Define Human Resource Management (HRM). What are the major challenges of Human Resource Management (HRM) ?
Meaning and Major Challenges of Human resource management (HRM)
Meaning- Human resource management may be defined as a set of policies, practices and programs designed to maximize both personal and organizational goals. It is a process by which the people and organizations are bound together in such a way that both of them are able to achieve their objectives.
According to Filippo, "Human resource management is the planning, organizing, directing and controlling of the procurement, development, compensation, integration, maintenance and reproduction of human resources to the end that individual, organizational and societal objectives are accomplished."
Major Challenges of Human Resource Management-
1. Downsizing Plan
2. Exit Policy
3. Work Force Diversity
4. Technological Changes
5. Work life Conflict
6. Liberalization, Globalization and HRM
1. Downsizing Plan
Downsizing means reducing the size of the organisation. It is a restructuring of the organisation whereby non-core activities are disposed off. Downsizing involves elimination of certain jobs with a view to improve work efficiency. Where there is surplus staff, trimming will be essential.
Reasons for Downsizing Plan-
(i) Due to poor human resource planning, an organisation may be overstaffed.
(ii) Technological development may make the labour force redundant.
(iii) Some functions of an organisation may be outsourced. As a result, people who perform these tasks become surplus.
Adverse affects of downsizing plan in the organisation :
(i) Downsizing may create a feeling of insecurity among people working in the organisation. The employees will have a low morale, as a result.
(ii) When talented applicants must leave the company due to downsizing, the skill base may be lost.
(iii)Job insecurity will have a negative impact on the organization's performance levels. As a result, implementing performance improvement techniques will be more difficult.
Functions for successful implementation of downsizing plan
(i) HR managers have to decide who to be made laid off, where and when.
(ii) They must have programmes to assist the laid off employees
(iii) Steps should be taken to help the laid off employees in finding new jobs.
(iv) Policies must be developed for announcing layoffs and making cash benefits.
(v) HR managers have to convince trade unions and win their support for downsizing
(vi) HR managers must ensure proper communication to minimize the negative effects of rumours. They have to ensure that the employees are kept well informed about the factual position.
Alternatives to Downsizing-
Other methods of dealing with surplus work force are:
(i) Re-development or retraining of workers.
(ii) Retain all the employees but reduce the work hour.
(iii) Transfer or reassign the employees to Jobs in other units or departments in the organisation, where there is demand.
(iv) Offering voluntary Retirement scheme.
(v) Laying off the surplus staff.
2. Exit Policy
Surplus manpower is a major problem in many of the industrial units in India. In addition to surplus labour, many of the units have hidden unemployment. Though this issue is most common in the public sector, it also affects the private sector. With the introduction of India's New Economic Policy, which would open the way for economic reform, Exit policy has become a widely debated subject.
Definition-
"Exit policy refers to the policy regarding the
retrenchment of the surplus manpower resulting from restructuring of
industrial units or the workers becoming unemployed by the closure of
the sick units."
In wider context, "The Exit Policy covers the
policy for the compensation for the employees who leave the organisation
and the measures for their rehabilitation also."
Need for the Exit Policy-
1.
Under the protected economic system, the market in the country was
basically a seller's market. The high costs of surplus manpower employed
by the companies could be passed on to the consumers by way of high
prices. However, survival in a competitive system demands cost
efficiency improvement and cost reduction in every possible way. It may,
thus, become necessary not only to get rid of surplus manpower.
2. The organisations would have to cut the labour force, further due to modernization and mechanization.
3.
In some cases, it may also become necessary to give up some of the
existing lines of business to maintain or improve the health of the
organisation. Some of the measures which the industrial units take to
improve the competitiveness and to ensure survival would render a part
of the existing manpower unemployed. If such measures are not taken in
time, it may even ultimately lead to closure of the units throwing all
the workers unemployed.
4. There are also a large number of sick
units both in the public and private sectors. There is no economic or
social justification for their continuation. If the required
restructuring to improved competitiveness and the closure of enviable
sick units are not allowed, the whole economy would become sick in due
course. Thus, there is no option but to have an exit policy.
5.
Technology is becoming increasingly labor-saving. Technological
advancements are causing several previously labor-intensive industries
to become increasingly capital-intensive. Thus, technological
advancements increase productive efficiency on the one hand while
affecting employment in many organisations around the world on the
other.
