HR POLICIES AND THE EFFECTIVENESS OF WORKERS’ UTILISATION

The introduction of HR policies has both strategic and practical purposes. Strategic purpose refers to the process of aligning HR strategy and firm’s business strategy (vertical fit), and the consistency within the HR four main activities (horizontal fit).  In practical context, the change in HRM system should be able to help managers dealing with employee-related issues and utilizing employees’ labour more effectively. This essay will particularly examine the second purpose, which I found that it is true to some extent. Policy intervention has helped many firms to attract, develop, utilize and retain their workers as a source of firms’ competitive advantage. In the same time however, they are still facing some challenges. To discuss this view, this essay will define the term of effective employees’ utilization, then describe the types of policy intervention, identify evidences of the effectiveness, and point out to some challenges in managing HR today.

To begin with, how do we know that HR policies contribute to the more effective utilization of employees? Sheehan, Holland and De Cieri (2006, p. 135) define the effectiveness of HR as the fit between HR activities and firm strategies, and real impact to business performance. Meanwhile, Guest (1987, p. 511-515) identifies four HR outcomes of the HR policy intervention, which are integration of HR into corporate strategic planning and implementation, employee commitment, flexibility and adaptability to organisational change, and the quality of staff. Therefore, this essay will particularly present a summary of three following aspect: employee motivation and organisational commitment, strategic fit, and the real impact to both individual and corporate performance. These factors will be discussed more intensively in the next part of this essay.

Generally, HR policy can be divided into two categories, the policy that governs the overall HRM system, and the regulations which are incorporated with day to day HR activities. HRM system is heavily shaped by contextual contingencies such as national, sectoral and organisational factors (Boxall and Purcell, 2000, p. 199). Historically, those factors influence the development of HR movement. It can be traced back to the introduction of Frederick Taylor’s scientific management in 1895 until the emerging of SHRM approach in 1990s up to present (Kaufman, 2001). In Australia, the HRM system has shifted from the training and industrial welfare officers back in 1939, personnel function with emphasis to more administrative focus in 1950s, then shifted to focus on worker satisfaction and job motivation in 1960s and early 1970s, to HR roles in early 1980s, and finally settling up the strategic roles in 1990s (Brown, Metz, Cregan and Kulik, 2009, pp. 273-276).

Concurrently, HR practices are also influenced by the types of management approach. Huczynski (1993, p. 446) pinpoints six groups of management approaches which influence and attached to HR. Those are bureaucracy, scientific management, classical management, human relation, neo-human relation and guru theory. These approaches generate technical, structural, employee-focused and customer-focused solutions for any organisational problems (Huczynski, 1993, p. 459). When it comes to implementation, all the solutions should be formally incorporated with institutional system through policies affecting all four HR areas, which are HR planning, selection and recruitment, training and development, performance management, and rewards management (Fombrum and Devanna, 1982 in Guest, 1987, p. 156). For example, the implementation of just in time system as a technical solution require a firm to recruit an expert to manage it, a training program for all affected employees, and a performance and rewards management system that value the accurate time utilization.

Specifically, Guest (1987, p. 516) categorises seven areas of HR policy, those are:

‘Organisational and job design; policy formulation and implementation/management of change; recruitment, selection and socialization; appraisal, training and development; manpower flows – through, up and out the organisation; reward systems, and; communication systems’

More specifically, a set of policies on recruitment area may specify general recruitment strategy, required knowledge, skills and attitude (KSA) for every position, certain tests to measure those KSA, standardized recruitment process, parties involve in the selection process, and budget allocation for recruitment. In this case, different HR areas constitute different aspects.

Back to our discussion of the effectiveness of HR policies, Huzynski (1993, PP. 448-449) finds that new management programs or fads, including HR policies, may effectively increase employees internal motivation, as well as the solutions to existing and continuing company’s problems and vehicles for organisational changes. The terms of empowerment, participative management, performance recognition and benefit adjustment are examples of HR initiatives to boost employees’ motivation. Theoretically, those initiatives refer to soft model of HRM which is incorporating employees’ commitment, flexibility and adaptability, and emphasising communication as a core management function (Truss, Gratton, Hope-Hailey, McGovern and Stiles, 1997, p. 54).

