Introduction
The human resource management is responsible for managing the human resources of an organization. The HRM aims at improving the performance of an organization through effective management of human resource. It is involved in job description in an organization, planning and recruitment of employees.
According to Risher (23), strategic human resource management involves merging the corporate strategy and the HRM strategy. The policies of HRM should be well defined for intended outcome to be realized. This study aims at examining the importance of human resource management with regard to change in organizations. The study will focus on change process and would highlight a case of successful change process that involved human resource management in Ford Motors Corporation.
Human Resource Management
Employees are the most valued asset of an organization. According to Greer (21), human resource management is “a strategic and coherent approach to the management of the most valued asset of an organization.” Not all the management staffs of an organization are concerned with the firm. The HRM is concerned with managing the workforce in the organization. The strategy involves policies laid down by the organization with a philosophical and ideological underpinning.
HRM is mainly made of four component that include beliefs, information on people management, involvement of line managers and shaping of the employment relationships through set levers. A HRM system comprises of HR philosophies, strategies, policies, processes, practices and programmes. According to Becker and Gerhart (792), the components can be categorized into three groups that are the HR system architecture, policies and processes (practices).
HRM emphasizes that firm workers are important in achieving the mandate of the organization through sustainable competitive advantage. There is need for integration of HRM strategy with the corporate strategy of the organization. HRM helps the organization attain the necessary integration.
Managing employees is not different from managing other resources of the organization. However, the differences arise in the nature of the resources being managed, i.e. people. Since the behaviour and the performance of the human resource depends on factors such as motivation, ability, perception of roles and situational contingencies, HRM is concerned with ensuring the resources are productive by providing necessary support (Zheng Yand and McLean 33).
The human resource of an organization is involved in various activities such as staffing of employees and enhancing their training. This involves recruitment of new company employees by selecting knowledgeable and skilled individuals with experience to fill up vacant positions in the firm. The success of a recruitment exercise depends on planning, analysis of the job, recruitment and selection of the required staff (Risher 26).
Other duties of the HRM is offering rewards to motivate employees, developing employees through education and training, maintain employees in the organization through proper administration and enhancing employee management relations. Under employee relations, HRM is responsible for spearheading participation of employees in trade unions through negotiations.
In spite of all these roles, the activities that the human resource management is involved in vary from one organization to another. Moreover, HRM emphasizes on high employee commitment, workplace learning and enlightened leadership in an organization.
There are several HRM models. The Fombrun, Tichy and Devana model give emphasis to interrelatedness and coherence of GRM activities. In this model, HRM is made of four components that are employee selection, appraisal, development and their rewards. The four components aim at increasing the performance of an organization.
The Harvard HRM model has six components that include evaluation of situational factors, taking into account the interests of the stakeholder, HRM policies, and the outcomes of HR activities, long-term consequences and utilization of the feedback by the firm.
Similar to the Harvard HRM model, The Warwick model has five components that include the analysis of the organization’s environment internally and externally, business strategy and HRM content. All those internal or external factors that affect effectiveness of the human resources are usually considered under this model (Risher 27).
International Human Resource Management
As explained above, globalization has is a common of the modern business environment as businesses are able to conduct business globally. Countries have opened up their borders for international trade and companies are able to operate in different markets other than their domestic markets. Many organizations have ventured into other global markets by establishing subsidiaries across the globe in different regions.
Apart from the ability of firms to operate globally, globalization has enabled mobility of factors of production including labour. Employees could move from one country or region to work and operate in another. Due to mobility of labour, firms must adjust their human resource policies from the local or country of origin policies to international HRM that incorporates international regulations concerning employee relations.
In the international HRM, multinational organizations manage their employees in different countries of operation based on the country or region’s employee relations. The international human resource management incorporates all aspects of managing human resources at the global level including use of employee databases that are managed using information systems.
An organization utilizing IHRM usually ensures to comply with HRM and legal regulations applied in the country of operation. Therefore, IHRM could be said to be applied by multinational corporations operating at a local level while observing international regulations governing HRM.
Strategy and International HRM
The word strategy was added to HRM to indicate the need to establish a relationship between the external strategy of an organization and the internal Human resource strategy. According to Armstrong (121), the HRM policies and practices must fit into the company’s strategy as applied in the external business environment.
The immediate business condition faced by the organization in the external environment must be taken into consideration in order to attain the necessary competitive advantage.
Bratton and Gold (93) adds that strategic planning as applied in the normal HRM only considers quantitative aspects of finance, marketing and productivity in the organization with less attention being given to the qualitative dimension such organizational culture, the value system of the firm and power depicted by company management. In addition, unless the human resource section of the firm is involved in the strategic planning of the organization, it is difficult to achieve the strategic plans.
