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5HRF – Managing and Coordinating the Human Resources Function –
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Assessment criteria 2.2 Analyse how the HR function varies between organisations in different sectors and of different sizes.
The function of HR is evolving, becoming an increasingly important strategic contributor to organisational success. Hence, organisations are customizing their HR function to suit their needs in terms of the realisation of their objectives. The HR function tends to be unique to each specific case and while there are some similarities that can be identified across organisations, such as strengthening the workforce through training and development, there remain some noticeable differences.
Research into how firms structure their HR based on management practices and contingency variables has demonstrated that there tend to be distinct forms that are related to their primary function. For example, some companies seek to agglomerate employee roles and responsibilities into as few positions as possible to reduce labour costs, while others set up specific departments to serve their production or service needs. Furthermore, manufacturing firms use a different structure compared to those in retail, as the former relies on the quality of its products while the latter depends on its employee interactions with customers.
Other factors also come into play when determining the roles and structure of HR, first and foremost the size of the organisation. As larger firms have a larger workforce and are usually organised into a hierarchical structure, they employ HR managers to supervise the line managers. Smaller firms, on the other hand, have fewer employees and hence have less of a need for a dedicated HR manager; this means that one individual, often the business owner, may perform several HR functions, such as recruiting and interviewing. Another factor determining the organisational HR structure is the sector in which the company operates. For example, the oil and gas sector is particularly characterised by large organisations, such as Saudi Aramco, with over 65,000 employees, which have different HR needs compared to a smaller firm with a workforce of a dozen employees. For instance, employee training and development in Saudi Aramco is developed and delivered in-house by its HR department according to the specific employee development needs of the company. A smaller firm, on the other hand, will find it considerably more time and cost-effective to engage a third party to train and develop its staff.
A well-known HR model that is widely used in large organisation such as Saudi Aramco is Dave Ulrich Three Legged Stool Model. This model is aimed specifically at large-scale organisations, enabling them to effectively deliver HR services. The model consists of shared service and expertise centres and business partners. Shared services centres are where they handle the administrative tasks. Business partners work closely with the department managers to deliver and implement any company wide strategies, they can also work as advisors to managers. Finally, the centre of expertise where a team of experts focus on a specific area of HR.
This model is effective in large organisation such as Saudi Aramco. However, with a smaller organisation of a dozen employees, the model is considered ineffective, very costly and very hard to attract talented and experienced HR employees. Thereby, what models are well suited for small organisation? The current emerging trend for small organisations is having no HR Department. Usually manager act as HR managers where they handle recruitment, reward and recognition as they make the decision related to HR. According to the organisation life cycle theory, companies develop through a sequence of stages: birth, growth, maturity and decline. In the birth stage where the firm is a small Business Process Outsourcing (BPO), HR might be the best practise. As outsourcing is considered less costly and more efficient than the three legged stool model for small firms, as BPO offers an access to talented and experienced HR to handle the HR function within the small firms. HR outscoring can also be partially used in large organisations such as Saudi Aramco to handle basic Administrative HR related work.
Assessment criteria 1.1 Summarise the organisational objectives that the HR function is responsible for delivering and how these are evolving in contemporary organisations
Objective 1: Creating organizational structures that enhance productivity
After a firm has been able to attract the right employees, it must adopt the appropriate organisational structures and practices to enable it to fully utilise the human capital it has recruited. In this context, the nature of the operations of the organisation, e.g. the delivery of products or services, and its sector, e.g. healthcare, academia or technology, will determine the form of these structures and practices. Therefore, it falls to HR to identify the optimal form to suit the firm’s needs. Organisational structures have changed over time, no more so than in terms of HR, which was once non-existent in the majority of firms. However, the increase in organisational complexity led to the development of models to make HR more efficient and effective, such as the Ulrich Model, which is further explored under assessment criteria 2.1.
Objective 2: Constructing organisational capacity to sustainably achieve corporate objectives
While HR initially played a purely supportive role, it has become crucial to the achievement of corporate objectives in the long term as it underlies the structure, talent base and functional interactions in the firm and thus ensures that the organisation sits on a solid administrative foundation. In particular, HR ensures that corporate objectives are correctly disseminated throughout the firm, allowing each employee to understand and execute their role, which further strengthens intra-organisational trust. In addition, HR is crucial to effective staff recruitment, particular because in recent years the process of attracting talent as been considerably altered due to technological advances and the advent of social media. Specifically, social media platforms, such as LinkedIn, Twitter and Facebook, enable recruiters to review potential candidates as well as to present their organisations in the best possible light to attract the best talent. Meanwhile, high-calibre employees are equally taking advantage of this new environment, becoming increasingly empowered to research the jobs available as well as examine the respective missions, cultures and management styles of potential employers before settling on the one that best aligns with their own values. This underlines the need for HR departments to take on the role of cultivating the image of an attractive employer by establishing an active presence on social media, for example by encouraging existing employees to promote company culture using the firm’s official social media channels.
