Human resource management has become a persistent and prominent approach to the management of employment in an extensive range of market economies. In concern of management theorists and for many managers, HRM is the imperative to the survival and success of organisations in the twenty – first century. According to Peter Drucker (1993), defines ”one single, simple idea: that people – their skills, knowledge and creativity- are the key resource for economic and organisational success” i.e. ‘the knowledge- based economy’.
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Despite the popularity of the term HRM, there is still no universally agreed definition of its meaning. According to Watson (2002:369) suggests that a ”rather messy situation currently exists whereby the term HRM is used in a confusing variety of ways”. In its broadest sense HRM can be defined as a generic term to describe any approach to managing people; whereas Boxall and Purcell (2003:1) described HRM as ”all those activities associated with the management of employment relationships in the firm”. Though, HRM comprises a ‘new approach’ to managing people that is extensively different to more conventional practices. Even there are number of perspectives which make HRM distinctive. However Storey (1995:5) defines HRM as a ”distinctive approach” to employment management which seeks to achieve competitive advantage through the strategic deployment of a highly committed and capable workforce, using an array of cultural, structural and personnel techniques’. Whereas related to strategic nature of HRM, Buchanan and Huczynski (2004:679) approaches HRM as ”a managerial prospective, which argues the need to establish an integrated series of personnel policies to support organisational strategy”.
Two main modification of HRM were acknowledged early in scholastic discussions of HRM:
According to (Guest, 1987; storey, 1992)
‘Hard’ HRM with an emphasis on the Strategies of cost minimisation (e.g. low wages, minimal training, close supervision), Quantitative aspects of managing human resource as an economic factor in production (e.g. in lean production- downsizing, work intensification).
‘Soft’ HRM approaches aimed at enhancing the Commitment, Communication, Motivation, Quality, Leadership and flexibility of employees.
Strategic HRM:-
A strategic approach to Human Resource management has great appeal, According to Johnson and scholes (1997); describe ‘strategic HRM’ in concern of business and management as ”the direction and scope of an organisational over the longer term, which ideally matches its resources to its changing environment, and in particular to its markets, customers and clients to meet stakeholders expectations”.
Strategic decisions in management are likely to be concerned with:
Enduring direction of the organisation
Extent of the organisation’s deeds
Identical organisation’s deeds to its environment (i.e. PESTLE)
Identical organisational deeds to its resources
The Harvard model of HRM:-
Source: Beer et al (1984; p.16 ‘Map of the HRM territory’)
Long term consequences
Individual well -being
Organizational
Effectiveness
Social well- being
HRM Policy choices
Employee influences
Human resource flow
Reward systems
Work systems
HR Outcomes
Commitment
Competence
Congruence
Cost effectiveness
Situational factors
Workforce characteristics
Business strategy and conditions
Management philosophy
Labour market
Unions
Task technology
Laws and societal values
Laws and
‘Ideal types’ of Human Resource Management:-
Characteristics
Human resource management
Strategic nature
Dealing with day to day issues; but proactive in nature and integrated with other management functions.
A deliberately long-term strategic view of Human resources
Psychological Contract
Based on seeking willing commitment of the employee
Job design
Typically team-based
Organisational structure
Flexible with core of key employees surrounded by peripheral cells
High degree of outsourcing
Remuneration
Market based
Individual and/or team performance
‘Pay for contribution’
Recruitment
Sophisticated recruitment for all employees
Strong internal labour market for core employees. Greater reliance on external labour market for non-core
Training/development
Transformed into a learning and development philosophy transcending job – related training.
Strong emphasis on management and leadership development
A learning organisation culture
Employee relations perspective
Individualistic; high trust
Organisations of the function
Largely integrated into line management for day to day HR issues
Specialist HR group to advise and create HR policy
Welfare role
No explicit welfare role
Criteria for success of the function
Control of HR costs,
maximum utilisation of HRM over long term
Source: adapted and developed from Guest (1987)
Recession:-
Organisations have been focus to enormous stress over the past few years, with foremost principal structural changes in industry sometimes obscured behind the short or long-term issues of recession which in other words can be described as the circumstances of the economy turn down; a extensive cut in the GDP, Employment and Trade (Business).