Strategic HRM involves cohesiveness of HR policies and practices, internalization of the role played by HR in the firm and employee integration. Cohesiveness is concerned with ensuring that HRM practices complement the company’s practices and policies. The integration of workers ensures that there is identity of interest for the firm and its human resources. The matching model is used to describe the nature of any element of integration and the strategic planning and HRM link (Armstrong 123).
The Matching Model
Under this model, it is assumed that countries that experience high wages for employees are able to gain a competitive advantage through utilization of Porter’s generic strategies of cost effectiveness and differentiation of products. However, each of Porter’s strategy requires a unique set of responses from employees in order to reinforce the behaviour pattern. HRM is responsible for matching the reciprocal employee behaviour to the application of generic strategies of Porter to organizations.
To achieve this, HRM begins by matching the philosophy, policies, programs its practices and the five P’s so that the outcome stimulates and motivates the behaviour of employees towards each individual competitive strategy. Rynes et al. (382) postulates that the HRM practices and policies of an organization should be configured and managed in a manner that is congruent to the particular strategy of Porter.
Thus, the HRM practices should match the strategies of an organization in order to gain a competitive advantage and performance. In summary, the basic of the matching model is the fit between the external strategies of the firm and the internal strategies that include HRM strategies.
In spite of the benefits of the matching HRM model, Bratton and Gold (99) argues that the matching model is based on a rational view of strategic decision making that is also based on predispositions and planning actions. Moreover, it is argued that the strategic decisions (both the firm’s and for HRM) are affected by organizational politics hence lack of clarity in terms of environmental influences.
Resource based Model of International HRM
This model calls the attention of the strategic nature of employees of an organization and the importance of learning at the work place. Organizations possess unique competencies in their employees that enable them gain a competitive advantage over their competitors in an industry. The competitiveness of employees is depicted by their knowledge and skills that ensure an organization lead in innovative products.
The resourcefulness of employees can be increased through work place learning and education. According to Bratton and Gold (102), it is not possible to achieve the competitive advantage of an organization by analyzing the external environment alone, but by including the analysis of the company’s skills and capabilities carefully.
Therefore, in terms of a SWOT analysis, the matching model emphasized on the opportunities and threats facing the firm from the external environment while resource approach emphasizes the examination of internal strengths and weaknesses of a firm to form a competitive advantage.
Strategy in IHRM and Organizational Performance
According to Armstrong (127), most HRM models make an assumption that an alignment between the strategies of the organization and HRM strategies could improve the competitiveness of the organization hence improved performance. The resource-based model indicates that there exists a causal chain of policies of team empowerment, education and learning at work, commitment of employees, synergy and improved performance of an organization.
The cycle is called involvement – commitment cycle. According to Sims (376), it is important that employees be committed to the organization because through commitment, they will share the goal and objectives of the organization. The employees will then be loyal hence improving the performance of the firm. Through commitment, workers can show dignity, self worth and psychological involvement n the activities of the organization (Rynes et al 374).
According to Rogers and Wright (1998), HRM assumes that employees are an important resource to an organization and the performance of the firm depends on them. The positive impact of HRM on the performance of the firm depends on formulation of appropriate policies and processes and their effective implementation.
In a study conducted by Farnham (56) to find out the existing relationship between HRM and organizational performance, it was established that it is not easy to measure the impact of HRM practices on the performance of an organization. Doubts have been made concerning the validity of some studies. According to Armstrong (159), surveys that only ask about the number of the extent of HR practices are not sufficient to understand the existing link between HRM and performance of a company.
Change Management
The improvement of business processes in an organization has not been smooth for most firms. As the management of an organization introduces change in the company, there is always resistance to change with most employees opting to remain with the current processes of the firm.
Change Management Process
In order to apply the required change, an organization needs to identify the problem it is facing in order to find and develop the best solution to the problems. According to Brown and Kusiak (77), lack of proper diagnosis of the problem could lead to implementation of the wrong process in the organization. The outcome could worsen performance rather than improve the performance of the organization. The problem identification process involves various steps as outlined below.
Problem Identification
Organizations face many issues some of which are complex while others are simple. The identification of problems of the firm needs to be followed by prioritizing the issues so that the company can make decision on which issues to be solved first.
Symptoms: the establishing of the issues affecting the organization needs to be followed by diagnosing the features or symptoms of the problem.
The symptoms of the problems of the firm should be distinguished from the causes of the problem. According to Brown and Kusiak (82), business analysts usually hear many issues affecting, the firm and they give many solutions. It is important that the firm does not ignore any solution given. However, the solution provided should be argued out with the management of an organization in order to establish its effectiveness (Boeker 155).
