The Impact of Human Resource Practices on Organizational Performance - Progress and Prospects - Case Study Example

Case study: HRM In contemporary organisations, human resources is increasingly looked at as a unique asset that will offer a sustained competitive advantage. The changes in the business environment, change in workforce demographics, technological changes, increasing globalization, intellectual capital and continuous changes in organisations has led to increase in the importance of human resource management (Wright & McMaham, 1992). A human resource department that lack strategic integreation and is higly administrative can fail to provide a competitive advantgae that is necessary for survival. This may lead to loss of the relevance of the department. According to Huselid & Becker (1997), there are noticeable financial returns where human resource management systems in an organisation have aligned with strategic goals of the business ans well as achieving operational excellence. Knowledge is an essential factor in the performance of the organisation, and through implementation of strategies to develop and retain the knowledge worker, the organisation can develop a competitive advantage. Thus, knowledge is one of the most strategically significant resource in an organisation (Grant, 1996). Alvesson (2000) identified the knowlegde of workers and the ways of minimization of turnover as crucial problems in human resource management. The main function of human resource management (HRM) is to connect the strategic objectives of the organisation with human resource activities. According to Kamoche (1996), human resource management plays a crucial role in development of workforce strategies since it transforms the organizational strategy into practice. Layoffs and redundancies are becoming inevitable in organizations as employers use them to cut off costs due to rising economic challenges. This essay analyses the role of HRM in development workforce strategy and legal issues associated with the strategies of staff reduction. According to Huselid & Becker (1997), planning in an organization begins with the organizational strategic plan. At any time within the organization, there are both short-term and long-term goals. For instance, the organization may encounter a sudden change such as a decrease or an increase in demand for services. Given such varying situations, the leadership of the organization develops overall goals as well as strategic objectives. Furthermore, there must be a department that will be able to envision the required steps to be taken in order to bring the overall organizational goals to reality. This calls for human resource management to develop strategies for the workforce in order to implement the overall objectives of the organization. Alvesson (2000) adds that workforce planning will offer an effective way for a systematic aligning of the priorities of the organization with human resources and budgetary that is required to accomplish them. The initial planning process requires the managers to develop the workforce plans or strategies that will help in accomplishing the organizational objectives. In addition, the human resource managers must ensure that these strategies will provide sound basis that will justify the staffing requests and the budget in order to provide a clear connection between the workforce, budget and the objectives for accomplishing the strategies. Wright, McMahan & McWilliams (1994) argues that workforce planning process will need to put into consideration the forecasting of the number of workforce required and the types of knowledge and skills required. This will help in achievement of the organizational success through comparison of the available workforce with the organizational needs that are unmet. Doing this requires a better understanding of the gap existing between the workforce and what needs to be done. Thus, this calls for efficiency in human resource management in order to prevent losses due to excess number of workers in relation to the task that needs to be accomplished. On the other hand, the available workforce may be less than the required needs to be accomplished. In any of the situation, human resource management becomes crucial in development of strategies that will ensure the organization maintains its competitive advantage by balancing the costs and work force without jeopardizing any factor (Kamoche, 1996). Such is the situation in the case study where based on understanding of the workforce, human resource management requires to develop strategies of maintaining the workforce while at the same time reducing the cost incurred by the firm in order to achieve organizational goal. Monks & McMackin (2001) argues that the role of human resource management in any organization is to ensure that the value of workforce increases which is reflected by an increase in the organizational performance capacity as well as its value to customers and other stakeholders. Thus, human resource management ensures that the goal of increasing the value of the organization is maximized while the workforce is controlled. This calls for aligning of the human resource policies of the organization to the mission, core values strategies, as well as goals that has been defined by the organization. In order to achieve this there is a need for human resources management to act as a link between the organizational and the workforce. This means that human resource management needs to design the policies and practice of human resources, implement them and assess how they make the organization achieve its goals without jeopardizing the interests of the workforce. Wright & McMaham (1992) adds that the human resource department needs to utilize its human resources effectively through building a strong foundation of workforce strategy that align to the organizational goals through leadership, recruitment and training of the best possible candidates. Thus, strategic planning will set the organizational direction and objectives. At this point, the role of human resource management ensures that the strategies provide the necessary financial resources as well as providing basis for the needs of the workforce. Thus, it becomes easy to achieve the strategic goal and objectives of the organization with not just the right people but also with the right competencies. According to Kamoche (1996), human resource management plays a big role of ensuring that the overall strategic planning of the organization is naturally complemented by workforce strategy. As the strategic planning assists the organization to identify its current position, where it is heading as well as the means of getting there, human resource management develops a workforce strategy in order to lay out specific tasks and actions that are required by the organization. This ensures that there is necessary workforce to accomplish the mission of the organization. Thus, development of better workforce strategy will ensure that the workforce will translate strategic thinking into real and concrete actions in staffing and training needs. Based on the resource-based model, Alvesson (2000) argues that human resource management requires combining the sum of knowledge and expertise of its workforce in order to provide a source of competitive advantage. At this point, the human resource management sees the workforce as assets. This means that layoffs will act as a sale of assets