Strategic Human Resource Management in Australia - Case Study Example

Strategic Human Resource Management in Australia Introduction The department of human resource management is a fundamental one to contemporary organizations. To remain viable and feasible in modern market environments that are characterized by immense cutthroat competition that are coupled with rapidly shifting political, environmental, technological, cultural, social, economical, financial and legal market forces, business organizations, governments and institutions are looking for ways to maximize profits by utilizing minimum costs. To do so, they are investing in increasing their resource capacity and appropriately and effectively managing the available resources (Armstrong, 2000, p. 19). Among resources that an organization utilizes in order to realize, its goals and objectives include material resources, capital resources, financial resources, information, technology and human resources as stated by Deb (2006, p. 83). In the recent decades, the human resources have attracted substantial amount of focus and greater emphasis since, it is the most important and valuable asset to an organization. For effective and, efficient management of the human resources, the human resource management is charged with the task. The focus on human resource management has further diversified to include alignment of the goals and objectives of the human resource to the mission, vision, goals and objectives of the business organization, hence, strategic human resource management (Armstrong, 2006, p. 23). The human resource management therefore, does not remain to adequately plan, co-ordinate, remunerate, develop and manage the human resource of the organization, but plays a critical role in attaining anticipated outcomes of the organization (Svetlik, & Ilic, 2006, p. 66). The role of human resource management is at times, shared between the human resource manager and the line manager. This report will explicitly analyze the implementation of HRM strategy (performance appraisal and recruitment and selection) from the line manager’s perspective by conducting an in depth interview with a line manager in an Australian transport firm. Strategic Human Resource Management Strategic management is the way to go for modern businesses that seek to increase its capacity of production, profitability, market share, volume of sales and those that seeks to effectively and efficiently satisfy the changing needs, expectations, tastes and preferences of the customers. According to Armstrong (2000, p. 71), SHRM helps in growing the ability and the confidence of the HR function to attain the human resource strategies and in motivating the human resources in a bid to increase operational efficiency and high work performance. Additionally, enhancing collaboration between the organizational structures, promoting teamwork, fostering collaboration and integration of all the departments in the organization, in a bid to attain set business and HR strategies (Svetlik, & Ilic, 2006, p. 61). Strategic human resource management helps the HR manager to incorporate the human resource management into the business strategizing process where emphasis is placed on HR activities and procedures that support the mission and goals of the organization and help in developing an effective, cohesive and stable relation between the other departmental heads (Armstrong, 2006, p. 52). In addition, helping the HR department to participate actively to attainment of the mission where the HR manager is held responsible for the human resource management decisions they make. This is especially important in quantifying progress in attainment of the set goals and objectives. According to Armstrong (2006, pp. 77-79), the human resource management carries out particular functions that include among others human resource planning, recruitment and selection of the human resources, training and development, compensation administration, labor relations, administration of employee benefits, medical and health of the human resource, performance appraisal, safety, personnel research, employee discipline and management of HR audits. The need for a strategic human resource management is driven by a need to be more innovative, creative and improve the competitive edge of the business organization (Deb, 2006, p. 89). An overview of the organization and its business environment, and the deployment of the HR function The report will analyze the establishment of human resource strategies from the perspective of one line manager in a firm in the Australian transport and logistics industry. The transport firm has more than thirty five years in operation and has established a reputation for development and implementation of efficient, effective and innovative logistic solutions incorporated with modern technological solutions. Through a joint venture partnership, the firm has grown in depth, breadth and stability in its external and internal environment. The firm’s investment portfolio has been growing gradually and steadily in the recent past and through adequate strategic planning, proper administration and strategic management, the firm anticipates to remain relevant, reliable and sustainable in the present and in the future. Through a close relationship between the transport firm’s organizational management, employees, customers, marketers, suppliers, shareholders and investors, the firm has been able to adequately deliver high quality genuine freight and logistic solutions designed to meet individual needs and preferences of the costumers. Through commitment and accountability by the people within and without the firm, competent