In numerous ways, recessions are a motivating ‘natural experiment’ to examine. According to Paul Geroski & Paul Gregg (1997) describes ”recession involve a major reduction in demand sustained over a substantial period of time, it affect some organisation far more than others and they are exogenous to the actions of individual organisations”. The reduction in demand is most important and sustained means that those organisations that are deficiently affected by a recession are expected to be rethinking the essential premises of their competitive strategy. The evaluation between the strategy and composition of organisations who are exceedingly harshly affected by a recession with those less harshly affected endow with indication on what composes a few organisations more susceptible to surprises them others, and on the toughness of diverse strategy choices and diverse organisational constitution to changes in market conditions.
As a consequences recession also throw at least some useful luminosity on how organisations counter to unpredicted changes in demand. Additionally the effects of recessionary demand surprises are unavoidably reassigned reverse to labour markets.
Current scenario of Recession:-
According to Mike Schraeder and David J. Hoover (2010) ”the global economy has experienced massive confront in the previous two years as businesses have struggled with apparently insoluble financial crises which disclose a shocking compilation of industries that have closed a business, economize, or occupied in other strategic indispensable in the expedition for survival. Providentially, there is a number of substantiation that the influence of the global crises possibly will be deteriorating”. Moreover, organization and their leaders are now faced with the harsh certainty of demanding to recuperate from the shock of these crises, whereas concurrently creating divisions that are proficient for competing effectively in a decrepit global environment.
Cost-effective aspect
Peak to through so far
Real GDP decrease
3.7% real decline from December 2007 until June 2009 totalling $500 billion
Personal Income
individual wages declined by $339 billion from mid-2008 to the 1st Qtr of 2009
Investment
Fixed investment has declined by $543 billion, or 24%, since December 2007
Unemployment
There are 8.1 million less people employed today than in 2007
Industrial Production
Has fallen 12% since 2007
Bankruptcies
National bankruptcies have risen from 800,000 in 2007 to 1.4 million in 2009, a 75% increase
Trade
Exports and imports declined by 22% and 31%, respectively, between July 2008 and June 2009
Currency
The USD has fallen 17% in the last year versus a basket of world currencies
Bank Failures
140 banks failed in 2009, with 700 banks in danger of failing, according to the FDIC
Source: Economic Recession, Depression, or Systematic breakdown (Economics/ Recession 2008-2010) by James Quinn, (March 4th, 2010) available from Internet URL http://www.marketoracle.co.uk/Article17665.html
http://www.marketoracle.co.uk/images/2010/Mar/recession-4-1.jpg
Source: Economic Recession, Depression, or Systematic breakdown (Economics/ Recession 2008-2010) by James Quinn, (March 4th, 2010) available from Internet URL http://www.marketoracle.co.uk/Article17665.html
http://www.marketoracle.co.uk/images/2010/Mar/recession-4-2.jpg
Source: Economic Recession, Depression, or Systematic breakdown (Economics/ Recession 2008-2010) by James Quinn, (March 4th, 2010) available from Internet URL http://www.marketoracle.co.uk/Article17665.html
Impacts of recession on top of global/ domestic organizations:-
As per given data in graphs of above mentioned, the major area to focus in concern of HRM is unemployment, during ending phase of 2007 employer were recruiting employees without forecasting the demand of prospective which results into redundancies/ unemployment, job insecurity, demotivation, stress , depression, reduced flexible working hours and increase in responsibilities on working employee in the organisations also.
Whereas James Quinn (2010) describes ”a depression is categorized by irregular enhance in unemployment, a decrease in the accessibility of credit, extract productivity and venture, frequent liquidation, condensed sum of business and exchange, as well as extremely explosive comparative currency price variation, mostly depreciation”. Price devaluation, economic crisis, and the stock market/ bank collapse are also universal fundamentals of a depression.
According to Sally Walters (2009); International & national Downsize/ recession related issues:
Business environment
Business closures
Redundancies
Modification in terms and conditions of employment
Cash flow complications
Deficiency of credit
Reduction in the value of authentic
Consolidation
Condensed margins
Public overheads
Recover costs and competences
Recruitment
Employee revenue
Recruitment complications
Aged employees
Skill development
Understanding future complications when economy start to rise
Facing difficulty to invest in skill development
Training
Compact training obligation
Emphasize the specific needs of business
Lack of apprentices in young employees in concern of employment prospects
HRM Strategic perspective in concern of recession (issues):-
According to David Hussey (2002), ”during recession there are no simple solutions and, success will depend, as always, on the soundness of the strategic decisions taken by top management, and ability of the organisation to implement those strategies”. This would push the Human resource phase of the business to the forefront, even without the additional difficulties of sustained revolutionize and the demands. HRM, which is already very proficient in many organisations, requires to be obsessed by the business requirements of the organisation, but without losing prospect of the decisive value and significance of people in making strategies turn out to be reality.
