ompetitive
advantage
Ebebe, Gertrude
Chiebonam
Department of
Business Administration and Management
Federal Polytechnic,
Oko
Email:
ebebegertrude@yahoo.com
Abstract
The entire global economy had been thrown into a big turmoil due to the
action or inaction of some big business executives and captains of global
financial system. It is also instructive
that, with the burning economic issue being discussed all over the world, the
firm is actually ripe to review the role of Human Resources Management and its
contribution to corporate success in Nigeria in particular and African
countries in general. This paper aims at
re-engineering the practices of Human Resources Management for optimal output
so that the global economic meltdown will not destabilize the socio-economic
and political system of the African countries and Nigeria in particular. We examined the concept of the HRM,
activities and roles of HRM, trends in HRM, a redefinition of HRM, and we tried
to establish a link between HR strategies with the company strategy as it
relates to Nigeria and African countries in general.
Introduction
Human
Resource Management (HRM) is the function within an organization that focuses
on recruitment of, management
of, and providing direction for the people who work in the organization. Human
Resource Management can also be performed by line managers (http://humanresources.about.com/od/glossaryh/f/hr_management.htm).
Human Resource Management is also a strategic and comprehensive approach to
managing people and the workplace culture
and environment. Effective HRM enables employees to contribute effectively and
productively to the overall company direction and the accomplishment of the
organization's goals and objectives. The entire global economy had been thrown
into a big turmoil because of the action or inaction of some big business
executives and captains of the global financial system. It is also instructive
that, with the burning economic issue being discussed all over the world, the
time is actually ripe to review the role of HRM and its contribution to
corporate success (Olorunda, 2009).
The
heightened levels of global competitiveness have alerted all firms to the fact
that all their resources must be utilized well than ever before. As a result,
human resource management has received much attention recently because of the
recognition that much more could be gained from a better handling of the
workforce. For this reason, academics have continued to focus much more on the
issue of manpower in organizations as an activity that is critical for
Organizational survival. Survival is said to be better enhanced when human
capital management efforts in attracting, motivating and retraining employees
are at their best. HRM efforts should not be limited to survival alone, as
recent developments have shown the need to also focus on building a culture
that makes employees at whatever level develop attitudes that support the
growth and survival of the Enterprise
According
to Schuler, (1995) human resource management is the use of several activities
to ensure that human resources are managed effectively for the benefit of the
individual, society and the business. As with many disciplines, the study of
managing people has changed drastically during the last century. Beginning with
the works of Fred Taylor around the turn of last century, the focus of managing
people in organizations was on developing precise analytical schemes to select
and reward an individual. During the 1920s, work on these analytical schemes
expanded to encompass issues of appraising and training individuals, essentially
for making them achieve more from less resources.
Conceptualizing Human Resource
(Capital) Management
Individuals
generate, retain and use knowledge and skills (human capital) to create
intellectual capital. Their knowledge is enhanced by the interaction between
them (social capital) that generates the institutionalized knowledge possessed
by an organization (organizational capital). These concepts of human,
intellectual, social and organizational capital are discussed hereunder.
Human Capital
The
term “Human Capital” was originated by Schultz (1961) who elaborated the
concept in 1981 as follows….. “Consider all human abilities to be either innate
or acquired. Attributes which are
valuable and can be augmented by appropriate investment can be referred to as
human capital”. Bontis et al (1999) put it more succinctly that human capital
represents the human factor in the organization: the combined intelligence,
skills and expertise that give the organization its distinctive character and
competitive edge. The human elements of the organization are those that are
capable of learning, changing, innovating and providing the creative thrust
which if properly motivated can ensure the long-term survival of the
organization. It is indeed the knowledge, skills and abilities of individuals
that create value, which is why the focus has to be on means of attracting,
retaining, developing and maintaining human capital they represent.
Intellectual Capital
The
concept of human capital is associated with the concept of intellectual
capital, which is defined as the stocks and flows of knowledge available to an
organization. They can be regarded as the intangible resources associated with
people who, together with tangible resources (money and physical assets),
comprise the total value of business (Olorunda, 2009).
Social Capital
This
is an element of intellectual capital which consists of the knowledge derived
from networks of relationships within and outside the organization. The concept
has been defined by Putnam (1996) as ‘the features of social life-network,
norms and trust-that enable participants to act together more effectively to
pursue shared objectives.