However, Truss et al (1997, p. 70) note that the organisations tend to display the soft HRM only in their rhetorical conceptualisation, while in reality they usually adopt the hard approach which involves quantitative and calculative measures. This measurement seems to be the part of ensuring strategic fit between HRM system and corporate business strategy. In contrast, Guest (2002, p. 22) found that employees perceive so many items associated with ‘soft’ HRM approach. He concludes that the implementation of HR activities and initiatives generates the higher sense of fairness, trust, and management commitment perceived by employees.

In fact, Winstanley and Woodall (2000, p. 6) state that the development in HRM system in the last century has a significant contribution to the improvement of employees welfare and position. Despite that, some of contemporary HR practices have also generated ethical issues. They point out to the long working hours and ‘presenteeism’ as the result of flexibility, the concern with justice in the appraisal process, and the shaping of employees’ values and attitude through training and development activities (Wistanley and Woodall, 2000, p. 8). Similarly, a new compensation package might lead to bargaining process (Huczynski, 1993, p. 460). This activity involves individual and collective bargaining (i.e. department/work unit and union), particularly any party who assumes to have a good bargaining position or suffer certain losses caused by the new wage system. This bargaining process raises question about fairness and justice framework adopted in deciding the exact amount of compensation and benefit package for each employee.

For HR professionals, the call for strategic HRM system and practices has enhanced their roles and responsibilities. As it has been mentioned, HR function in organisations has shifted from managing employee administration to become strategic partner of firm’s decision makers/managers. It means that HR professionals have a better career prospect as the HR organisational structure developing. In the same time, it puts HR professionals in two ambiguous roles, as the strategic partner of the organisation and as the centre of employee well-being organiser (Brown et al, 2009, pp. 276 -277). As most of HR professionals are not choosing to be an employee champion, employees are gradually losing their personal contact with employee specialists and heavily depending on their immediate managers (Francis and Keegan, 2006, p. 243).

For the managers, the more comprehensive HR policies give them more specific guidance in dealing with employee-related issues. Specifically, the clarity of inputs, process, and outcomes of program implemented; detailed roles, responsibilities and accountabilities of everyone involves in the program; what are expected from employees and what the consequences given to them for both the successful and unsuccessful completion. However, as HR practitioners are encouraged to get more focus on the strategic aspect of HRM systems (Sheehan, Holland and De Cieri, 2006, p. 143), current HR approaches require more active participation of the managers in each of the four major aspects of HR. For example, managers and supervisors should involve in determining job requirements and selecting people, coaching subordinates, appraising performance and giving rewards and punishments. Consequently, this expansion of responsibilities requires managers to improve their HR-related skills, which they may lack capable or may hinder (Francis & Keegan, 2006, p. 241).

On the other hand, management programs and initiatives are sometimes emerged from managers who determine to do something differently especially from outside competitors (Huczynski, 1993, p. 450). He finds that most of managers build up their career in a specific field with specific technical capabilities and most of them did not equip themselves with general knowledge and skills required to manage people.  Hence they will have difficulties to choose the best strategy from so many alternatives available. For those managers, the careless decision of adopting HR initiatives would lead to inefficiency, ineffectiveness, and have no impact to business strategy.

Besides that, there is an issue with time allocation to deal with employee-related roles in the middle of bunches of tasks. In this case, bureaucratic tendency of HR process can be a drawback to the work process, and job standardisation tends to promote administrative accountabilities, which can reduce productivity. For example, candidate interview feedback, performance appraisal report, training needs justification and things similar with them require managers and supervisors to spend some time to work on certain areas which are not their main responsibilities.  Another problem is the improper HR practices may be a source to internal conflict. Unsatisfying appraisal result can create conflict among employees, and employees versus their supervisors. Similarly, imbalance proportion between team and individual performance based rewards could end up with motivational decrease.