While attempt to come out from the recession, companies perspective in concern of HRM; (issues which has been taken by companies/ organisations to survive in time of recession)
Redundancy/ Job cuts
Cost retrenchment and downsizing
Hiring freezes
Modification in terms and conditions of employment
Laying off temporary/ part time employees
Condensed training dedication
Freezes in previously planned Pay, Incentives and Bonus policies
Enhance the use of premature retirement
Restructure
Reduction in employee hours
Affecting employees offshore
Employee revenue
‘HR department should obtain into depiction barely the liable effectiveness of their deeds but also their apparent impact on employee commitment’.
HRM activities in relation to HRM outcomes and performance (under perspective of recession):-
Issues
Impacts
Solutions
Positive Implications
Negative Implications
Redundancy
Cost retrenchment and downsizing,
Demotivation
Stress
Depression
Rejoin the employee in state of increase in demand,
Contract based employee
Employee might perform well compare to previous performance
Fluctuation in employee working hours
Employee might not have commitment and loyality towards organisation or might lose trust
Less work commitment, Insecurity in aspects of full time employees
Reduce pay, incentives and change in bonus policies
Freeze on promotions
Low motivation
Low motivation
Less employee engagement and commitment, trust
Offering rewards by increasing pay/ incentive/ bonus
Performance appraisal for highly skilled employee and core employee of the organisation to keep them in trust and motivated
It might have significant affect on employee performance
Motivation
Dedication towards work
Employee engagement and commitment
It might only motivate few employee in organisation, as money is always solution of short term situations,
Appraisals are sometime demotivated & expensive
Might also affect on cost cutting strategy of organisation
Reduction in training commitment
Decline in leadership and learning development,
Poor performance
Provide continuous improvement training programs
Development in knowledge
Skill enhancement
Expensive
might not be effective for all employees
Issues
Impacts
Solutions
Positive Implications
Negative Implications
Relocate/Redeploy transfer of employee (domestic as well as globally depend upon organisation
Low morale, insecurity in concern of job,
Cultural dispute
Provide social network,
Provide comfortable zone by management ,
Provide facilities and benefits
Depend upon individual behaviour of employee; it might goes well as employee will get exposure and it might help to learn different cultural/ countrywide organisation strategies and guiding principle
Expensive but sometime it is not possible in real world to do so.
Depend upon employee individual personality to have capability to cope up with different culture
Laying off part time/ temporary working
Workload,
Less employee engagement towards work and commitment
Provide a more flexible alternative to full time employee,
Cover temporary peaks in demand
Cost effective
To protect the job security of core employees
To cover for holidays and sickness absence
Might not be effective for all industry expertise
Depend upon contextualities of the situation
HRM strategic planning and sustainable implementation for current market conditions & prospect economy crisis:-
Indicates in accomplishment plan
Description
Strategic planning
Strategic personnel forecast
Link employees scheduling with business strategy by establishing demand and supply circumstances by employment category
Productivity controlling
Launch a innovative efficiency metric such as worth additional per individual to administer productivity programs
Work force adaptation
Employees flexibility
Exploit working-time implements like generation work accounts, vacation programs, and engagement with unions
Employees reduction
Amend employees size to the new economic environment with respect to job category forecasts
Human resources Cost management
Optimize workforce cost programs by converting cash inducements to noncash ones
Persistent recruiting of key workforce
Employ top applicants for assignment- decisive jobs
HR and performance improvements
Restructuring the HR organisations
Measures all HR actions to certify superiority throughout bunching procedure optimization, and ascendancy process
Performance management
Support performance process to the new environment by discarding interim observations and implementing enduring philosophy
Sustainable implementations
Employee Engagement
Focus on such values as honesty and trust and start an initiative to bring discipline and motivation into balance
Leadership Competences
Coach leaders to evolution from intensification to crisis with workshops, communication process, and support from top management
Modify management
Establish best-in-class support by illuminating accountabilities, enforcing transparency, and soliciting employee feedback
Internal and external communication
Organize a comprehensible communication strategy and methods that target decisive stakeholders
Source: Rainer Strack , Pieter Haen et al. (March 2009) Creating people in advantage in times of crisis; ‘how to address HR challenges in the recession’. Boston consulting group; European association for people management
For visionary companies who wants to develop state-of-the art nation development in the existing environment:-
In today’s impulsive environment, the HR department is frequently dragged in numerous directions. According to Rainer Strack), Pieter Haen et al. ”for illustration, specialist recruiters who usually focus on hiring may need to take on other HR tasks, such as managing the introduction of shortened working hours”.