Organizational Capital
This
is the institutionalized knowledge possessed by an organization, which is
stored in databases, manuals etc. (Youndt, 2000). It is often called structural
capital (Edvinson and Malone, 1997).
The
added value that people can contribute to an organization is emphasized by
human capital theory. It regards people as assets and stresses that investment
by organizations in people will generate worthwhile returns. The theory
therefore underpins the philosophy of human resource management and human
capital management in organizations.
Activities and Roles of Human Resources
Management
The
activities and roles of human resources in organizations cannot be exhaustively
discussed in this paper but permit me to list some. According to Olorunda,
(2009), they are:
Ø
Scanning and analyzing the environment;
Ø
Planning the manpower needs;
Ø
Staffing the human resource needs of the
organization;
Ø
Appraising and shaping employee behaviour;
Ø
Compensating employee behaviour;
Ø
Improving
work environment;
Ø
Establishing and maintaining effective work
relationships;
Ø
Training and retraining employees;
Ø
Serve as repository of organization culture art1
values as well as act as change champions.
Increasingly,
the success in managing human resources depends upon an effective scanning and
analysis of the environment, both internal and external by the human resource
professional in the organization. The internal environment includes the top
management goals and values, organizational strategy, organizational culture,
technology, structure and size. The external environment includes the
economy/market, demographics, values, laws and competitors. Effective scanning,
analyzing and human resource planning will lead to an appropriate job analysis
which in turn leads to “right” staffing which includes recruitment and
selection. There must be an efficient appraisal system put in place to manage
and measure performance. A good performance management system will ensure a
competitive compensation policy anchored on total compensation and
performance-based package. It also looks at indirect compensation practices.
Added
to the aforementioned is a plan to improve employee’s performance through
training and development for general organizational improvement. Establishing
and maintaining employee rights, safety and health issues and industrial
relations is also of immense importance. Thus, the general goal of human
resources management is corporate survival, competitiveness, growth,
profitability and adaptability.
Trends in Human Resources Management
From
the analysis above, it can be concluded that strategic human resource
management is largely about integration and adaptation. Its concern is
therefore aimed at ensuring that:
1. Human
resource management is fully integrated with the strategy and strategic needs
of the organization;
2. Human
resource policies are consistent both across policy areas and across
hierarchies;
3. Human
resource practices are adjusted, accepted and used by line managers and
employees as part of their everyday work.
These provide
the framework for discussing best way to re-engineer the practice of human
resources management to meet the challenges of the global economic melt down.
The Practice of Human Resources Management
To Meet The Challenges Of The Global Economic Melt Down: A way out.
This can be viewed as organizational
structures, cultures and systems that set the benchmark standards of excellence
for others in the industry to follow. Key corporate processes that are tailored
against these standards of excellence are labeled best practices for HRM..
However,
to re-engineer the practice of HRM involves the strategic human resource
management that has many components including philosophies, policies,
programmes, practices and processes. The human resource philosophy is a
statement of how the organization regards its human resources, what roles the
resources play in the overall success of the business and how they are to be
treated and managed.
Modern
analysis emphasizes that “the People” are not “commodities”, but are creative
agents in a productive environment. They are therefore active agents of
production unlike the other factors which are basically passive and would
therefore contribute to corporate objective based on how they are deployed in
terms of time, quantity and quality. This theoretical discipline is based
primarily on the assumption that employees are individuals with varying goals
and needs, and as such should not be thought of as basic business resources,
such as trucks and filling cabinets. The field takes a positive view of
workers, assuming that virtually all wish to contribute to corporate goals and
objectives, and that the main obstacles to their endeavours are lack of
knowledge, insufficient training, failure of process, the deployment of
inappropriate culture and value system and lack of alignment of HRM to
corporate strategy.
This
is the reason why recent literatures in HRM have emphasized the need to have a
different approach to the treatment of “people issues”. The approach therefore
struggles to get the roles of HR functions beyond the roles of administration,
employee champion or reactive agents to that of strategic and proactive
partners for the top management. In addition, HR practitioners have difficulty
in proving how their activities and processes add value to the corporate goals.
It is only in recent years that HR scholars and professional are focusing on
developing models that can measure if HR adds value in actual sense.
