Describe and critically evaluate the key factors that shape the role and practices of the HR/Personnel function within an organisation with which you are familiar. On the basis of your analysis identify the main HRM challenges currently facing this organisation. Relate your analysis to appropriate literature.
Introduction People are an important and expensive resource to a business. This asset has the capacity to be highly productive and generate revenue for the firm, but it also requires much attention and maintenance. When the direct costs of employment are added to the indirect costs of recruitment and selection, training and development, the organisation’s investment in an average full-time employee can exceed ?00,000 in a short space of time. Therefore one of the fundamental factors is how to attract the right employee and retain their services, gaining efficiency throughout. Before answering the first part of the question “Describe and critically evaluate the key factors that shape the role and practices of the HR/Personnel function within an organisation with which you are familiar”, the differences between HRM and the older style “Personnel Management” requires defining. Human Resource Management HRM can be defined as any part of the management structure that relates to people at work. It involves everything from recruitment to training to performance appraisal and overall employee welfare. HRM is originally an American management term that has taken over from the more restrictive ‘Personnel Management’, and denotes a more proactive and business-focused role, with an emphasis on good communication and staff commitment, more flexible work practices, and performance-related reward systems. Once considered a more peripheral activity, HRM has now moved to the core of the business.
The authorбпs own perspective of this assignment is delivered from within the steel industry. An employee in middle management with a history of working from grass roots to Manufacturing Manager over a 10 year period within the Basic Oxygen Steel making plant (BOS). A plant where the iron from the Blast furnace iron is refined and then re-alloyed to be supplied at the correct time temperature and specification to the Continuously Cast plant (CONCAST) where semi-finished products are supplied to the mills for rolling.
Current Economic Climate Due to the current economic climate that is affecting the trading situation, both within the home and world export market there has been immense pressure on the business to reduce operating costs to achieve business objectives. Many areas of the business especially within the carbon steels section are, and have been making a loss for an extended period. Not just since the tragic events of 11th September 2001, the events of which that have been blamed for losses in many other businesses. This event has merely compounded an underlying trend of difficult trading conditions in steel. We have as a business been implementing strategies to cut costs and increase efficiency, not just in operational performance terms but also changes in managements structures, team working implementation and further changes in manning levels (based on under utilisation of plant due to the low output).
HR Role Many of the recent objectives set by the business at боBoard Levelбп to reduce costs have required the need for the HRM function to take a role in the business, to be able to achieve the required levels. Some specific areas that the HR Department manage include Policies; such as Drugs and Alcohol and Equal Opportunities, as well as implementation of Company policy and Strategy, both long-term and medium-term. But these are day to say issues; the following headings are other fundamental areas that the HR function has played a part in during the recent cost cutting exercise. Manpower Planning This topic involves charting the future needs of the organisation with regard to numbers, skills profile, age and experience. This enables the firm to have the right people in the right numbers at the right time. There have been some major changes within the organisation over recent years; the implementation of Team Working has been key to reducing costs. It brings about some major benefits, not least a reduction in employee numbers through more efficient use of the resource. Through this implementation at Scunthorpe, a 15% reduction of manpower has been achieved. The challenge that the HR function was faced with was how to achieve this kind of figure? In reality the HRM department had a minor role to play. From Board level through to Senior Management came the directive that a percentage manning reduction was required across the board, and that it would be fulfilled. Each individual department had to carry out Key Task Analysis (KTA) to determine what sort of levels of manning could be utilised based on боtime and taskбп process. From this analysis came a set of numbers that indicated how many persons could manage an area. The dwindling numbers within the HR function meant that they hade no alternative but to take an lesser role and stand back to allow the production departments themselves to manage certain tasks. Many of the manning reductions have been found through voluntary redundancy and early retirement. Having had the departmental managers find the numbers the HR function has now stepped in to undertake the interviewing process that details the package available for early departure. Recruitment and Selection This process is by which the organisation gets the best people to do the jobs necessary to achieve its goals. Preparation is the key to effectiveness in this area, by clearly establishing the jobs to be done and the type of people needed to do them, the construction of an accurate Job Description and Person Specification will save time and money.