The success of an organisation hinges not just on driving productivity, accumulating capabilities and delivering corporate goals but also on strengthening the organisation’s ethical considerations through the implementation of professional and ethically focused practices. There are a number of benefits that can be derived through the use of HR to deliver ethical aims, especially in terms of setting up recognition and reward policies that foster the development of ethical practices. While the HR function of rewards and recognition once focused solely on performance, in recent years it has evolved and many well-established firms now also reward and recognise ethical considerations, offering enhanced employee benefits and certification in recognition of employees’ ethical practices.
Assessment criteria 2.1 Explain the different ways in which HR objectives can be delivered in organisations.
HR objectives can be realised in a variety of ways. Saudi Aramco, for example, has applied the Ulrich Model to achieve its HR objectives. This model is specifically aimed at large-scale organisations, enabling them to effectively deliver HR services by dividing their HR functions into four segments, as presented in Figure 1.
Figure 1. Ulrich’s model of HR roles.
Later on, Ulrich outlined how organisations can implement shared services by operating service centres, also known as call centres, which use internet and communications technology to offer administrative support to the organisation as a whole. Meanwhile, Ulrich used the term business partners to refer to groups of individuals who collaborate with management to implement organisational strategies and enact key initiatives. In this context, HR has a so-called centre of expertise that provides a knowledge source for the various roles of HR, such as employee relations and reward programmes. This allows the various business segments of the organisation, including its shared services, to be supported and appropriate policies to be enacted.
While the Ulrich Model has a disadvantage in that it is somewhat complex and thus difficult to implement, it does offer a number of benefits that organisations can draw upon. For example, it enables a high responsiveness to both the needs of management and the fluctuating circumstances within the organisation. Secondly, it facilitates the ability of an HR department to be proactive in its dealings with both external and internal clients. In relation to these first two points, the model also allows HR to structure itself according to the organisational goals as well as the customer requirements. Finally, it offers better methods to measure HR outcomes.
HR objectives in an organisation can also be delivered through the use of centralised human resources. This refers to when professional HR managers deal with employees, e.g. in relation to recruitment, training, salaries and employee motivation, from one central location using HR specialists. In contrast to having these processes managed by the leaders of local business units, this approach offers a number of advantages. Firstly, it facilitates consistency throughout the organisation as all the individual business units are aligned in the direction given by the centralised office. Furthermore, when employee management in terms of training, abilities, rewards, motivation and morale is consistent, then the organisation as a whole will benefit from increased smooth-lining, thus providing greater strength to the organisational structure. Secondly, centralised human resources lead to greater cost-efficiency. Running HR management from one location increases efficiency and reduces process redundancies, thereby considerably lowering costs. Costs are further reduced due to the fact that all local managers can use the same training programmes and materials as well as compensation measures, meaning less expenditure for training and personnel management. Using the centralised human resources approach to deliver HR objectives does, however, have a disadvantage in that it can lead to considerable delays in the management process as it requires extensive communication between the local business units and the main office. As local managers must wait for guidance or information pertaining to new projects, any delay in the transmission of this information leads to time wastage and hence a reduction in productivity.
Assessment criteria 1.3 Evaluate the business case for managing HR in a professional, ethical and just manner.
Having an ethical culture in an organisation refers to the extent to which ethical values and practices are implemented in the daily activities of the company. Firms can have a broad range of values to which they align their business direction, such as excellence or quality. However, it is not always clear how these values are achieved or even defined at the organisational level. An ethical approach would ensure that these values are associated with integrity and not with practices that would be considered unethical, such as unsafe working conditions or the exploitation of vulnerable workers. In addition, there is the matter of the firm’s ethical climate, which refers to its social values and norms and thus determines the good social behaviour of the firm. An organisation’s practices and policies shape its ethical climate and guide good working behaviour, thus they should be the focus of ethically oriented management. Ideally, operations are made ethical by being grounded on an ethics programme, either formal or informal depending on the scale of the organisation, that highlights and supports these values and norms by outlining a code of ethics. Through such a code, the employees are aided in dealing with ethical issues related to the workplace. Furthermore, not only are the organisational values given in concrete terms, but the behaviours of employees are also outlined in a manner that fosters voluntary compliance. In particular, a code of ethics enables managers to provide guidance to their employees and ensures that ethical expectations are met. In addition, having a code of ethics puts organisations in a position to receive and respond to valuable feedback from other stakeholders, such as customers and business partners.