that will be difficult to acquire again in future. In order to prevent such as situation, it is the responsibility of human resources management to develop strategies that will retain its employees and look for other ways of reducing the costs. Thus, according to resource-based model, management of workforces is of great importance. Based on control-based model Monks & McMackin (2001) argues that human resource management is focused on control of workplace as well as behaviors that monitor the role of employee in the performance of the organization. This also involves control of work in order to increase the levels of labor productivity as well as profitability. Thus, human resource management has a crucial role of developing workforce strategies that will increase the levels of productivity of the workforce as well as increasing the profitability of the organization. For instance, in the case study, it is the responsibility of the human resource department to ensure that they develop workforce strategies that will retain the large pool of experienced employees because they will need them in future, but increase their levels of productivity. This would also be reflected in reduction of costs. Based on the knowledge of the workforce, Grant (1996) argues that human resources management plays a crucial role in development of workforce strategies for achievement of long-term goals of the organisation. Human resource department has a clear understadning of the internal and ecternal factors that impact the worrkforce due to the closeness. This enables them to develop a strategic workforce plan that is practical which also directs the allocation of resources in order to achieve a competitive and meaningful results over time. With clear understainding of the workforce, it is easy for human resource management to formulate key strategies that will address factors that are essential to the management of workforce. This will ensure that the current success as well as the furutre success of the organisation. A good knowledge of the complex and changing problems with limited resources gives the human resource management the ability to develop strategies that ensure that organisation addresses the expectations of the clients without compromising the workforce and other resources. Therefore, given its position that links the workforce and the mission, goals, strategies and objectives of the organisation, HRM becomes crucial in development of workforce strategies for managing the future of the organisation. According to Huselid & Becker (1997), forecasting of demand requires analysing of the the type of the workforce that will be required in order to accomplish the future requirements and also carry out the organisational mission. This means that the there is a need to analyse the workforce required to achieve a certain task in future as well as how such as task will be perfromed. Thus, development of strategies requires examination of how changes such as economical and technological will affect the workforce. It is the role of human resource management to assesses its workforce and comes out with workforce strategies that will ensure retaining of its competitive workforce in order to ensure its future success. Human resource management has a role of analysing the projected work supply in order to come up with effective strategies that consider the required number of workforce in future. This calls for consideration of certain factors such as the competencies, number of employees, salary level, and job classification among others. Once the human resource management understands the current workforce profile, it can be able to develop workforce strategies that will project into the future inorder to prevent deficiency of skilled workers in future (Huselid & Becker, 1997). Such is the situation in our case where the role of human resource management will be very essential in order to develop strategies that will retain the workforce and at the same time consider reduction of cost. This will be essential in order to cater for enough experienced workforce in future when the operations in the organisation will be back to normal. Wright & McMaham (1992) argues that it is also important for human resource management to consider issues such as retirement profile and turnover rates in workforce analysis in development of strategies. Thus, it is essential to define the current supply of workforce, the competencies and the number of people required to address the critical issue. In addition forecasting the future will also assist in undesrtanding the future of the organisation. All these issues explains the importance of the human resource management in developing workforce strategies that will not jeopardize the current position as well as the future of the organisation. Based on the case study the human resource management has a crucial role of developing strategies that ensures that it retains its workforce while it reduces its costs in order to cater for demand of more employees in the future when the operations of the company return to normal. The HRM must ensure that the strategies improve the compecency of workers in all sectors in order to improve productivity while at the same time looking for ways of reducing costs without compromising its pool of employees who might be absorned by its competitors. Becker & Gerhart (1996) adds that it is the responsibility of the human resource management to ensure that the development of workforce strategies will close the gap between the worforce demand forecast and the workforce supply projection. A situation where the demand will excced supply is an indication of a critical work demand. This means that the competencies or the number of personnel will not meet the future needs of the organisation. For instance, in the case study, if the developed workforce strategies will advocate for reduction of personnel, then the company will be exposed to challenges of meeting the future needs due to low number of personnel. Thus, this action may led to loss of future competitive advantage. on the other hand, there may be situation where the demand is exceeded by the future supply whereby the number of personnel may exceed the needs. In our case, this may be caused by retaining the workforce by failing to reduce the costs. This may lead to exposure of the organisation to future challenges of decreased profits. The above information shows that the human resource management is in a better condition of providing the organisation with the date required in order to come out with the most effective strategies. Thus, the role of human resource management is to provide the organisation with the suitble actions in order to address such issues through properly developed workforce strategies. Once the gaps are identified it is the role of HR department to consult with the management in order to agree on the set priotities to close the gaps without causing a critical impact to the organisational goals. It is important to note that the solution to close the gap is based on the workforce and must be strategic in nature. The HRM have a role of ensuring that the developed workforce strategies addresses the ongoing as well as unplanned changes in the workforce (Becker & Gerhart, 1996). Huselid & Becker (1997) adds that the development of workforce strategies involes collaborative work between the department of human resource and other part of the management in order to