infrastructure and modern technology, it has made the firm more of a partner in meeting the logistic and freight needs of their customers. The transport firm has a five year old human resource management department that carries out its mandate and functions such as recruitment and selection, performance management, time management, benefit administration, training and development and alignment of the goals and objectives of the employees with those of the transport’s firm among others. The HRM at the firm is perceived as both an administrative and strategic function, which is essential as recommended by Sims (2001, p. 34). The members of the firm’s HR consist of the national HR manager, the national training and development manager, three state human resource managers and five human resources administrators. The human resource manager in the firm communicates the policies, mission and vision of the firm to the employees, fosters teamwork, enhances communication and work flow across and along the organizational structures, ensures the right organization culture and behavior and ensures the firm is accountable and effectively implements quality and occupational health and safety standards. In addition, the transport firm’s HR manager ensures the human resources are motivated and inspired enough to exploit their best skills and talents, perform efficiently and are innovative in making decisions and solving work related issues thus, help in attainment of the firm’s business strategies and increasing the firm’s competitiveness (Sims, 2001, p. 103). The HRM of the firm has contributed to the firm’s increased customer relations, loyalty, creativity, reliability, accountability and ensuring freight and logistic solutions are delivered at the right time, in the right form, at the right location, to the right customer and at the right cost. The four HR heads carries out all the above mentioned duties including recognizing areas of long term strategic growth, interpreting and offering counsel to the Executive and line management on policies, practices and systems, analyzing challenges and formulating solutions to counter strategic business problems, developing new systems and policies to meet the firm’s needs and resolving line management issues. Overview of the line manager’s role and responsibilities, with particular regard to HRM responsibilities in (Performance Appraisal and Recruitment and Selection), and the manager’s formal relationship with the corporate HR function Despite the important role the HR manager and the line manager play in an organization in attainment of the organizational goals and objectives and the proximity with which these two personnel co-ordinate and function, their views and perspectives on what human resource management entails have been discordant. The line manager manages the day-to-day work processes of a line of workers and holds the vertical line of command (Sims, 2001, p. 131). The line manager is responsible for achieving the corporate vision and goals in a particular functional line of business. The role of the line manager may need interoperation with other key business segments such as accounts and human resources among others (Armstrong, 2006, p. 83). Areas in which perspective of the HR manager and line manager vary are in ownership of the firm’s service and HR planning. Additionally, the involvement of line managers in rankings of HR activities such as performance appraisal and recruitment, hindrances to the line manager’s participation in HR activities and the skills and proficiency of the line manager in dealing with the human resources as highlighted by Sims (2001, p. 112) . The line manager at the transport firm reports to the country manager. The operations manager who manages the supervisors, customer care executives, the sales team, freight handlers, operations clerks and customer service providers reports to the firm’s line manager. At the transport firm, the line manager guarantees the establishment and maintenance of effective system management for occupational health and safety (OHS) consistent with the national OHS management systems within the firm. Other duties include efficient management of branch operations, ensuring attainment of the branch’s profitability targets, increasing the sales and customer service revenues, proficient management and leadership of the workforce at the branch and proper maintenance of the company facilities and vehicles within the branch. In regards to recruitment and selection, the transport firm’s line manager organize and make suitable arrangements on the recruitment, selection and orientation of employees in a bid to establish efficient execution of duties and smooth workflow in the receiving, inspecting, cataloging and facilitating freight dispatches. The line manager offer adequate resources and time for training of employees, suppliers and contractors on the OHS and the firm’s programs, policies and work ethics, roles described by Sims (2001, p. 18). Additionally, the manager establishes work requirements and assigns duties to workers, monitor, coach, and develop workers in a bid to enhance individual and group performance as highlighted by Armstrong (2000, p. 106). In relation to performance appraisal, the line manager ensures appropriate procedures are put into place in order to ensure effective and efficient worker’s performance is analyzed and thereby, process their compensation and incentives. He is in charge of developing and implementing performance rating scale to use in appraising performance and at the same time, compile information received from performance appraisal to design systems and structures to improve on the areas of