LEI Faculty of Management International Business Academy In partial fulfillment of the requirement of Human Resource Management for the Degree of Master of Business Administration, Coventry university April 2013 Word counts: 3364 Task: Hypothesis Statement: Best Practice Models of HARM and Strategy are universalistic in nature and assert that regardless of context or internal factors, there is one best way of managing human sources which, if applied, will lead to better organizational performance.
Literature Review Traditional practice of human resource management is known as personnel management is believed as workforce centered and more focused in operation. Managers would recruit employees and carry out administrative tasks according to management requirement and act as a bridge between employee and employer; and as a result they were as a functional specialists rather than strategic managers and often had little power status In the organization (Boils, 2006).
In traditional model and concept of HARM employees are mean to be resources from 1900 to 1930. This concept moved further to orientation between 1935 to 1 980, where the employees needs are considered. Furthermore between 1970 to 1 990 HARM has been transformed into leadership style to match the needs of individual. The latest concept of HARM since 1990 has considered employees as a competitive advantage. The differences between personnel management which is believed to be the traditional practice and modern HARM, has significant differences.
In terms of time and planning perspective, the personnel approach was much focused on short term, reactive or responsive to action, ad hoc concerned in a specific case & also termed enplaned and marginal with limited quality and scope where modern HARM approach plays as long term sustainability, proactive- self-driven action, and strategic not functional and integrated role. In terms of psychological contract personnel commitment role; committed towards achieving specific organizational objectives. Personnel management in terms of control system, employees were controlled by others.
On the other hand in new HER practice model human resources are self controlled; and they are focused upon the objectives and are self-driven. In the perspective of employee relations, personnel management practice human resources tit low trust towards managers and organization whereas new HER practices believe in high trust among employees, employer and managers (INERT, Nina, 2008). While talking about preferred structures and systems, the personnel management was bureaucratic, mechanistic, power-centered; information sharing were centrally focused and the roles were formally defined.
The modern HARM approach focuses on flexible roles of employees meanwhile the roles of employees were kind of specialist or professional in older days and they do not need to know anything about other line management task and roles and they Just would have specific specialty. Whereas in odder HARM approach, human resources are integrate largely into their line management. It means people’s activities are integrated to each other within their line management (INERT, Nina, 2008).
For evaluation criteria, personnel management focused on cost-minimization and modern HARM and its practice believe in high pay and optimal utilization for better performance. In this way we could conclude that up to the modern HARM from traditional personnel management many significant changes and improvements has taken place for better organizational performance. The evolution of modern HARM is the result of globalization of markets, technology hanged, increase in global capital, close connection with industrial relation. Considering relationship between HARM and industrial relation, there are two main concerns to indicate.
One is in what way HARM challenge does to industrial relation and how can be there a conflict between these two. Another concern is, if conflict arises, how it can be reconciled so that they can compliment each other for organizational smooth operations. HARM and IR have different objectives and in situation of conflicts, we have to know both disciplines. In a Journal article by International Labor Organization written by S. R. De Silva, analyze that it would be not a realistic for unions to expect management to reduce their resort to effective HARM.
He also concludes that Asian emphasis is reflected that program on HARM are far likely to attract management participation than IR and the same way IR programs attract trade unions. The main challenge to unions comes from management exercises to protect employee commitment. HARM has been seen more to have a strategic role as a way of achieving management goals (SILVA, S. R. De). HER best practice is the practice in HARM where several aspects of human resources are integrated for better organizational output and performance.
This is based on an assumption that human resources are competitive advantages tool for an organization because they are rare and impossible to imitate and very difficult to substitute the absolute theme of human resources assets and culture of an organization. One of the definition of HARM best practices is “the idea that a particular bundle of HER practices has the potential to contribute to improved attitudes and behaviors, lowers level of absenteeism and labor turnover, and increases level of productivity, quality and customer service ultimately generating higher
Adrian, 2002). Though many professionals have given their own set of HARM practice bundle, here the main components of HER best practice are stated as: Employment security and internal promotion, Selective hiring and firing, Extensive training, learning and development, Employee involvement and voice, Self managed teams and team-working, High compensation contingent upon organizational performance, Reduction of status differentials and Harmonistic (MARCHING, Mike and Wilkinson, Adrian, 2002).
The approach of ‘high-commitment’ or best practice HARM model was at first evolved in the early US models of HARM, that adopts certain best raciest would outcome better organizational performance, improved employees attitudes and behavior, low absenteeism and employee turnover, quality and efficiency, etc. The early work of Beer et. Al (1984) and Guest (1987), they have defined sets of HER practices that results organizational performance and can take many forms; some emphasizes a universal set of HER practices that improves all of the organizations they were applied to.