develop workforce strategies that will address future surpluses and gaps. The role of human resource management in such situation is to provide information based on their experience with the workforce. This will also provide a wide range of workforce strategies the the organisation may apply in order to retain and develop personnel with the required competencies at the lowest cost possible. The development of the strategy is influenced by many factors such as resources, job classification and workplace as well as workforce dynamics. Strategies may vary and include modification of positions, development of retention and productivity techniques and definition of training and development needs. For instance, in the case study, development of workforce strategy may include modification of positions. Since the company is experiencing situations where some departments have more that enough personnel while others have less that required personnell, the management may need to modify positions in order to ensure balance in all departments. This would be effective as it would prevent layoffs while increasing the productivity of the company. In another situation, the company may also need to develop techniques for retention and productivity because they will need the same employees in future. This will ensure that the company does not loose its employees to its competitors and at the same time it increases its productivity. Human resource management have the resposnibility of ensuring that the strategies support the most crucial gaps that are faced by the organisation. According to Kamoche (1996), after the role of human resource management of ensures that the activities of human resource aligns with the organisation, there is a strategic fit of activities where they reinforve one another. Such a fit produced various advantages. First, the strategi fit produces consistency. Second, the fit ensures that the activities of human resource will reinforce the business strategy of the organisation. Third, a good strategic fit facilitiates exchange of information across activities. Finally, the strategic fit will lead to elimination of redudancy as well as minimization of wasted effort. Each of human resource activities will reflect a fundamental decision that the organisation has made under the guidance of human resource department in order to focus not just current issues but also preparing for the future by investing in its workforce. One of the unhappy realities in the current economic situation is that a variety of organisations are forced to cut costs in a number of area where personnel is included. Reductions of workforce are usually extremely emotional charged and personal events. Due to such conditions, they usually lead to legal crime, especially when one feels that there is unfair treatment. Dismissing an employee as a way of reduction of workforce usually exposes the employer to claims of wrongful discharge. For an employee who that have been selected for termination, they usually feel that the selection process was not fair leading challenge of the process by basing it as discriminatory in terms of gender, age and minority among others. Other claims that may be brought forward include breach of contract based on the promises that were made in the employees handbook. In many situations, when an organisation is forced to reduced its workforce, there is a need for careful attention to some actions that may bring up legal risks (Harshman & Rudin, 2010). Before implementation of the reduction of workforce, all the legal implications should be considered.in a downward economy, it becomes an inevitable strategy but has its own risks. Thus, it is essential to consider legal issues that give rise to conduting a layoff. Large scale reduction of employees implicates more set of laws as well as certain provisions of the retirement of employee that comes out when an employer decides to displace large number of personnel. While the employer reviews the legal issues arising due to reduction of workforce there are also additional variables that arise. First, the downsized employee who has been given generous benefits my be weel equiped to wage a law suit against the employer as compared to a fired employee. Second, the downsized employees may come together against the employer where their pool of resources fir hiring a capable consel may mak a formidable adversary. Finally, the downsized employees have more legal ground to stand on as compared to the fired. It is worth noting that reduction of workforce requires coming out with a difficult decision about who among your capable employees must go. However, legal problems that are associated to reduction of workforce are best avoided by a careful planning, treating the employees with respect and consistency and involvement of legal counsel as early as possible in the process(Melvin, 2011) . From the case study, Stacey’s statement of regarding redudancies and layoffs as legally justifiable is correct. Layoffs and redudancies usually happen so long as the employer complies with all legal requirements involved in reduction in force. Initially, the employer is making it clear that the company wants to cut costs as a result of its current situation. However, it is advisable that the company use a legal counsel to go through the entire process. In addition, the employer must be aware of legal risks ssociated with the decision. Conclusion Human resource management plays a crucial role in development of workforce strategies. One of the main reasons is because it acts as a link between the overall strategies and objectives of the organisation and the activities of human resources. On one side, the strategic planning helps the organization to identify its current position, where it is heading as well as the means of getting there. On the other side, human resource management develops a workforce strategy in order to lay out specific tasks and actions to ensure that there is necessary workforce to accomplish the organizational goal. As a result, the activities of human resource aligns with the organisation leading to a strategic fit of activities. Such a fit produced various advantages: it produces consistency; ensures that the activities of human resource will reinforce the business strategy of the organisation; facilitiates exchange of information across activities; and, it leads to elimination of redudancy as well as minimization of wasted effort. By dealing direclty with the employees, the human resoirces department has a better understanding and experiences of functioning of the personnel. This makes it very significant in the development of workforce strategies. From the case study, the role of human resource management in development of strategies may lead to better ways of retaining the employees while modifying their positions. This will increase their productivity and inturn reduce the costs and prevent laying offs. This fosters its future success because the company will require their experienced employees in future. Organisations reduce their workforce as a way of cutting costs due to difficulties in economic situations. Such situations make workforce reductions inevitable. However, there are legal issues associated with such reductions. An employer is legally justifiable to conduct the workforce reduction process, provided that the organisation complies all legal requirements. 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