Strategic personnel forecast: predict future scarcity to reorganize capabilities
Performance management: shift from diminutive to extensive term approaches
Employee engagement: attention on motivation and accountabilities
Leadership competences: endow leaders for turbulent conditions
Modify management: espouse a methodical, cascading approach
Internal and external communication: talk the walk
Strategic planning:-
Strategic personnel forecast: predict future scarcity to reorganize capabilities
Generally organisations do not fully comprehend how downsize will influence their demands for individuals and how layoffs will influence their prospect. Even if the economy prolongs to depreciate, the majority of companies will still features lack in precise jobs. To overcome from this Rainer Strack), Pieter Haen et al. suggests that ”companies have to evaluate their employees by generating job categories with comparable expertise requirements. While in dispensation these companies will capable to categorize probable scarcity in skills as well as pockets of competence where retraining opportunities exist”. Once companies will recognize their requirements for job category, companies might discover smarter and longer term preference about their employees.
productivity controlling: progress from input to output
On the whole HR departments do a high-quality job of determining headcount, human resources costs and relative inputs.
Work force adaptation:-
Employee flexibility: generate reversible circumstances
Companies expecting to recuperate from the current downsize should attempt to establishment headcounts method with built in flexibility; moderately than layoff employees particularly in those marketplace where employees diminution are expensive and time intense.
Employees reduction: be suspicious to engrave in the accurate places
Companies whose businesses are in extensive decline require, thinking the steps that are additional enduring, like laying-off full time employees. Companies have to identify the core employees who should be engaged.
Human resources cost management: produce inventive reimbursement model
Whereas companies may espouse a flexible or restructure strategy, the action might be in several ways like relating to wages, deferring bonuses etc.
Persistent recruiting of key workforce: promote talent
In this consumer’s marketplace, elegant corporations are discerning fortitude key employees from competitors or the marketplace.
HR and performance improvements:-
Restructuring the HR organisations: be lean
HR department requires being highly effective and efficient in scenario of downturn, otherwise it will affect on trustworthiness while HR will endeavour to lead individual’s proposal elsewhere in company.
Performance management: shift from diminutive to extensive term approaches
Presently Companies have a major chance to standardize their performance management and incentive methods to extensive term business objectives that might expand new significance, such as growth and sustainable business traditions
Sustainable implementation:-
Employee engagement: attention on motivation and accountabilities
Employees are most essential and effective assets of company when they are motivated while working in well-organized system. In downsize, it is tough to achieve balance between motivation and well organized system due to unavailability of promotion and high wages.
Leadership competences: endow leaders for turbulent conditions
Leadership is motivating the corporation to modify its commencement of superlative performance. In time of crisis organizations are arranging training for their mangers to coach them how to lead in tough times.
Modify management: espouse a methodical, cascading approach
Companies requires clear agenda and sustained and meticulous program management. HRM needs to create schedules, metrics and clear accountabilities to mobilize the establishment.
Internal and external communication: talk the walk
In organisation working environment; one to one communication, an open door policy and active listening skills all are significant.
Conclusion:-
Though it is complicated for HR to recognize techniques and HR practice that promotes a environment of modernization in support of the organisation objectives. Present scenario of downturn has immense impact and creates challenges for all departments, production units and workforce within organisation. HRM top management is itself in crucial situation; they have to rethink about their previous strategies before recession and compare it to the present scenario of crisis, then need to implement in concern of present situation. There is enormous requirement of critically analysing the strategies and necessitate to structure the new strategies undertaking consideration of employees supply and demand, maintaining employee engagement, developing forefront for leaders to assist for survival in crisis for companies and employees in tough time and restructuring the organisation and HR as per obligation of businesses. Work force might respond to the complicated situation like downsize positively if their leaders are truthful, straight and compassionate about the complications and generate enthusiasm about the prospects.