Others focused on ‘human capital-enhancing’ practices and high involvement practices or high commitment models which reflect strong commitment towards organizational objectives and values will provide nominative benefit. Others have also highlighted on ‘high-performance work system/ practices’ and this task has been explored by some researchers exploring the relation between these ‘sets of HER practices’ and organizational performance (BEARABLE, Julie and Clayton, Tim, 2010). While highlighting the modern HARM, the Harvard HARM Model gives clearer image how human resource management works.
The integrated structure linked with long term human resource management objectives on the basis of HARM policies connected with different stakeholders’ interest within different situation factors. The Harvard Interpretation of HARM Figure 1 The Harvard Model of HARM (PRICE, Alan, 2011). It is believed that the best practice models of HARM are universalistic in nature and this applies to all most all of the industries wherever the industry are located. It is a assumption that whatever the context and internal factor varies, HARM best practice always results the organizational best performance and outputs.
HARM best practices high involvement work systems are positively related to employee retention and firm productivity; and bundles of internally consistent HARM practices are associated with higher productivity and product quality. Best practices of HARM and Strategy are Universalistic in nature because HARM best practice emphasizes human resources as rare resources, it would be difficult to imitate so it would be one of the crucial competitive advantage tool of an organization. HARM best practices has been integrated and connected with different human resources key areas such as strategic planning, resources, development, motivation, etc.
Many researches have been conducted to find out the HARM performance link in United States along other researches has also done to indicate the added value of HARM in countries other than US. Among different studies, none of these research results multi-country imprison approach to what extent organizational performance is the result of HARM done to explore the importance of geographic context on the link between HARM and organizational practice conducted on human resource management and firm performance in Europe through the lens of business systems: best fit, best practice or both? , by Ellen T. Stators, Chris Brewster and Chris Carousals.
Researchers have tried to cluster nations by using geography as a proxy for socio-cultural and political differences in work-related practices. Firms look for best fit but tend to adopt best practice to conform the unwritten norms and formal rules of specific institutional contexts. Strategic HARM defined as ‘organizational systems designed to achieve competitive advantage through people’ and the strategic HARM focuses on integrated combinations of HARM practices, through organization must explore competitive advantage rather than adapting existing context and these combinations are named as ‘HARM bundles of competitive advantage’.
This research study has been conducted with different aspects of HER best practices with some hypothesis to find out the link between human resources management and firm performance in European private sector businesses. Training and development, though a costly reactive, are important to organizations high performance in long run, has a positive relationship between firm’s activities and performance. In geographical context, researchers indicate in their report a less sophisticated approach in the central and southern countries towards training and development than in Nordic and Western regions.
Cyan (2005) suggests that more individualistic and egalitarian cultures, like Anglo-Irish and the North-Western, are more likely to link training and development to observable performance outcome than more power distance cultures regions such as Central-southern region (STATORS, Ellen T et al. 2010). Another important aspect of HER practice is Staffing, and its link to organizational performance seems to be similar over the EX.. Cyan (2005) see cultural differences across EX. is staffing practice, and hard to differentiate actual staffing performance relations across various cultures and have best practice approach is proposed.
When testing another aspect of HER practices, incentive compensation and benefits and link to performance seems different by geographic context, the relationship is strongest in North-Western and weakest in Anglo-Irish region and moderate in Central-southern region. And it an be concluded that ‘best fit’ is proposed for the relation between incentive compensation and benefits and performance among all regions (STATORS, Ellen T et al. , 2010).
Through the research study, it is noticed that relationship between participation and communication and performance shows moderate result by geographical context. The strongest relationship in the Central-southern, weakest in North-Western region and moderate in Anglo-Irish region has been noticed. Sharing information on organizational strategy, finances or vision gives a feeling that employees are trusted in the organization and they do their best effort for improvement of organizational outcomes. Widespread communication and decentralized decision making character has been noticed in Nordic.
Participative at less egalitarian are Germanic countries; those emphasize in ‘a voice’ to employees, encourages collective bargaining and consultation to be used rather than confrontation. I-J and Ireland are less participative than the former and more bureaucratic and formal, though they are relatively low in power distance. Whitley and centralized. Hypotheses (2001) work, from a cultural view, suggest that moving from north to south in Europe, centralization and power distance increases and articulation decreases (STATORS, Ellen T et al. , 2010).
While testing HER planning and the link to firm performance, there was a moderate result by geographic context. The stronger relationship found in the North-Western and Central-southern, the weaker in the Anglo-Irish regions. Strategic HARM seems less common in Southern Europe and in Germany, Netherlands and Nordic countries it is lower and more participative than UK & Ireland (Brewster et al. 2004; Cyan 2005) (STATORS, Elm T et al. , 2010). Another study has been done to add some value in HER best practices in the aspects f human resource staff by Mary Dunlap, CAP and Debra M.
