Human Resource is the most important asset for any organization and it is very useful in getting flying colours in competition. Managing Human Resource is quite challenging as compared to managing technology or capital of a management system, so a management must require an effective management system which is achieved by effective management practice. Human resources are capable of converting the other resources, like, money, machine, methods and material into output like products or services.
The effective management of human resources requires sound Human Resource Management system. Storey (1995) defines HRM as a distinctive approach to employment management which seeks to obtain competitive advantage.
HRM can help firms improve organizational behavior in such areas as staff commitment competency and flexibility, which in turn leads to improved staff performance (Koch and McGrath 1996).
Why companies fail?
(Fortune magazine November 1994)
1. Identity Crisis: Top managers keep stick to traditional managerial ways, there initiative is always resist by the work force.
2. Failures of Vision: Managers lack in seeing the obstacles coming the way in the coming future.
3. The big squeeze: Managers rely on present excessive debt they took assuming of running business alike in the future too which may not likely happened some times.
4. The glue sticks and sticks: The traditional way of strength becomes a hindrance in innovation.
5. Anybody out there? Always look out for your customers, a difficult practice in today’s scenario.
6. Enemies within: Managers who don’t look for effective measures in managing Human Resource may develop hostile workers and uncooperative team.
These hindrances cannot be avoided without managing people well. Every person who works in organizations plays a role in managing people. This is true for those of you who wish to create, manage, and lead future organizations. Judy Lewent, one of today’s “hottest” executives, and CFO of Merck & Co. says even financial analysis should serve to encourage the right behaviors in people,
“finance departments can take the nuances, the intuitive feelings that really fine business people have and quantify them” (Harvard Business School review, 1994).
It’s almost correct to say that organizations are changing swiftly, perhaps more rapidly than ever before. One study of hundreds of business suggests that 37% of organizations are “transforming” through quality initiatives and fundamental changes in the way work is done (Industrial and Labour Relations review, 1994).
One pattern in these changes is the increasing importance of people issues that require managers to understand how people contribute to organizational success.
Organizations have always strived to provide value to their constituents, to survive, and to adapt. Today, many claim that reaching those goals requires a keener focus on “softer” factors. Leading writers argue that the companies that will survive are those with strong “cultures”, driven by leaders who relentlessly pursue a “vision”, through “simple structures”, providing “world-class training”, that value “people skills”, and that foster “entrepreneurship”(Fortune, 1995). Charles Handy, a leading business futurist, suggests that key challenges facing future managers include: Shorter and more intensive work lives, the demise of corporate pension plans, motivating employees in the manner of not-for-profit organizations, loyalty to the team rather than to the organization, and increasing responsibility for education beyond schools (Fortune, 1994). Managers who master these trends will significantly affect their success in an increasingly global and volatile world. Activities such as employee education, organizational design, pensions and loyalty are no longer the exclusive domain of the “human resources department”,
Re-engineering, redesigning work to streamline processes and combine fragmented tasks for more efficiency has become a mantra for many organizations. Reengineering efforts have often proceeded from an operational or financial model, resulting in enlarging the work of employees, cutting entire administrative processes, and generally finding ways to do more with less (Business Revolution, 1993) Astounding returns are possible, but so are increasing work loads, and wrenching decisions about who stays and who must go (Robert W. Keidel, 1994). After publishing their book, “Reengineering the Corporation”, authors Michael Hammer and James Champy note that up to 70% of reengineering efforts fail (Thomas A. Stewart, Fortune, 1993). They say that “the redesign, as brilliant as it may be, doesn’t get results because of managerial thought and ideology.” (The Wall Street Journal, 1995) Perhaps managers need to be “reengineered”, to better understand the effects of reengineering on careers, burnout, and the new social contract between employees and organizations (Michael Hammer & James Champy, 1994). As Michael Hammer puts it, “The biggest lie told by most organizations is that ‘people are our most important Assets.’ Total fabrication. They treat people like raw material. If you’re serious about treating people as an asset, we’re looking at a dramatic increase in investment in them.” (Hal Lancaster).
Senge says that Human Resource Management is a key to knowing who the organization’s innovators are, and to diagnosing what’s needed to make learning spread, and how to make every aspect of the organization a learning opportunity (Charlene Marmer Solomon, 1994). Such tasks are clearly too important to be left to the organization’s “training department.” Every employee and manager must understand how people learn, if a learning organization is to become a reality.
Employee ownership is nothing new. It was the original organizational design. Families owned and ran the means to produce food and shelter. Modern organizations frequently focus on “shareholders” as the real owners of the organization’s capital and economic returns. Classic business theory suggests that firms exist to enhance shareholder value, but the notion of ownership is changing, as more organizations provide stock to employees. Some organizations have become fully employee-owned. UAL Corp., parent of United Airlines, awarded various employee groups 55% of the company’s stock in exchange for a $4.9 billion package of labor concessions, such as wage levels and work flexibility (Kenneth Labich, 1994). When employees own the company,
human resource management issues become stockholder issues. Managers aspiring to lead such organizations must understand human resource management as a fundamental business discipline, and integrate it with other business disciplines. As Stephen M. Wolf, outgoing UAL Chairman Notes, “our fleet is in place, the route structure is in place, our service strategy is in place. But there was one piece of the puzzle missing: Our labor costs were not competitive.” (Kenneth Labich, ibid.)