weaknesses and support the areas of strength. Using performance appraisal information, the line manager, rewards and recognizes high performing areas and employees and device systems of empowering unproductive business strategies and employees. To increase performance, the line manager at the transport firm monitor daily performance of each employee to ensure set targets are achieved and he manages all challenges faced by the employees including performance management, safety and team building. Overview of (Performance Appraisal and Recruitment and Selection) and Key issues facing the transport firm in regard to (Performance Appraisal and Recruitment and Selection) and strategies being pursued 1. Performance Appraisal Rao & Rao, (2004, p. 88) mentions that performance appraisal is made-up to be unbiased, objective, reliable, legal, and accurate. Appraising performance is vital in analyzing productive and non productive workers, assessing conduct of employees, assessing the reward outcomes, strengths and weaknesses of employees and it helps in identifying areas that need more focus and employee training. Suitable performance appraisal rides on adequate performance management. Performance appraisal refers to the practice of establishing a structured official association between the leader and the subordinate, which is carried out at specified duration of time for instance it may be yearly or semi annually (Rao & Rao, 2004, p. 90). During the performance appraisal, the output of the worker in terms of efficiency, quality and yield is, reviewed, in order to discover the strong and weak points of the employee and spot prospects for the employee to develop their abilities, experience, competence and knowledge (Armstrong, 2000, p. 101). Performance appraisal can be, utilized by the HR manager or the line manager to create a foundation for making integral decisions affecting employees such as promotion of employees, rise in salary packages, incentives and stipulating disciplinary actions (DelPo, 2007, p. 45). 2. Recruitment and Selection Recruitment and selection is among the important processes an organization undertakes that aids in achieving set targets both short and long term. Recruitment and selection helps in identifying, choosing and orienting the most skilled candidate to fill a specific job position as indicated by Cooper, et al., (2003, p. 71). As a HR function, recruitment and selection entails examining the capacity, skills, knowledge, competence and experience of prospective employee in regards to what an organization requires in a worker for a particular job position. Effective recruitment and selection process helps in employment of an individual who is not only skilled and knowledgeable, but also, one who easily assimilate with the rest of the team, understands the mission, vision and goals of the organization and is committed to execute assigned duties (Taylor & Fox, 2000, p. 93). Additionally, the organization is able to attract and retain the best of valuable employees thus, increasing its value, attaining anticipated results, reducing job dissatisfaction and minimizing high employee turnover. An effective recruitment and selection process ensures an organization attracts the right candidate, for the right job, at the right time and at the right price. The process involves assessing educational and cognitive abilities of the potential employee as stated by Cooper, et al., (2003, p. 89) which is done through various screening procedures including CV and certificate presentation, oral interviews, aptitude tests and written interviews. Key issues Despite the important function performance appraisal plays in the Transport firm, there are some challenges facing it. The line manager mentions that this includes lack of proper training of the management and the employees on the significance of performance appraisal. Employees at the transport firm just fill in the appraisal forms and more often than not, they indicate views that will appease the management and generate and rewards rather than presenting facts as they are. Training the workforce on the practices, processes and systems of performance appraisal is crucial as identified by Rao & Rao, (2004, p. 81). The other issue is selection of inappropriate performance rating methods and scales. Not much thought and deliberation went into deciding the most suitable performance appraisal method to use at the Transport firm. This has led to leniency and central tendency, which results in recording of inaccurate information on the appraisal systems thus, presenting unreliable performance information, issues highlighted by Rao & Rao (2004, p. 63). It is crucial to implement the right rating scales and methods in order to increase performance and reduce chances of biasness, stereotyping, victimization and job dissatisfaction among performing and non-performing workers (Svetlik, & Ilic, 2006, p. 54). The method or criteria chosen to assess performance should be quantifiable and match with the objective set for developing a performance appraisal as illustrated by Armstrong (2006, p. 53). The line manger indicate that performance appraisal at the firm is done with the purpose of rating employee payments. This has resulted in payments eclipsing other work-related goals and activities related to performance appraisal, where the labor forces have been holding back on information on performance they perceive negative in a bid to gain rewards. By using performance appraisal to rate salaries and compensations, the transport firm risks having less open appraisal forums and the workforce may work hard on work activities that generate good ratings as an alternative to enhancing