Redefining a Better HRM Practice
Modern HR
practice has redefined the role of HR practitioners as a front burner issue
rather than being at the “back-burner” as it is viewed in many corporate
environments. The strategy therefore is that HRM should migrate from the
present level of being handed instructions for execution from top management to
an alignment that seek to:-
·
Partner with top management in designing and implementing
corporate strategy
·
Monitor internal and external environment and
planning to meet the changing environment
·
Monitoring corporate programmes to ensure
compliance with mandate and making sure that results are achieved
·
Communicating issues on tangible results,
benefit, risk aversion and ensuring that experience are shared
·
Highlight in good time for necessary correction,
any drift to future failure at whatever level of the organization; and
·
Grow the organization on a culture and value
system that support and ensure the future growth and business continuity for
the organization
Human
resources alignment means integrating decisions about people with the corporate
strategic direction. By integrating human resources management (HRM) into the
corporate planning process, emphasizing human resources activities that support
broad corporate goals and building a strong relationship between HR and
management, organizations are able to ensure that the management of human
resource contribute to mission accomplishment and that managers are held
accountable for their HRM decisions.
The
new focus therefore is to include human resources representatives in the
corporate planning process and integrate human resource management goal,
objectives, and strategies into the corporate strategic plan. HR should refocus
its activities to broader organizational issues and expand to gauge the impact
of HRM on corporate objectives. However, most companies are still struggling in
this area as their HR practices still lay a lot of emphasis on internal HR
office efficiency efforts. The challenge therefore is how to integrate HRM into
the planning process to make it a fundamental contributing factor to the
company’s planning and success.
Hitherto,
HRM had closed its eyes on the issue of who takes the lead and in that case the
fortune of the organization had been placed in the hands of very few and in
many cases, a single individual referred to as the Chief Executive who takes
major decisions about the direction of the organization. The new direction
therefore must focus on installing ‘People” of diverse opinions as a team of
experts to champion the course of the organization. In this arrangement, the
different departments must be charged with complementary responsibilities that
disallows few or a single department from taking decisions that could cause
major injury to the entire organization such as demonstrated in the performance
based integration process. Under this environment, every department in the
organization is important and there is ample evidence to show that it adds
value as well as contribute to organizational success.
LINKING HR STRATEGY TO THE COMPANY STRATEGY
One
way of looking at strategies is to see them as a means for solving very complex
problems. Therefore, HR strategies are those strategies intended at helping the
organization achieve its full potentials, ranging from financial to learning
and growth not only to make it continually competitive but to be able to
survive itself in the ever changing business environment.
Indeed, recent events have
demonstrated the need to expand the provisions of the Balance Scorecard to
include another key perspective termed “Leadership” without which the business
continued existence and growth cannot be guaranteed. A Friend of mine once joked
that “the global economic melt-down started with the peoples’ initiatives and
will probably end with peoples’ initiatives.” In most cases, it has been
discovered that the “failed decisions” were that of the chief executives of the
giant
organizations that control a network of business units around the globe. It is
indeed very interesting to note that the present global economic problem has
consumed businesses ranging from the petty businesses to the giant
multi-national corporations in the developed and developing countries alike. It
is even more worrisome to note that corporations that were thought to be best
practice organizations were not left out even though they have employed the
Balance Scorecard to ensure business continuity and growth.
Let
us consider a situation where the company Chief Executive gets the business
strategy completely wrong. If what it means is that people like Jack Welch
should be considered an invaluable asset to companies like General Electric
(GE), we would appreciate the implication of getting it right at the HR level.
What we have seen generally is that when the company wants to change its
business strategy aimed at meeting the challenges of competition or otherwise,
the first point of call is having the right people who appreciate what went
wrong, to identify the gaps that needed to be filled either in terms of
technology, material or the people.
However,
if it is also supposed to mean that every individual employee at GE is regarded
as very important asset, we are not so sure that it holds true. It is one thing
to subscribe to a generalized statement such as this and it is another thing
entirely to actually regard and treat employees as though they are the
company’s most important asset. The way in which companies like Digital
disappeared off the face of the earth shows that organization must have people
who can get the strategy right in place. Digital probably had many committed
and loyal employees but their poor business strategy resulted in their
employees adding no value whatsoever. The missing link here is that these
companies failed to identify the fact that an effective HR strategy may be “one
of the only way” to sustain a real competitive advantage. This therefore calls
for the need to reappraise the position of leadership in organizational
success. In essence, the HR strategy must aim at putting in place, an
appropriate leadership that is committed to the success of the organization
within its competitive context. The leadership in turn must focus on activities
that encourage adaptation, innovation, proactivity in order to achieve
continued relevance and corporate existence. Along the line, all necessary
control measures must be continually serviced both at the IT and the people
level in order to ensure that they tie to the organization strategy at all
times.