Recruitment within corus has been very low for many years, 1988 was the last time anyone was taken from the outside environment; the only current source of new employees into the business is through Graduate recruitment. Since privatisation in 1988, apart from graduates, nearly all (blue collar) vacancies have been fulfilled though internal cross matching, and recruitment from the in-house боcleaning contractorsбп. This source of employee recruitment is seriously flawed with many disadvantages, not least that the type of person employed for cleaning is not necessarily the right person for operation of technically based operating systems, education levels required for cleaning are significantly lower, and the nature of the work is totally different. The reason that this source has been used is due to the ease of the selection process, the lack of cost involved and the minimal time required to interview etc. Most are employed on the basis that their Contract Manager says боthey are good eggs! The other benefit is that they are hired on a 6-month trial, if they do not size up then they are easily transferred back into the contract gang. An easy recruitment process but by far the right person for the job. Graduates are the main source of external recruitment. The HR Function carries out visits to colleges and universities to entice budding youngsters into the industry with the knowledge that they are joining a company that is renowned for being the most efficient steel producer in the world, and that they will gains skills to promote themselves within the industry. The corus website is seriously directed towards graduate recruitment and is a main source of applicants. Unfortunately at present there are not many wanting to join what is seen as an ailing industry, a challenge for the HR Department to continue to recruit from a reducing market. Training and Development This in most organisations is a major growth area, with firms realising that skills development and flexibility are now key to business success. Unfortunately within corus over the last few years the amount spent on боexternalбп training has been kept to an absolute minimum and has had an effect on plant operating performance, initiatives such as I.I.P, T.Q.P. and the likes have been dropped by the wayside due to the cost and lack of resources to implement and apply. The significant changes in manning have affected this. The main source of training at present is боsitting with Nellie, the disadvantages of this being that the trainee is getting a level of training that the trainer has been trained to give. Unfortunately Plant Trainers are non-existent and therefore the training given is from someone who has little experience of training people and very often not a lot of knowledge of plant and the process. The latter is inherent of the loss of knowledge due to the departure of experienced individuals. This has now been identified and new measures have been put in place that will be discussed under боChallengesбп. Performance Appraisal This involves a formal system of regularly collecting, recording, and sharing information between the employee and the appraiser about the employee’s work performance and potential. Conducted in the correct manner, it can enhance motivation, contribute to achieving organisational goals, and assist the process of rewarding good performance. One would like to think that this is carried out, in reality there again is insufficient time for the line manager to implement as the role of боfire fightingбп other issues on a daily basis is consuming time, and the fundamentals of managing people are not being addressed. Reward Management This involves designing the most appropriate methods of remuneration and increasingly incorporates broader, performance-related items such as bonuses and employee share option schemes. These have been implemented alongside the new Team Working and Management structures and are based on Payment for Performance (PFP) on an individual basis, and Bonus related schemes for achieving operational performance. Pay bands and application of the same is an element of the reward scheme that the HR function carries out. This is a broad based application, easy to maintain and implement, but unfortunately as experienced from a personal viewpoint it has been implemented poorly with little or no communication between Pay Departments, the HR function and the employee.
The process of collective bargaining based on employees’ terms & conditions, resolving disputes that may arise, and adhering to the whole range of laws governing the relationship between employers and employees in the workplace. In reality the first line manager deals with any grievance or dispute that may occur locally and the HR department is only called upon for advice or when the dispute escalates. The Collective Agreements are through multi-union negotiations and may include Pay, Hours of work, Bonus payments, Sick Pay scheme and Holidays. There is also the Works Rules, application of, updating of and any changes of legislation affecting works rules to consider. Much of this is on an annual basis with most carried out at national level with minimal amounts at local level. CHALLENGES Skills and Knowledge The increase in voluntary and early retirements has had an effect on the organisation that relates to age, experience and knowledge. The reduction of people has mainly been achieved from those that can afford to take early retirement, those with minimal or no mortgages, have a level of savings and a lifestyle that could be led with minimal supplementation. Thus the late 40бпs and early 50бпs are the target group. These are the people who have vast experience and knowledge in the steel making industry, gained over many years and they have now been removed. The challenge is to replace this knowledge in a short space of time. The average age has been lowered by 10-12 years since the implementation of team working, this reduction in age has highlighted the reduction in knowledge and experience of the remainder posing a further and future problem that the age range of those employed is such that they will all leave the industry at or around the same time. The cycle will start again unless there is intervention to bring about change. Training Training of the individuals that are left needs to be urgently considered. As stated previously the lack of training over the last few years and the changes that have taken place have led to a deterioration in plant operational performance. This poor performance is unsatisfactory and is incurring costs to the process. The cost of training is not quantifiable, is seen by other organisations as a benefit but at present to corus it is a burden to costs and as such has not been pursued. This “benefit” has now been realised by senior management and the re-instatement of a Training Owner for plant and the re-launch of the Investorбпs In People initiative should be the start of an increase in performance. The HR function for their part are required to implement and continuously apply the new recording system required to follow this scheme up. This is not just for plant requirements but also for legislation such as COMAH, (Control of Management and Change) where there is a requirement to be able to identify an individualбпs competency in the job that he is doing. Critically, we as an organisation should be looking at the theoretical side of how to implement training programmes, studying the likes of боKolbбпs learning cycleбп to ensure thorough understanding of the subject and correct implementation of the training received. But this is theory and unfortunately the current culture is that we are боfire fightingбп, living for the present and just attempting to survive the current climate. Thus there is no commitment to provide resource that has no quantifiable financial gain. Graduate Retention This is an issue whereby in the current climate a high number of graduates are leaving the industry due to its poor outlook; safety and security are important factors to achieve motivation but unfortunately valued employees are leaving in droves. Employment packages are poor in relation to other organisations similar in size, graduates are drawn by the better working environment and benefits provided to organisations that practice.