overall productivity which is important in enhancing effectual and sustainable work performance. In relation to recruitment and selection, the issues are time consuming procedures as the paperwork has to pass a long chain of command for approval. There is no formal recruitment and selection policy and framework to guide the process, as the line manager is charged with supervising it and use personal judgments to employ a candidate. This is prone to favoritism, discrimination and unfairness (Cooper, et al., 2003, p. 96), since, employment opportunities are offered based on the ‘gut feelings’ of the line manager. Due to managerial interference especially for senior positions, promotions and employment is done based on other facts other than merit. Strategies being pursued Due to the above mentioned issues in the recruitment, selection and performance appraisal functions of HR at the firm, the line manager interviewed states that the firm has invested resources on training. Its workforce on the importance of performance appraisal and what the objective of it is and investing on seeking counsel from experts in performance management and appraisal on the appropriate and effective criteria, method and rating scale to use in appraising performance. According to the line manager, the firm has began formulating strategies on designing well structured recruitment and selection frameworks to guide the process which will be essential in attracting and retaining valuable employees for the right job and at the right price. This will help the transport firm evade law suits arising from malpractices in recruitment and selection which includes discrimination and unequal employment opportunities. Challenges faced and the opportunities perceived by the line manager in implementing (Performance Appraisal and Recruitment and Selection) According to the line manager at the transport firm, he has had immense challenges in performance appraisal and recruitment and selection processes. This is because HR functions that include resistance by the employees at the transport firm to embrace performance appraisal and for the departmental leaders that do, are not trained on performance assessment and more often, they give employee ratings that do not necessarily reflect the actual performance of the employees through leniency or central tendency. This has resulted in redundancy among workers since non-productive and non-performing employees enjoy the same privileges as high performing employees do. This is because; the appraisal reports offer general descriptions and they do not highlight specific details on productivity per worker. The ineffectiveness of the performance appraisal, the line manager, indicates it’s as a result of rigid organizational structures at the transport firm. The use of dictatorial practices such as threats of salary withdrawal or reviews for line mangers who fails to complete the appraisal forms within the shortest time, has hindered effectiveness of the performance appraisal. The use of performance appraisal for negative reinforcement tool of perceived failure and as a means of justifying unfair salary reviews and lack of regular appraisal does not help matters much at the transport firm. However, he mentions, his line management department in collaboration with the employees, have the potential to develop clear goals and objectives to achieve during the performance appraisal processes. Opportunities lie in setting realistic, specific, attainable, time bound and measurable performance goals (Rao & Rao, 2004, p. 91). In addition, communicating the role and objectives of appraising performance by the management to the employees as suggested by Armstrong (2000, p. 67). In the recruitment and selection function, the line manager mentions that it has not been easy to implement it, since; the process is not considered a strategic function. This means inadequate resources, time and commitment is given the recruitment and selection process that has led to recruitment of incompetent employees, increased job dissatisfaction, which has culminated to reduced employee morale, poor team spirit and reduced work performance. Another challenge is that the process is not designated to one department as any head of department can hire any person they want at will and in some instances, a candidate is taken through various number of interviews by senior management, and the opinions formed are finally, forwarded to the line manager. The process as earlier mentioned, lacks a structured framework of screening, selecting, interviewing, orienting and integrating the prospective candidate. Acknowledgement, comparison, and contrast of the interview findings against SHRM theory and empirical literature in (Performance Appraisal and Recruitment and Selection) This report is a compilation of views and opinions collected from an interview on one line manager working at an Australian transport firm that offer logistic and freight solutions. This is important to mention because, the line manager as a member of the internal environment of the firm, has a better perspective and understanding of what happens before and behind the scenes in the firm’s work processes and operations. Nevertheless, his opinions on the recruitment and selection and performance appraisal as HR functions within the firm may be biased. Be it as it may, his sentiments on the need to have a credible criteria for assessing performance is in line with factors influencing performance appraisal as highlighted by Rao & Rao (2004, p. 41). The line manager mentions that using performance appraisal as a means to rate employee payments and compensation should be accompanied by clear, realistic, measurable