In
a way, the present global meltdown has brought to the front-burner, the need to
evolve the right HR strategy that is creative and proactive enough to identify
which Chief Executives are most appropriate at any time in the lifetime of a
company. Suppose the “world” had evolved the right HR strategy to “replace with
the right people”, the various world business chief executives that were part
of the global economic downturn would have had a different perspective on the
way to curb the occurrence of the phenomenon. Those who “initiated” the
economic downturn, in most cases did not take the organizational overall
interests into consideration in taking many of their “selfish and go for the
kill” decisions that later translated many world economies into enclaves of
failures.
It
is very important therefore that for the business landscape to become and
remain competitive within the ever changing global business environment there
would be need to take very important steps aimed at treating HRM as a key
factor in the achievement of business success. However, the challenge is: how
many companies would readily want to have the HR practitioner on the company
Board? After all, it is a common feature in many companies to have decisions
taken at the top levels, which are only handed over to the HR managers for
implementation. Let me propose therefore that for the companies to reap the
full potential of all its resources, be it human, capital, IT etc, there is an
urgent and dare need to give HRM a top level priority that make it part of the
highest company decision making process.
If
the simple craft-shops constitute the lower extreme of the HR strategic scale,
then the big multinational companies are on the other. They employ thousands of
people and use sophisticated marketing or production techniques. Here,
attracting the right caliber of people and managing the human resource well is
more likely to be an issue. In- between these two extremes though, must be a
whole range of different types of business enterprises that employ varied
number and quality of employees. The HR maturity scale offers a range of
positions against which an organization can assess the maturity of its HR
thinking and systems. It can be used as a means for assessing an organization’s
view of the importance of human resource management and its role in maximizing
business performance and value. The worse position on the scale i.e. “stage 0”
features those organizations that do not have a clear view on how they manage
their people. Over time any organization will have to go through this series of
stages in order to mature into an organization that gets best value out of its
people.
Human resources
not
Truly regarded by
the
Board as a source
of
CONCLUSION
In
conclusion therefore, the question is: is your organizational HR matured to
meet the challenges of the global economic meltdown? Did you find yourself
battling with the basic or traditional HR functions of recruiting, developing,
motivating and retaining employees or you have matured to the more strategic
phase of planning and partnering with management to achieve the desired
corporate goals?. Or better still, have you matured into helping to install the
right management and also indicating the right time to disengage the Chief
Executive before he causes damage to the organization. We fervently believe
that the way forward is that organizations will achieve their business results
to the extent that they get the HRM right. With this practice, the HRM will be
able to face any underdevelopment, economic or socio-political challenges.
REFERENCES
Edvinson,
L. and Malone, M.S. (1997). Intellectual
Capital: Realizing Your Company’s True Value by Finding Its Hidden Brainpower.
New York: Harper Business
Olorunda,
C.O. (2009). Redefining Best Practices in
Human Resources Management. The Bullion. A publication of the Central Bank
of Nigeria. Vol.33,No3
Putnam,
R (1996). Who Killed Civic America?
Prospect, March, pp 66-72.
Schuler,
R.S. (1992). ‘Strategic Human Resource Management: Linking the People with the
Strategic Needs Of The Business’. Organizational
Dynamics, summer: 18-31.
Schuler,
R.S, (1995) Managing Human Resources, 5h edition West Publishing Company.
Schulz,
T.W (1961) Investment in human capital, American Economic Review, 51, March,
ppl -17.
Schulz,
T.W (1981). Investment in people, The
Economics of population quality. University
of California
Storey,
J. (1992). Developments in the Management
of Human Resources. London: Blackwell.
Youndt,
M.A (2000). ‘Human resource considerations and value creation: mediating role
of intellectual capital’, Paper delivered at National conference of US academy
of Management, Toronto, August.
No comments:
Post a Comment