Serving, SPAR. They have emphasized on the awareness of handling workplace harassment and implications of the Family and Medical Leave Act. They suggest six additional factors to be considered for employees’ favor specially regarding health and harassments by Maintaining complete 1-9 forms- to document the employees information and use it in need; Post Required Notices- to have the appropriate notices and posters required by state and federal law visible in the workplace which can prevent penalties and audits. These posters should display minimum wage information.
Checking worker’s compensation insurance- employer should check worker’s compensation insurance policies which covers the compensation in the event of business offset working places specially working at home and on the road; Accurately classifying independent contractors and employees- both hiring employee through contractor or direct recruitment of employee has advantages and disadvantages; Knowing the Implications of the Family and Medical Leave Act- this rule applies to 50 or more than 50 employees business, a clear policy for paternity, family medical leave and maternity can enhance employee morale.
This act is designed to make sure that employees don’t loose their Jobs when they need to have time for their family and personal needs; Providing Training on Workplace Harassment and Safety- need to communicate what is happening, mange the harassment in a proper way and also address about workplace safety issues like violence, etc (DUNLAP, Mary and Serving, Debra M. , 2010). Another experimental research study has been conducted whether best practice HARM only work for intrinsically motivated employees to explore the relationships between perception of multiple best practice HARM and employee outcomes.
From various Norwegian service organization of a total of 838 employees 4 cross sectional surveys showed that several relationship between perceived information, perceived empowerment and employee performance were moderated by intrinsic motivation. Motivation to perform an activity itself in order to feel and experience the satisfaction inherent in the activity is defined as intrinsic motivation. Individual HER practices investigation suggest that relationship between perceived training opportunities and organizational citizenship behavior both are moderated by intrinsic motivation.
These studies refer that positive relationship exists in high intrinsically motivated employees, and in other hand there are no any negative relationships for employees with low intrinsic motivation. Objective of this study is to find out if the relationship between perceptions of multiple best HARM practices and employee productivity- such as affective organizational commitment, work B;rd and Disk, Enders, 2010). The above study consists of different theories and hypothesis based on the experiment.
One among the theories and hypothesis findings is that intrinsic motivation moderates the relationship between perceived empowerment and work performance, turnover intention and affective commitment they are stronger for higher than for lower levels of intrinsic motivation. Empowerment leads to higher work performance, higher organizational commitment and lowers turnover intention. High intrinsic motivation employees accept larger number of roles and responsibility than low intrinsic motivated employee.
Such results reduce turnover and increase organizational commitment and work performance from high intrinsic motivation employees. On the other hand, the result is Just opposite from low-intrinsic motivation employees (BEARABLE, Julie and Clayton, Tim, 2010). Similarly another hypothesis theory findings highlights that high intrinsic motivation employee have stronger relationships or positive relation refer to perceived information sharing with work performance, turnover intention and affective commitment.
On the other hand low intrinsic motivation employees have low stronger relations. Since high intrinsic motivation employee are more engaged and involved in their Jobs, the shared information leads them to respond more positively. Whereas low intrinsic motivation employee given lower level of involvement in their work don’t perceive the shared information to greater extent and thus the information sharing is not strongly related to their work performance, turnover intention and affective commitment (BEARABLE, Julie and Clayton, Tim, 2010).
Fair compensation and its relationships between work performance; their turnover intention; and affective commitment are stronger for lower than for high levels of intrinsic motivation employee. Social exchange theory suggests if employees perceive fair treatment from their employers they should act in terms of positive behavior and work attitude. Perceived fair compensation must increase employee’s work performance and affective commitment and reduce their turnover intention because this gives a feeling that employees are involved in and care about organizational performance.
The main driver for work performance, lower intention, higher affective commitment for low intrinsic motivation employee is fair compensation. On the other hand high intrinsic motivated employees are motivated by work itself, rather than perceived fair compensation (BEARABLE, Julie and Clayton, Tim, 2010). A study on effect of organizational strategy on universalistic or contingent HER practices in Indian manufacturing by Vanity Tomato has been done. This study tries to know the impact of firm level strategy depends upon the kind of human resource practices adopted.
A set of fifteen best practices were studies through various industries and also this study is the search whether the adopted practices in different companies are universal or contingent to the corporate strategy. First objective of this study is based on contingency approach to strategic human resource management (SHRIMP) and tries to understand approach and nature of human resource practices adopted by Indian manufacturing companies. Another objective of this research is to know whether Indian manufacturing companies like the western style and adopt HER practices to their corporate strategy.