices remain the solace for companies large and small in the 21st century.
Strategic Planning, Quality & Productivity