Workers and the Exit policy
The
workers have a lot of apprehensions about the very term "Exit Policy".
One of the important objectives of an exit policy is to protect the
interests of the workers. However, instead of educating the workers
about it, the trade unions and politicians seem to be causing
unnecessary fears in the minds of the workers.
In fact the biggest loss of not having an exit policy is to the labour force because the legitimate interests of labour are protected only when there is legal closure of a sick mill. If properly implemented, the exit policy is most pro-labour policy.
There is a growing realization among the workers of the need to increase productivity to survive the domestic and foreign competition. They also realize that if the organisations do not shed the excess manpower, all the worker would sink with the firm. While in some organisations, the unions cooperate with the VRSs, in several organisations, they have strongly opposed. The response of the workers to the VRS may depend upon the attractiveness of the scheme, their assessment of the future of the enterprise etc.
To conclude, there is a clear cut indication of the need for modernization, restructuring and even closure of units in inevitable cases and if these measures render workers unemployed the right policy is not to resist such measures but to retain and redeploy the workers to the extent possible.
3. Work Force Diversity
Work force diversity is another major
work related trend. Diversity has been defined as any attribute that
humans are likely to use to tell themselves "that person is different
from me" and thus, includes such factors as age, gender, education,
values and cultural norms.
New trends in the work force diversity-
(i) Composition- The composition of the work force is changing in India. Organizations now cannot discriminate on the basis of age. Young, skilled and knowledgeable employees are occupying positions of importance. Old employees have grown in number now-a-days due to improved medical and health care. Employees are no more fascinated by public sector and government owned and controlled organisations. Opening up of private sector has provided many avenues to the new generation employees. Diversity issues in Indian companies are somewhat peculiar owing to differences in social backgrounds, cultural differences, religious origins and regional origins. Certain sections of society enjoy a preferential treatment, guaranteed by constitution, right at the entry level itself e.g. reservations for scheduled castes and scheduled tribes, other backward classes, ex-defense and paramilitary personnel, physically handicapped persons etc. In addition, personnel managers have to deal with issues of child labour and contract labour, where the various provisions of labour legislation are being conveniently ignored by the employer.
(ii) Women at Work- Women
employees today constitute a major share of the work force. The initial
reluctance on the part of the employers to give jobs to women seems to
be a thing of the past. Women handle both hard and soft jobs,
now-a-days, in every possible field whatsoever. In most industries the
principle of equal pay for equal work has more or less become the rule
now.
(iii) Dual Career Couples- Increasing
number of dual career professional couples limit the individual
flexibility in accepting physical relocations. Organizations have been
used to make use of job moves and physical relocation as an important
means of developing talent Promotions to higher positions need
experience in a variety of roles in different organizational units.
Now-a-days, the time is when both partners are actively pursuing
professional careers. Physical relocations will be difficult for these
couples.
(iv) Changes in Employee Values- The
changing structure of work force has led to the introduction of new
values in the organisations. Alienation from the job, increasing counter
productive behaviour, rising expectations and changing ideas of
employees are some of the factors responsible for the changing values
and roles of human force. Another change in the values of employees is
the declining work ethic. A time was there, when employees regarded
their jobs as a central life interest and performed them with single
minded devotion. Now-a-days, work is regarded as only one alternative
among many as a means for becoming a whole person. Employees are seeking
a greater balance between their work lives and their personal lives,
more leisure time and greater flexibility in scheduling time away from
work. Employees have been demanding that management should look more
closely at work schedules which accommodate their needs in addition to
the needs of the organisation. Consequently, it has become imperative
for the personnel management to include various fringe benefits to
improve morale, introduce a machinery to reduce grievances, encourage
employee participation in decision making. This will pave the way for
industrial betterment and meet the ever increasing demands of the work
force.
(v) Level of Education-
In the recent years, employees have been entering the organisations
with increased level of formal education. Increased educational level
changes the attitudes of the employees. Rather than relaxing with the
feeling that more of education is better, if management does not
reorganize and redesign jobs to effect a match with better qualified
personnel, it will be contributing only to frustration, absenteeism,
grievances and turnover Personnel managers must find innovative ways of
keeping these people motivated and satisfied.