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Recommendations for Managing Human Resource Management in downsize/recession in addition to foremost prospective:-
In present scenario of global as well as domestic organisations, many of countries are coming out of recession, not fully because there are still uncertainties how stable the global market is however nobody has firm scenario when will the next recession occur, since still companies are trying to cope up with economy crisis in few aspects.
According to Rainer Strack , Pieter Haen et al. (2009) ”the first casualty of a downturn is people; the employees, on whom the fortunes of a company rest. Companies do whatever they can to get costs under control, and they often act swiftly by cutting employee hours, imposing a hiring freeze, and taking other steps that affect their employees”.
In perspective of HRM; there are hazards for corporations that engrave their employees too swiftly. While individuals may emerge to be in immense contribute today, the demographic wave will soon twist. Whereas Rainer Strack , Pieter Haen et al. (2009) elaborate further their point by saying ”the talent pool is poised to shrink, as the baby boom generation retreats into retirement and as younger and similar generations enter their prime working years”.
Look for ways for cost effectiveness without laying off work force
Reallocate employees wherever probable
Keep on fostering and emergent employee talent/ capabilities
All decisions must have taken under consideration of suspicious personnel planning
Ensure that company pursue the legislative dismissal course of action to the correspondence if company necessitate doing redundancies.
Let remaining employees know that they are valued, essential and essence of company.
References:-
Beer, M., Spector, B.,Lawerce, P.R., Mills, D. And Walton, R.E. (1984), p.16; ‘Managing Human Assets’, New York: Free Press
Boxall, P. and Purcell, J. (2003), p.1; ‘Strategy and Human Resources Management’, Houndmills:Palgrave Macmillan
Buchanan, D. and Huczynski, A. (2004), p.679; ‘Oraganizational Behaviour’, 5th edn. Harlow:FT/Prentice Hall
Drucker, P. (1993), ‘Post Capitalist Society’, Oxford: Butterworth-Heinemann.
Geroski, P. A. & Gregg, P. (1997), p. 2-3; ‘Coping with Recession: UK Company Performance in adversity’, United Kingdom: Cambridge University press (eBook resource : available from internet URL: http://books.google.co.uk/books?hl=en&lr=&id=neo3ZneOXp8C&oi=fnd&pg=PP16&dq=business+coping+strategies+to+avoid+the+effects+of+recession&ots=TEB2ESH_5a&sig=zaVSjowL5UBTTSpZa0FhWzeUp1w#v=onepage&q=&f=false
Guest, D. (1987), ‘Human Resource Management and Industrial Relations’, Journal of management studies, 24, 5: 503-521
Hussey, D. (2002), p.5; ‘Business Driven HRM’, New York: Wiley & Sons ltd.
Jhonson, G. and Scholes, K. (1997), ‘Exploring Corporate Strategy’, London: Prentice Hall
Quinn, J. (2010), ‘Economic Recession, Depression, or Systematic Breakdown’, E- Resource Article published on Mar, 4th 2010 available from internet URL: http://www.marketoracle.co.uk/Article17665.html
Rainer, S. & Haen, P. et al. (2009), ‘Creating People Advantage in Time of Crisis: How to address HR challenges in the recession’, Journal of Mangerial psychology, Publisher: Emerald Group Publishing Limited, E-Resource available from Emerald.
Schraedar, M. and Hoover, D. (2010), vol.24, 2: p.11-13, ‘Enhancing Organisational Recovery in Tough Times: a pragmatic perspective’, Development and Learning in Organisations, Publisher: Emerald Group Publishing Limited, E-Resource available from Emerald; http://www.emeraldinsight.com/Insight/viewPDF.jsp?contentType=Article&Filename=html/Output/Published/EmeraldFullTextArticle/Pdf/0810240203.pdf
Storey, J. (1992), ‘Developments in the Management of Human Resources’: An Analytical Review, London: Blackwell
Storey, J. (1995), p.5; ‘Human Resources Management’: A Critical Text, London: Routledge
Walters, S. (2009), p.5-8; ‘The Impact of the Economic Downturn on business and skills in England’, Journal of Social Economics, Publisher: Emerald Group Publishing Limited, E-Resource available from Emerald.
Watson, T. (2002), p.369; ‘Organising and Managing Work’, Harlow: FT/Prentice Hall
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