and time bound performance goals and objectives. Views supported by DelPo (2007, p. 107). According to Cooper et al. (2003, p. 37), performance appraisal as a component of performance management should be devoid favoritism, biasness, unfairness and instead, it should be carried out professionally and objectively. As the line manager mentions, performance appraisal at the transport firm has been ineffective owing to its use for negative reinforcement tool of perceived failure and as a means of justifying unfair salary reviews. The author, DelPo (2007, p. 18), indicates that performance appraisal should be a process carried out routinely in order to enhance continuous improvements and as the line manager states, performance appraisal at the firm is irregular and that not so much concern and focus is given to it. This has led to inaccurate presentation of performance facts linked with leniency and central tendency among the supervisors. The line manager indicates the ineffectiveness of performance appraisal as a result of autocratic and rigid control of power within the firm. However, it is important to mention that use of stringent measures and imposition of power is sometimes necessary to makes things happen. This is illustrated by use of transactional leadership in varied industries and organizations, where the conduct of employees is closely monitored and helps in achieving set targets. This type of leadership is effective depending on the industry, organization and people as highlighted by Sims (2001, p. 27). Recruitment and selection helps in ensuring an organization to attract and retain valuable employees which is crucial in improving work performance, increasing capacity of production, increasing innovativeness and creativity crucial in improving an organization’s competitiveness, attaining the business strategies and goals and effectively and efficiently meeting the needs of the customer (Cooper et al. 2003, p. 91). The author highlights that inadequate recruitment and selection process leads to employment of candidates to the wrong job positions, increased job dissatisfaction, low employee morale, fragmentation of teamwork and increased employee turnover rates. Although the transport firm has no structured recruitment and selection process, the success of the firm in terms of innovativeness and efficient delivery of freight and logistic solutions, might indicate that the firm conducts effective training and development to help new members fit in and improve their skills and knowledge to be able to execute their duties efficiently and effectively. As Armstrong (2000, p. 43) indicates, training and development can help low performing employees or poorly recruited candidates to integrate within existing team, improve and better exploit their skills and knowledge which is vital in helping achieve set goals and objectives of the organization. Majority of the information mentioned and highlighted by the line manager are consistent with available literature and models of effective strategic human resource management. There is no gap on facts on what pertains to effective performance appraisal and recruitment and selection as HR functions. Effectiveness of the line manager’s role in the implementation of HR strategies Despite the challenges that the line manager at the transport firm faces in his role in establishing an effective performance appraisal and facilitating a successful recruitment and selection process, the line manager has been able to improve on the situations. In the area of performance appraisal, the line manager in collaboration with the employees has developed clear and measurable performance goals to help enhance the effectiveness of the process. This includes analyzing employee trends such as absenteeism, output per worker, numbers of monthly hours worked and number of targets met by individual employee. Additionally, the line manager has mobilized support from the senior management to consult experts on the most appropriate criteria, method and rating scale to assess performance. On the other hand, the line manager has implemented systems and work programs that help increase employee performance through effective screening processes of qualified employees, formulating policies to guide the hiring process and liaising with the senior management in ensuring the line management department facilitates the process without internal interference. The line manager has ensured all potential candidates have equal employment opportunities and short listing is based on the best-qualified candidate whose qualifications, skills, knowledge and experience fit the vacant position. This is as suggested by Cooper et al. (2003, p. 93). Nevertheless, the line manager needs to put more emphasis on communicating the vision and business policies of the firm during the recruitment and selection process. Additionally, he needs to assess the ability of the potential candidate to integrate smoothly within the existing team and the candidate’s ability to understand the firm’s vision and goals and own them. Alternatives and recommendations for improvements to strategies/problems identified by the line manager Developing and implementing an effective human resource management that is perceived by the organization as an administrative function as well as strategic is not easy. The organization needs to see the HR functions not as an unnecessary cost but a valuable practice meant to increase competitiveness, performance, quality, effectiveness and efficiency. In addition, a unit that helps develops inimitable, un-substitutable, rare, quality and competitive organizational resources as mentioned by Millmore (2007, pp. 