Creating unanimity
in a diverse work force may turn out to be a considerable challenge for
the personnel manager. As several experts recently put it, there are
"two fundamental and inconsistent realities operating today with regard
to diversity. One is that organizations claim they seek to maximize
diversity in the work place and maximize the capabilities of such a
diverse work force. The other is that traditional human resources system
will not allow diversity, only similarity". What they mean is that
employers traditionally hire, appraise and promote people who fit their
image of what employees should believe and act like and there is a
corresponding tendency to screen out those who don't fit. Establishing
HR programes that just do not pay up service to diversity may, thus, be
a challenge for many employers.
4. Technological changes
in the words of J.K. Galbraith, "technology is a systematic application of organized knowledge to practical tasks." in the modern-day world, information is the key resource. organizations that employ appropriate technologies le to get the right information to the right people at the right time, will enjoy a competitive advantage. recent innovations in the form of total quality management, re-engineering work processes, flexible manufacturing systems, have only one thing in common i.e., serving the customer well through improved operational efficiency.
Technology affects the personnel function in the following ways:
(i) With the advent of technology, jobs tend to become more intellectual or upgraded. a job which could earlier be handled by an illiterate or unskilled worker now requires the services of an educated and skilled worker.
(ii) The introduction of new technology dislocates workers from their jobs unless they become well equipped to work on new machines. this makes it obligatory on the part of personnel management to train workers and rehabilitate those who are displaced or cannot be trained.
(iii) Employees who become well versed in the new technology, find the jobs more challenging and rewarding. as a result of technological advancement, employees stand to gain through increased productivity, reduced prices and increased real wages.
(iv) Technology has an impact on human relations as well along with upgrading the jobs. technology lays down the requirements for much of the human interaction in organisations. since interaction and activity affect sentiments, technology indirectly determines what individuals in large groups will feel and think about one another and about their work situation.
(v) Manufacturing advances will eliminate blue collar jobs, replacing them with highly skilled and specialised jobs and these new workers will require a high degree of training and commitment that their predecessors probably never dreamed of. as a result, to remain competitive, job and organisation charts will have to be redesigned, new incentives and compensation plans instituted, new job descriptions written and new employee selection, evaluation and training programmes instituted-all with the help of personnel management.
5. Work life conflict
Today's workers have many competing responsibilities such as work, children, housework, volunteering, spouse and elderly parent care and this places stress on individuals, families and the communities in which they reside. Work-life conflict is a serious problem that impacts workers, their employers and communities.
It seems that this problem is increasing over time due to high female work force participation rates, increasing numbers of single parent families, the predominance of the dual-earner family and emerging trends such as elder care. It is further exasperated with globalization, an aging population, and historically low unemployment.
Long work hours and highly stressful jobs not only hamper employees' ability to harmonize work and family life but also are associated with health risks, such as increased smoking and alcohol consumption, weight gain and depression. Work life conflict has been associated with numerous physical and mental health implications.
According to research, women are more likely than men to report high levels of role overload and caregiver strain. This is because women devote more hours per week than men to non-work activities such as childcare, elder care and are more likely to have primary responsibility for unpaid labour such as domestic work. Furthermore, other studies show that women also experience less spousal support for their careers than their male counterparts. Although women report higher levels of work-family conflict than do men, the numbers of work-life conflict reported by men is increasing.
Work-life conflict has negative implications on family life. The work responsibilities interfere with the ability of the employees to fulfil their responsibilities at home.
Employees, especially the younger generation who are faced with long hours, the expectations of 24/7 connection and increasing pressure of globalization are beginning to demand changes from their employers. Also, people in the elderly employee segment are working longer now than in the past and are demanding different work arrangements to accommodate their life style needs.
Current Practices
Employers are becoming increasingly aware of the cost implications associated with over-worked employees such as: operating and productivity costs, absenteeism, punctuality, commitment and performance. There are five main reasons why companies participate in work life balance programs high return on investment, recruitment and retention of employees, legislation, costs and union regulations.
There are a wide variety of practices currently being used to help employees achieve work-life balance. It is important to note that some work-life balance programs help employees handle stress and otherwise cope more effectively while other programs help to reduce the absolute stress levels by re-balancing work life.
Some of the practices used by the companies are as follows:
(i) A growing number of employers have implemented wellness programs or pay for their employees' gym membership as part of a benefits package. Some companies invite fitness trainers or yoga instructors into the office to hold lunchtime sessions.