In regards with performance, Boxall and Purcell (2000, p. 192) assert that high commitment HR practices are resulting in better outcomes for both workers and management. Particularly in service industry, highly selective recruitment and well-organised training program will help a firm consistently deliver high quality services to its clients (Boxall and Purcell, 2000, p. 184). Many literatures emphasis the correlation between HRM system and its particular HR practices and both individual and organisational performance, both those represent ‘best practice’ and ‘best fit’ types (Wall and Wood, 2005, pp. 430 – 431). Although Wall and Wood (2005) argue that those studies have made premature conclusions because of methodological flaws, their finding based on examination on limited number of previous researches with limited criteria (i.e. they didn’t take into account individual motivation, commitment and performance which are significant HR outcomes). They also do not provide evidence that HR has nothing to do with or has negative impact to performance.

In conclusion, HR policy intervention has help organisations and managers to more effectively utilise their human capital. Despite its achievement in addressing more various employee-related issues and playing more strategic functions within organisations, HRM system and its practices are facing some challenges in the more complex environment. Consequently, there are and some homework to be done to overcome those challenges. First, the focus on the strategic role will affect the prerequisite for people who enter the HR profession (Brown et al, 2009, p. 289). It will then raise the need to redefine HR education structure and training program, including the ethical framework themes (Winstanley and Woodall, 2000, p. 16). Second, to ensure the fulfilment of both roles, HR department need to enlarge its organisation or alternatively, enriching HR professionals’ job by embodying employee-related tasks (Francis and Keegan, 2006; Brown et al, 2009). Third, career-related training and education to new or potential managers becomes a compulsory, especially in managerial and people management which are required to handle HR-related issues. Thus, the key issue here is to search for the right balance between strategic roles and employee-related tasks.

Finally, as the implication to the practical context, a firm ideally conduct an extensive socialisation before introduce a new HR policy in order to get more positive response from the employees, increase their motivation to participate in the program, and increase their organisational commitment. Another strategy is preparing negotiation team to talk with employees regarding that policy. The team may consist of HR specialists, management representative (senior manager), and frontline managers. However, the bottom line actually doesn’t lie in the policies themselves, but in the actual implementation, which is important to make sure the compliance of such policies by all affected parties.

References:

Boxall, P. and Purcell, J. 2000, ‘Strategic human resource management: where have we come from and where should we be going?’, International Journal of Management Reviews, vol. 2, no. 2, pp. 183-203.

Brown, M., Metz, I., Cregan, C. and Kulik, C. T. 2009, ‘Irreconcilable differences? Strategic human resource management and employee well-being’, Asia Pacific Journal of Human Resources, vol. 47, no. 3, pp. 270-294.

Francis, H. and Keegan, A. 2006, ‘The changing face of HRM: in search of balance’, Human Resource Management Journal, vol. 16, no. 3, pp. 231-249.

Guest, D. 1987, ‘Human Resource Management and Industrial Relations’, Journal of Management Studies, vol. 24, no. 5, pp. 503-521.

Guest, D. 1999, ‘Human resource management – the workers’ verdict’, Human Resource Management Journal, vol. 9, no. 3, pp. 5-25.

Huczynski, A. 1993, ‘Explaining the Succession of Management Fads’, International Journal of Human Resource Management, vol. 4, no. 2, pp. 443-463.

Kaufman, B.E. 2001, ‘The theory and practice of strategic HRM and participative management: Antecedents in early industrial relations’, Human Resource Management Review, vol. 11, pp. 505-533.

Sheehan, C., Holland, P. and De Cieri, H. 2006, ‘Current Developments in HRM in Australian organisations’, Asia Pacific Journal of Human Resources, vol. 44, no. 2, pp. 132-152.

Truss, C., Gratton, L., Hope-Hailey, V., McGovern, P. and Stiles, P. 1997, ‘Soft and Hard Models of Human Resource Management: A Reappraisal’, Journal of Management Studies, vol. 34, no. 1, pp. 53-73.

Wall, T. D. and Wood, S. J. 2005, ‘The romance of human resource management and business performance, and the case for big science’, Human Relations, vol.58, no. 4, pp. 429-462.

Winstanley, D. and Woodall, J. 2000, ‘The ethical dimension of human resource management’, Human Resource Management Journal, vol. 10, no. 2, pp. 5-20.