By underlining its core values, an organisation is able to show that it has a strategic commitment to establishing and sustaining an ethical culture in the long term. For example, if the firm has been shown to be lax in its ethics, such as in the case of an environmental scandal, then demonstrating its ethical commitment can reinforce trust within the business while avoiding the suggestion that this is a common occurrence among the workforce or indeed an organisational norm. In this context, internal communications should reiterate the firm’s expectations in relation to its ethics and core values.
Essentially, an organisation relies on its HR department to effectively transmit its ethical message as it is the one that controls the main delivery processes and systems. As HR has the competencies to deal with changes and control internal communications and has close connections with key actors in ethical practices, it plays an important role in ensuring that ethical considerations are taken into account in business processes. This includes recruitment, which encompasses workforce diversity and inclusive hiring practices, training and development, and performance management, which in turn includes rewards and recognition. For example, HR is where the policies originate pertaining to employee familiarisation with ethical issues, such as data protection, anti-bribery and human trafficking. Similarly, in cases where employees need to express their concerns with organisational matters, it is the task of HR to ensure that there are confidential channels for them to do so, which in turn further enhances the transparency of the organisation.
Assessment criteria 1.2 Explain the major theories of effective change management and how these are implemented and evaluated.
Kurt Lewin’s change model is a widely used, simple yet very useful model for dealing with the change process, and it has formed the basis for many subsequent change models. At its core, the model states that the change process relies upon the perception of the necessity of the change. Thereby, a new level of the desired behaviour is reached, which subsequently solidifies to become the new norm. The model describes this process using the three steps of unfreezing, changing and refreezing.
Things that are frozen, i.e. solidified, must thaw before they are able to move or act. Under Lewin’s model, this also applies to change, meaning that in order for a change to occur, there must first be a stage of unfreezing. Change is often met by a natural resistance from individuals, whether in the workforce or other stakeholders, thus the unfreezing stage acts to foster an awareness of the need for the change. This usually occurs by demonstrating that the current way of doing things is not allowing the organisation to continue to grow toward its goals. As part of this process, the current established structures, behaviours and ways of thinking are laid out to demonstrate how the change is necessary to achieve corporate goals. Hence, communication is of particular importance during this stage as, without it, the workforce will not be able to appreciate the logic or benefits of the change.
The next step in the model refers to the actual change, whereby the previous attitudes and behaviours of the workforce have ‘thawed’ and can thus move. During this stage, it is necessary for a firm to implement and realise the change in order to move to a new state of being, also known as ‘transitioning’. This represents a particularly difficult point in the process for most employees as they can experience varying degrees of uncertainty, which can lead to increased anxiety and fear. By being better prepared for this stage of the process, the employees will find it easier to overcome these feelings and thus adopt the new attitudes, behaviours and processes. Hence, communication is again crucial to this step, this time supplemented by education and support to further familiarise the workforce with the change. The model stresses here that the change process requires careful planning and execution and should include employees to reinforce the message regarding the necessity of its change as well as its resulting benefits.
The last step in Lewin’s model describes a refreezing stage. This refers to when the change, regardless of whether it is a change to processes, people, structure or goals, stabilises and solidifies into a new state of being. This is considered a particularly crucial stage because it is when care must be taken that the employees do not slip into the previous attitudes, behaviours and ways of doing things and that the change is instead firmly incorporated into the new organisational culture and becomes an established way of doing things. This stage is best supported by enhancing individuals’ behaviour through the use of positive reinforcement based on acknowledgement and rewards.