103-107). The line management in collaboration with the human resource management of the transport firm needs to develop and implement systems and structures that not only focus on improving occupational health and safety, motivation and job satisfaction for employees, but also help in attaining the overall business strategies and goals of the organization. By so doing, the senior management gets convinced and allocates sufficient time, approval, support and resources towards HR functions. Among the recommendations that are effective for altering the challenges present at the transport firm includes a change of the leadership structure and style, where power should be equally distributed to all levels of the organization thus, processes such as performance appraisal and recruitment and selection are not interfered with. In addition, the performance appraisal and recruitment and selection processes should only be carried out by designated department either in the HR or line management department. This helps in discarding role ambiguity and conflict of interests among varied organizational departments. To enhance effectiveness of the HR functions, there is need to define roles between various departments in order to safeguard against duplication of duties and authority (Sims, 2001, p. 67). Active participation and consultations between the head of department where there is a vacancy and the recruiting and selecting department, will help in deciding the best criteria of hiring the best candidate and solving issues arising from the hiring process. Consultations are integral during the hiring process as they help in formulating the appropriate structure of interviewing, screening, integrating and orienting the potential candidate as indicated by Millmore (2007, p. 91). Communicating the goals of appraising performance and constant reassurance by the senior management is vital in helping resolving fears in employees who may feel performance appraisal may be used for negative intentions such as salary reviews and victimization. When employees at the transport firm are involved in development and implementation of performance appraisal, they will become more committed to not only generate good ratings to gain rewards and boost their remuneration packages and benefits, but also, to improve their overall work performance, which is essential in meeting individual goals and objectives and the vision and mission of the transport firm. There is need to amend the firm’s policies on issues pertaining to performance where threats of salary review is used as a means to generate employee performance. Alternative to this will be to address the needs of the employees, consulting them in issues pertaining performance appraisal and involving them in decision-making and problem solving processes. This helps in bringing employees on board during organization change and during implementation of new systems and programs. According to DelPo (2007, p. 73), different labor forces require varied methods and techniques of assessing performance. What the transport firm needs to do is analyze its industry and employees and establish why they need to appraise performance and what the information gathered from the process shall be used for. This will help in identifying suitable appraisal system to use that will capture information that the firm requires with co-operation and commitment of the entire workforce (Cooper et al. 2003, p. 108). This calls for formulation and implementation of clear, quantifiable and goal –oriented performance strategies (Millmore, 2007, p. 66). Conclusion The role of the HRM has evolved from merely administering benefits and remunerations, HR planning, labor relations and administration of employee discipline, to aligning the goals and objectives of the human resource and HR strategies to goals, vision and the business strategies of an organization. This has meant, the HRM is developing human resources that are not only inimitable, rare and quality, but also, those that are able to increase the innovativeness and enhance the competitiveness of the organization. The report has analyzed the implementation of HRM strategy (performance appraisal and recruitment and selection) from the line manager’s perspective by conducting an in depth interview with a line manager in an Australian transport firm. The firm understands the essential role HR functions play in an organization, but it has failed in some aspects as highlighted in the report. References Armstrong, M. (2000). Strategic human resource management: a guide to action. Sidney: Kogan Page Publishers. Armstrong, M. (2006). A handbook of human resource management practice. Sidney: Kogan Page Publishers. Cooper, D., Robertson, I.T., & Tinline, G. (2003). Recruitment and selection: a framework for success. London: Cengage Learning EMEA. Deb, T. (2006). Strategic Approach to Human Resource Management. New Delhi: Atlantic Publishers & Dist. DelPo, A. (2007). The performance appraisal handbook: legal & practical rules for managers. Singapore: Nolo. Millmore, M. (2007). Strategic human resource management: contemporary issues. London: Financial Times Prentice Hall. Rao, T.V., & Rao, TV. (2004). Performance management and appraisal systems: HR tools for global competitiveness. London: SAGE. Sims, R.R. (2001). The challenge of front-line management: flattened organizations in the new economy. London: Greenwood Publishing Group. Svetlik, I., & Ilic, B. (2006). HRM's contribution to hard work: a comparative analysis of human resource management. Washington DC: Peter Lang. Taylor, D., & Fox, G. (2000). The Complete Recruitment and Selection Toolkit. London: CIPD Publishing. Read More