Major companies frequently operate across national boundaries. The hard data suggests that this will become a requirement for survival in the future. Major organizations use communication technology to form “virtual teams” that work together simultaneously across national boundaries. Many organizations have actually relocated major headquarters functions to different countries (Marcus W. Brauchli). While globalization presents significant challenges for managing financial, marketing and production processes, some of the thorniest issues revolve around managing people. Coca-Cola, with businesses in 25 divisions, 6 regional groups and more than 195 countries, credits innovations in managing its international work force as a key to continued success. Workers pay “hypothetical income taxes” based on the U.S. system, and Coca-Cola pays their actual foreign taxes, adjusting for tax credits, etc (Dawn Anfuso). In many ways, it is the nature of the global workforce that will determine competitive advantage for future organizations (Business week).
Successful managers must understand human factors at work, if they are to maximize the payoff from new work designs, technologies and production practices. Human resource management is what helps managers make good decisions about these issues.
Human resource skills are essential to future managerial success. successful CEO’s describe their success in terms of skillful management of people. Jack Welch, CEO of GE, describes his “lessons for success”, “Anybody who gets this [ job has got to believe in the gut that people are the key to everything and “If you’re not thinking all the time about making every person more valuable, you don’t have a chance.” (Jack Welch’s Lessons for Success, 1993) Today’s managers need not master the technical details of people management, but must become informed consumers, capable of analyzing fads from facts.
Within the Human Resources box are the three components of Human Resource value:
1. Opportunity which is the necessary circumstances for employees to create value for the organization;
2. Capability which is the capacity of employees to create value; and
3. Motivation which is the drive or force employees feel to contribute to organizational value.
All three components must be present for human resources to contribute to
organizational value. It seems quite likely that employees were always somewhat capable and motivated to creatively contribute through teams and suggestions, but because the work was not organized properly, they had no Opportunity. Or, consider organizations that redesign the work to require teamwork and creativity, and have highly intelligent and experienced workers, but recognize and reward workers only as individuals. Here, there is Opportunity and Capability, but the Motivation is lacking. Thus, Human Resources are enhanced when managers find ways to build Opportunity, Capability, and Motivation. The enhanced Human Resources bring greater value to the Organization, which supports the Organization’s ability to bring greater value to its Environment.
In turn, the Organization receives necessary inputs from the Environment, and can use those inputs to further increase the value of Human Resources.
‘ Brian Dumaine, “Why Great Companies Last”, Fortune, January 16, 1995, p. 129.; John Rau, “Nothing Succeeds Like Training for Success”, The Wall Street Journal, September 12, 1994, p. A16.. “Workplace Innovation”, Work In America, vol. 18, no. 11, November, 1993, p. 3.
‘ Carla Rapoport, “Charles Handy Sees the Future”, Fortune, October 31, 1994, pp. 155-168.
‘ Charlene Marmer Solomon, “HR Facilitates the Learning Organization”, Personnel Journal, November, 1994, pp. 56-64.
‘ Hal Lancaster, “Re-Engineering Authors Reconsider Re-Engineering”, The Wall Street Journal, January 7, 1995, p. BI.
‘ Hal Lancaster, “Re-Engineering Authors Reconsider Re-Engineering”, op cit.
‘ Kenneth Labich, “Why Companies Fail”, Fortune, November 14, 1994, pp. 52-68.
‘ Kenneth Labich, “Will United Fly?”, Fortune, August 22, 1994, pp. 70-77. Greg Steinmetz and Michael J. McCarthy, “UAL Buyout Plan Is Opposed By Big Holder”, The Wall Street Journal, June 8, 1994.
‘ Kenneth Labich, ibid.
‘ Koch, M.J. and McGrath, R.G. (1996) ‘Improving Labor Productivity: Human Resource Management Policies Do Matter’, Strategic Management Journal, Vol.17, 335’54
‘ Marcus W. Brauchli, “Class Issue”, The Wall Street Journal, November 15, 1994, p. Al.
‘ Michael Hammer & James Champy, Reengineering Management, 1994
‘ Michael Hammer & James Champy, Reengineering the Corporation: A Manifesto for Business Revolution (New York, NY: Harper Business, 1993).
‘ Nancy A. Nichols, “Scientific Management at Merck: An Interview with CFO Judy Lewent”. Harvard Business Review, January-February, 1994, pp. 89-99.
‘ Paul Osterman, “How Common is Workplace Transformation and Who Adopts It?”, Industrial and Labor Relations Review, vol. 47, no. 2, January, 1994, pp. 173-188.
‘ Robert W. Keidel, “Rethinking Organizational Design”, Academy of Management Executive, vol. 8, no. 4, 1994, pp. 12-27.
‘ Storey, J. (ed.) (1995). ‘Human Resource Management: A Critical Text’. London: Routledge. Tayeb, M. (1998): Transfer of HRM practices across cultures: An American Company in Scotland, The International Journal of Human Resource Management, 9:2, 332-358
‘ Sumantra Ghoshal & Henry Mintzberg, “Diversifiction and Diversifact”, California Management Review, 37, no. 1, Fall, 1994, pp. 8-27.
‘ Thomas A. Stewart, “Reengineering: The Hot New Managing Tool,” Fortune, August 23, 1993, pp. 41-48.