The McKinsey 7S Model describes how organisations can successfully achieve their goals while implementing change by aligning seven internal elements, which can be either hard or soft. These elements are interconnected, and thus a change to any one of them will have repercussions for the remaining elements. The soft elements are difficult to define as they are intangible and are easily influenced by the culture of the organisation. An important soft element is shared values, which encompasses the firm’s core values, including its norms and standards guiding employee behaviour, and the organisational goals. Additional soft elements are style, which refers to the organisation’s overall style of leadership as well as its culture and ways of doing things, staff, which refers to the number of employees and their roles in the firm, and skills, which refers to the competencies and skills of both the organisation and its employees. Meanwhile, the hard elements, being more tangible, are easily identified and are considerably influenced by the managerial style. Furthermore, though equal in importance to the soft elements, the hard elements tend to contribute less to a sustained competitive advantage. These elements include strategy, which refers to the organisation’s plan in terms of how to compete on the market, structure, which refers to the organisational structure, e.g. its hierarchy, and systems, which refers to the processes and policies used by employees in the delivery of products or services.
The McKinsey 7S Model has many advantages when applied to the process of change management. Firstly, it allows an identification of the different elements that influence individual employees or processes within the organisation. Secondly, it facilitates an understanding of how a firm works and which elements are critical to its success. However, it also has some limitations. On the one hand, as it is a relatively complex model, it can be difficult to apply without the proper expertise. On the other hand, the interconnectedness of the elements means that change can cause substantial ‘noise’ and it may be difficult to identify a specific effect among the elements.
The process of mergers and acquisitions offers a way to exemplify change management based on Lewin’s Change Model. First is the unfreezing stage, in which the firm is prepared for the change. The employees are hereby shown the necessity of the change and are made ready for it and its consequences, thereby disturbing the status quo. The organisation’s established culture is thus disrupted by adjusting established attitudes, behaviours and practices. Next, the change process occurs. Through effective leadership and communication, the changes to organisational processes and the new concepts that emerge during the merger or acquisition are transmitted to the employees so that they can align themselves accordingly. Finally, in the refreezing step, the employees have embraced the change and are now able to accept the new state of being. As mentioned above, care must be taken here that the employees do not revert to their previous practices, attitudes and behaviours, but rather adopt, reinforce and thereby solidify the results of the change, even after the change management objectives have been reached. Subsequently, the whole process of change management should be assessed, e.g. through employee surveys or by evaluating certain action items pertaining to change management. Management should expect to encounter fear on the side of employees during this period, and should, therefore, emphasise clear and open communication and proactive methods to promote employee cooperation.
Assessment criteria 3.1 Discuss the main criteria and methods used to evaluate the contribution of the HR function.
Organisational success is dependent on a skilled and competent workforce, and thus training and development is a key function of HR. A good example of how to evaluate the contribution of HR is given by the case of the telecommunications company O2, which hired the management consultancy firm Get feedback to evaluate the effectiveness of employee sales training in terms of organisational performance. First, they collaborated to develop a framework outlining the behaviours and competencies required of the employees in the sales team, which included high-quality customer service, presentation skills and listening skills. A training programme was developed based on this framework, and a methodology was designed to enable its effects to be recorded and evaluated. Hereby, data were collected in terms of how much revenue each employee was generating, what their competence level was in relation to the rest of the team, and their levels of satisfaction and commitment. The data eventually showed that employees who responded faster to the skills training tended to show more engagement (an increase of around 18%) and, hence, generated more revenue. The results were subsequently incorporated by O2 into its training programme and allowed it to provide more accurate measures of individual employee value. This, in turn, was able to show how each employee could be helped to enhance their productivity and thus contribute more to the performance of the organisation.
A similar case demonstrating how HR can contribute to the performance of a company is Saudi Aramco, which developed a key performance index to determine the effectiveness of individual development plans following their implementation. Through this, it was able to establish an interdependence between high-performing employees and the use of individual development plans as key indicators. These individual development plans are part of a three-year training programme and employees who successfully complete it are ranked according to their performance.
Assessment criteria 4.1 Identify and evaluate research evidence linking HR practices with positive organisational outcomes
Assessment criteria 4.2 Explain how high-performance working and investment in human capital impact on organisational practice
The paper titled Strategic HR functions and firm performance: The moderating effects of high-involvement work practices outlined research aiming to show how firm performance is linked to HR strategies under the assumption that employee commitment to such strategies is essential to their successful implementation. Specifically, the study examined how high-performance work functioned to moderate the association between HR strategy and organisational performance, demonstrating the while the latter had a slight impact on organisational performance, high-performance work did have a moderating effect on this relationship. This effect is primarily seen when employees are provided with cash incentives for good performance as well as in the presence of personal development programmes. For instance, incentivised performance can support strategic HR by proactively encouraging employees to implement the required changes in their behaviours and attitudes. Meanwhile, the research further pointed out that personal development programmes that enable employees to develop the skills necessary to effectively achieve corporate goals are necessary when the functions of HR are incorporated into the firm’s management strategy.