(ii) Some companies undertake initiatives to improve employees' healthy eating habits. Others offer stress management programs which include stretching, yoga, counselling, as well as bringing in Registered Massage Therapists to work.
(iii) Many employers are offering longer vacation times than the mandatory. Additionally, some companies will offer "flex" days. Interestingly, sick days tend to go down once some is "entitled to three weeks or more a year of holidays.
(iv) Sometimes in order to accommodate workers need for work life balance, firms may need to reduce the amount of work given to each employee. To accomplish this, employers can hire new people, reduce time spent in job-related travel, allow for job sharing, or reevaluate the work itself and how it is structured and organized with work process improvements and/or re-engineering of work.
(v) Flexible scheduling is the benefit valued most by employees. However, increased flexibility, if implemented without conditions and used to facilitate business ends without provision for worker consent, could compromise instead of enhance work life balance.
(vi) Lastly, self-management is important; people need to control their own behaviour and expectations regarding work-life balance.
6. Liberalization, Globalization and HRM
Economic liberation and globalization in India since 1991, is having a major impact on the HRM, with the globalization of business, national labour markets are becoming increasingly interdependent. Maintaining or improving the employment and its quality in a particular country requires that its HR markets must be responsive not only to changes related to development and growth within the country but also to changing conditions world-wide. At the same time, globalization creates scope for MNCs and TNCs to play a role in generating and upgrading of employment and development of human resources in host countries. A global business must procure, motivate, retain and effectively utilize services of people both at the corporate office in the home country and at branches and plants in the host countries.
Globalization poses the following challenges for the HR managers:
1. All the companies have to put emphasis on the up-gradation of managerial and professional skills.
2. An important HR strategy is to restructure the organizations. Flatter organizational structures are opted for by most of the companies; so that employees can be empowered and independent decision making and flexibility can be introduced.
3. Middle level managers are fast becoming participative and result oriented.
4. Career planning and career growth for employees is receiving considerable emphasis.
5. Employee compensation is to be linked with performance through bench marking, business process reengineering etc.
6. Networking is being adopted with a view to create a responsive, goal oriented and competitive organisation.
7. An important challenge before the HR managers is to prepare the employees for foreign work assignments. The training techniques may vary from devising documentary programmes that merely expose people to a new culture through material covering the country's socio-political history, geography, economics, language and cultural institutions, to intense inter-personal experience training, in which individual can participate in role playing exercises, simulated social settings and similar experiences in order to feel the difference in a new culture.
Though it is difficult to generalise on the practices followed by all MNCs, the examples given below show the enlightened approach and importance given to human resources;
(i) P&G formed European technical teams and ran a series of conference in which likeminded experts from different countries could exchange information and build informal communication network. This team innovated a new liquid detergent by cross pollinating best practices in detergent manufacturing. The product responded to European needs so well that it drove out some well-established brands of other MNCs from the market.
(ii) Volkswagon attempts to ensure that the salaries of its expatriates fit into the social structure of host country. This often obliges the company to offer promotion to expatriates along with higher levels. corresponding salary classification to balance off generally lower-level local salary.
(iii) Lockheed Aircraft has set up its own television broadcasting station in Saudi Arabia 4000 expatriates there.
(iv) INCO has built schools, churches, hospital supermarkets, a golf course, yacht club, motels and restaurants for its 2000 expatriates in Indonesia.
(v) Bosch has set up new hi-fi manufacturing operation on a greenfield site at Cardiff aimed at achieving a blend of personnel strategies adopted by many more progressive companies operating in Britain (such as Sony, Nissan, Sanyo etc.) and some strands from German parent company. The package has most of the features of the new model single union agreements found in the other companies but with greater emphasis on the plant consultative council where delegates receive training for their roles. A five-year grade top to bottom pay structure included appraisal and performance pay for all.
(vi) A Business Today survey (Dec.7-21, 1993) revealed that more than two dozen of the biggest companies were busy reducing the number of management grades, eliminating layers and redrawing reporting lines within the organisation. ITC, HLL, Godrej & Boyce, Raymond Woollen Mills, Shaw Wallace, Ballarpur industries, Grompton and Creaves are a few examples of companies which have embarked on a flattening exercise.
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