Alternatives: after serious analysis of a given situation in an organization and hearing possible solutions from a business analyst, it is important that the organization develop alternatives for its problems. The approaches that could solve the problem of an organization could come with different consequences and costs that make it necessary for the management to discuss each alternative exclusively.
After discussion of each alternative, it is important that the management make a decision regarding the best solution to fix its issues. The decision should be based on the best approach that solves the problem affecting the firm while leaving it with the least negative effects.
The decision made should be followed by implementation and follow up of the effectiveness of the approach. According to Brown and Kusiak (83), follow up is important for organization to ensure that the approach follows the set guidelines and that it has no side effects. In the process of solving an issue that affects an organization and effects change in the firm, firms do use various methods. Some approaches include cause effect approach and business process reengineering.
Reengineering
According to Hammer and Champy (2), process improvement in organization requires reengineering, which is defined as the ability of an organization to disregards all its assumptions and traditional way of doing business and instead developing and adopting a new process centred business organization. The adopted new process should help an organization improve its performance.
In order to achieve the required process reengineering for an organization, an organization needs to adopt a fresh perspective and approach. In order to acquire change through process reengineering, it is necessary that an organization rethink and establish radical redesigning of its processes in order to generate the required dramatic improvements. The process could be well illustrated in the figure below.
As indicated in the above diagram, Hammer and Champy (3) notes that reengineering requires starting over for an organization. In order for an organization to succeed in the modern environment, there is need for its processes to be fast, of high quality, flexible and of low cost.
The initial phases of organizational change began long time ago with Adam Smith who proposed labour specialization, followed by establishment of infrastructure, the assembly line and hierarchical structure of the firm. In spite of the importance of these principles, their application in the modern business environment could result in delays, rigidity and high overhead costs in the production process.
The first step of reengineering begins with the focus on the fundamentals of the company. The fundamentals of an organization relate to the main activities of the firm, why they are done the way they are and the tacit rules and assumptions of present activities. According to Hammer and Champy (4), reengineering concentrates on what ought to be or should be done and ignores what is done.
The radical redesign phase is concerned with the reinvention of the organization. This does not involve making of superficial changes or marginal enhancements to the firm but changes and designs that enhance new features of the organization. The potential dramatic result is the phase that the firm realizes the outcome of reengineering.
According to Piderit (202), reengineering leads to quantum leaps in the performance of an organization rather than incremental improvements. Business process orientation involves evolving of the firm around its business processes. The processes undertake inputs in order to generate valuable outputs to the customer. In order for a business process to work, it must produce added value rather than internal activity.
Successful Reengineering Process: Ford Motor Corporation
Ford Motor Corporation applied the process analysis and problem solving in the 1980s by examining its employee accounts of about 500 employees. After a careful examination of the accounts payables, it was revealed that the company took much of the time in the department to track down discrepancies between orders that were purchased, shipping receipts and invoices.
The realization of the problem led to a rethink of possible solutions and reengineering was the only viable solution (Ford Ford and D’amelo 372). The company took various steps as explained below.
- The management began by establishing an online database mainly for the purchase orders whereby all orders issued by buyers were recorded in the database.
- Goods were received at the dock while there was an individual to check in the database. The match of the shipment and what is in the database led to the reception of the goods and vice versa. This eliminated possibilities of any discrepancies between orders that were made and received.
- Once the shipment is received, the database is updated immediately to reflect the change. In addition, a check was generated automatically and issued to the vendor in time.
The process improvement applied by Ford Motor Corporation was a success. This is because the head count people in the purchasing department reduced drastically from 500 to 125 employees with efficiency in time management being improved dramatically. According to Piderit (785), the reengineering process as applied at Ford Motor Corporation is a lesson to be emulated by many firms wishing to reengineer their processes. The changes that the company implemented could not have been achieved without the aid of the modern information technology. The process reengineering reflects old processes that have undergone new wrinkles.
Conclusion
The modern business environment is dynamic and full of many challenges that organizations needs to develop different mechanisms of solving their issues. The process of solving a problem involves first identifying the issue affecting the corporation and determining possible ways of solving the issues.
Out of the many alternatives, the management could choose one. Process improvement and reengineering is one of the many methods of solving issues affecting the firm. The reengineering process is vital since it helps an organization develop new processes and frameworks of the firm. Ford Motors in the 1980s in which it introduced new process of recording purchases thereby ending up cutting down its costs dramatically conducted one of the successful reengineering. Reengineering process could be accompanied by knowledge and innovation.
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