As a business we are very much in the old style of PM whereby we utilise the resource for the benefit of the organisation rather than nurture the person to provide a service that benefits the company for the good! The HR personnel can do little for the graduate financially to be an incentive for them to stay within the industry where environmental conditions are poor and achievement of goals is stifled.
Continuing with the theme of efficiency and cost reduction there have, and there will be more manpower reductions caused by plant closures and contracting out of services. Since the age profile is reducing there will be less chance of finding early and voluntary retirement from the younger average age of the existing employees, therefore individuals are not as willing to leave due to economic reasons. The decisions will be more difficult to make about who stays and who goes.
One of the HR objectives is to improve morale. This at present is at a low, it is a difficult one for the HR function to achieve because the lack of numbers does not allow them sufficient time to address individual issues and as stated, first level management now carries out most of this. Their presence is rarely seen on plant and as such they cannot use the personal affect to improving moral. There is a need for them to relate the likes of Herzbergбпs two-factor theory of motivation (Figure 1) and Maslowбпs hierarchy of needs (Figure 2) through Team Working initiatives, personal objectives and manipulation of the reward scheme and use this to drive moral. With most though, this is an individual element and certain factors will affect certain individuals differently, thus the need for a one to one basis to find out what drives or motivates each person. Most motivation is driven through line managers and thus the HR objective is somewhat misplaced for the current situation.
One of the challenges facing the HRM function itself is the move towards being a Business Service, not supplying just to corus but also supplying a service outside of the industry. This has already been achieved with part of the Engineering function that supplies its services to outside organisations and has thus made an extra ?.3M this year alone. This has been an initiative throughout the firm to generate more income and reduce the burden of a department on the business. Compilation of services business wide has been managed partly by the HR function, it is part of their objectives to identify further areas for this type of development and quantify the benefits of disadvantages of such a move. For those within the HR Department the move towards a Business Service has seen a step backwards away from generalisation and towards specialisation, a return in some ways to old style management. HR Managers were given skills for them to cope with general issues, but the move back towards specialisation sees them dealing with specifics and having a better working knowledge of one particular area rather than being a Jack of all trades.
An interesting point made by the local HR Manager иC Not enough is done to train the TU representative to be made aware of the Business needs, the reasons for why such actions are needed and the manner in which they should be carried out. There is nothing sinister in supplying such a service to what has inherently been seen as an aggressor to the management. The wider the perspective that the trade union official has, the better he will be equipped to make more appropriate decisions on behalf of the employees that he represents, and the better his understanding of why it is being implemented. The role of Trade Unionism within Human Resource Management poses somewhat of a threat, Legge, p.273, states that Trade Unionism in HRM organisations was being bypassed through the development of Human Resource Management initiatives. Organisations are боsoftбп models of HRM; and can pose a threat to the TU. Another consideration may be, that if the employee is happy and committed in their job, that the need for union representation may not be required. To the organisation there is the need for the T.U. for multi-union bargaining purposes, therefore the HRM department must balance the need of HRM against the need of the Trade Union.
The increasing competitive pressures, expanding globalisation and a generally harder business environment has brought about a move to a more enhanced view of HRM as opposed to Personnel Management. Unfortunately as a business, corus are very much in the old style of Personnel Management whereby we utilise the resource for the benefit of the organisation rather than nurture the person to provide a service that benefits the company for the good. Numbers have reduced significantly since the implementation of Team Working; the structure has been cut to bare bones. The reduced operating cost set out at board level has been achieved, but at a cost to the business through a reduction in operational performance. Unfortunately the current culture is that we are боfire fightingбп, living for the present and just attempting to survive the economic climate to make it through, there is no commitment to provide any resource that has no quantifiable financial gain. The HR Department has a role to play in modelling the objectives set by the Board, but their problems are much the same as that of plant management in that the resources are not available to support the fundamental ideas. There are many issues facing the company, short, medium and long term that require addressing, unfortunately it is a service and any gains made through expenditure are not readily quantifiable, therefore no capital is guaranteed whereby there is no return seen. Without an injection of cash or commitment to provide extra services for HRM then there will be no advancement towards achieving better results from the employee through HRM philosophies. HRM, as previously stated denotes a more proactive and business-focused role, with an emphasis on good communication and staff commitment, more flexible work practices, and performance-related reward systems as opposed to Personnel Management These philosophies are carried out by the first line management, which begs the question, “Have the lesser experienced plant personnel carried out a process that has inherently been carried out by trained professional HR managers and got the numbers wrong, furthermore, was it implemented correctly? Overall because of the reduction in numbers within the HR department, Plant managers and Line managers are now carrying out many tasks and the HR department have a significantly lesser role in the organisation. With no forecast of any change in philosophy and increase in expenditure then the situation is unlikely to change. The input of an active Trade Union and informed official needs to be considered, there is a definite need for both and the HRM department must ensure that a relationship continues.