In a similar vein, the study also found a moderating influence when organisations offer their support to the strategic activities of labour unions. In this case, it was demonstrated that when labour unions work with HR in the process of innovation in the organisation, they aid its strategic management as they increase the participation of employees in developing and implementing innovation. Thus, the study found that when labour unions were involved in HR decision-making, in this case in the context of Korean firms, difficulties had emerged in implementing certain programmes and policies related to a progressive strategy that was initiated following the Asian financial crisis in 1997. Overall, labour unions’ involvement with the strategic function of HR appear to play a conflicting role and may ultimately reduce its effectiveness.
This result is quite reliable as employees will be more committed and productive when they know there is a tangible reward, incentives and when the company is providing the right resources to develop their employees. Additionally, the result related to the use of labour union in HR strategies and decision making is valid due to the fact that the current HR strategies tend to place an emphasis on competition between employees, which may not be in alignment with the aims of labour unions, which work towards workplace equality.
Even though the result of the study might be credible and persuasive, the limitation of the research method and the company’s location suggests that more research need to be conducted to ensure that the findings of the study are absolute. As the eastern work culture, ethics, values and environment might be different from the western culture. For example, one culture might value appreciation more than the tangible incentive. Furthermore, this study did encounter some additional limitations. First, it used single-respondent surveys, which have been noted for their potential disadvantages, including low reliability and validity. Hence, the team from the Workplace Panel survey (WPS) tried to reduce the errors in measurement and increase the research validity by implementing various strategies. For example, they identified the individuals responsible for IR and HR in each firm as potential respondents for the survey. Meanwhile, they also used experts to conduct the interviews with the identified respondents and representatives of the workforce. In addition, the study was limited by a lack of performance data for individual companies and the fact that it based its performance evaluation only on firm net income and firm revenue. As other similar studies have drawn on a number of other measures for firm performance, including product quality, sales and efficiency, the suggestion is made that additional studies are conducted to examine whether this study was affected by its choice of performance measures. A final limitation lay in the fact that the study was limited to Korean firms that were unionized, even though the average rate for unionization in the country was just below 10 per cent. Therefore, the authors warn against generalising the results to non-unionized companies. Furthermore, as the level of union participation in HR strategic functions was provided by HR managers, there may have been some issues with the reliability and validity, although the information provided by the labour unions themselves correlated significantly with this. While this substantiation supports the study in its use of HR manager-reported survey items, there is still a need for additional research based on the participation of both labour unions and HR managers to enhance the validity of these survey measures.
In relation to the article, study and authors, it is clearly shown that the Authors have put great effort to insure the validity of the study in Korean firms as offered a rich summary of their results in the abstract, and provided a clear relation between work practices and the effectiveness of a strategic HR function. The conclusion also provided a shore summary of their main findings and limitations. The authors are well known professors in two top business schools in South Korea. Furthermore, this study is not their first research study as they have done previous studies in multiple journals in the last few years. In summary, the authors have the right experience and knowledge to conduct such a study.
In addition, the authors have based their study on gathered data from 203 Korean firms that are linked to trade union, which has increased the validity of the result. The in-depth evaluation of the measures used by the authors has enhanced the validity and reliability of the results. The authors were able to confirm the validity of their measures by conducting a correlation analysis with alternative measures. Additionally, the authors have compared and assessed their methods with other studies conducted with a similar goal. Therefore, the article is well written and explains the purpose, methodology and the results of the study. However, different studies from different countries need to be conducted as culture and values might be different and the performance drivers might impact differently on organisations across the world.
Last but not least, there is a high likelihood that the stature of HR function impacts on the implementation of work practices based on high involvement. The authors examined the effects of these practices on the association between the performance of firms and strategic HR function using a posthoc analysis and showed that significant relationships exist only between the HR function and employee training and career development. Yet, as these two variables showed no significant association with the financial performance of companies, the mediation model is not supported. However, as the mediation model has been shown to apply in other studies, the authors suggest that no generalization of these findings should be made to different contexts. In addition, they call for additional studies examining how work practices with high involvement relate to the strategic HR function in the presence of models of moderation and/or mediation.
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