Modern Business Environment Essay

To what extent is the flabby HRM toughie achiev adequate to(p) and desirable for clays in the neo crease env straighten outment?The new-fangled business environmentFor the past few hundred years the business environment has been mostly based upon routine man hours and materials into hard products (produce). What we be agreeing now is a teddy bear a stylus from this production by mass labour, to a system whereby goods ar produced by machine and the services geted to facilitate this be produced by man.Taking the UK economy as an example, the latest frugal forecast by the TUC ( image 2) shows a steady decline of manu featureuring in distinguish of service sphere pranks. This reinforces the cerebration that the emphasis is shifting from producing goods to providing services. The only advantage umpteen companies subscribe are the competencies and abilities of their race (Dewe 2002). With firms using the analogous machines competitive advantage (or disadvantage) is c reated by the experience and skills of the employees.Tom Watson Jr, former President of IBM recognised the shift solely the repute of this companion is in its peck. If you burnt down each(prenominal) told of our plants & we upright kept our good deal & information files, we would soon be as hearty as ever. Take away our people & we might never reclaim (People Management 199834). Knowledge in that locationfore is power, we are moving from a physiological economy to singleA UK g everywherenment report (Competitiveness exsanguinous make-up 1999) assures this new environment as requiring great receptiveness to know-how and the ability to see its commercial potential eagerness to keep on learning at all take aims in a business and a flair in spotting new customer holds and fresh business opportunities. This designates that the in advance(p) business environment is a go down where knowledge is key.In his oral communication to the Business Link annual company, Pete r Mandelson MP Secretary of say for Trade & Industry saw the knowledge economy as transforming old jobs as much as creating new, with implications for manufacturing and service industries alike. This leads us to the idea that the modern business environment is a place where investment is subscribed in human capital to produce this knowledge economy.In the modern business environment, with the emphasis on value of human capital, security shadower no longsighteder depend on a job or organisation that upon the employees own skill and competences (Van Ruysseveldt 19953-4). Organisations may not be able to guarantee long term employment, pen to entice releaseers of quality they essential look to opposite means.Hard & Soft HRMHRM rat be divided up into dickens approaches hard or buggy (Fig.3). As we see from the p business deal hard HRM is primarily financially driven, with a fairly hard view of controlling the wages bill, scarperers are seen as a apostrophize quite t han as an as devise to the organisation, the emphasis is on getting the best invert on their property, creating efficiencies.The comp some(prenominal) position will take precedent over the collective views and concerns of employees. Such a way of managing human resources was demonstrated by Fordism where the written reporters on the assembly line were under tight controls and even had to develop individualized information to be able to reach for Ford (White genus Oestrus 1994). The work of Taylor (Taylorism) and the principles of scientific management were accustomd in the late nineteenth century to tolerate factories to be managed through scientific methods rather than by rule of thumb. This idea likewise treated the workers as just an former(a)(prenominal)(prenominal) cog in the wheel of production and worked out the best way that the worker could cash in ones chips.The modern business environment has changed greatly since the days where all workers were seen as tools to be maintained, much like machines, with regulations and tight controls. This was the hard tame of HRM where peripheral workers are disposable and labour is direct productive (Beardwell & Holden 200198). This model tolerate similarly be viewed as managing headcount in a rational a way as for any other economic factor (Storey 19876). The workforce was merely a factor of production or cogs in the wheel.This hard HRM polity suits a workforce that is involved in a repetitive job each process is standardised to al funky tighter controls. The theory is that the firm should maximise human efficiency in the same way as any other resource. This was made a conquest by businessmen like Henry Ford in the days of mass industrialisation. However, with the advent of lavishly technology machinery much of the repetitive work is now done by robot leaving only jobs for virtuoso(prenominal) maintainers and operatives, not leaving much scope for hard HRM practices to survive.McDonaldisation ha s built upon the ideas of scientific management and the successes of men like Ford. Each part of the process of delivery the food to the customer has been scientifically scrutinised and adjusted to make it much efficient. As a result of this approach, they confine a controlled workforce and a set of strict rules and procedures that ensure the workforce is operative exactly as the employers wish well them to. McDonalds withdraw recognised that there is still a place for the uneducated worker, as machines cannot be relied upon to do all the jobs. In this instance there is still a place for the hard school of HRM.SoftHRM (fig 3) revolves close to the out growing of employees. Employees are viewed as assets to the company, rather than as purely another cost of production. This requires the management to regard the workforce as partners in the work process and nurture them to maximise their output. Heery and Noon (2001) suggests yielding HRM is an approach recognising the need to treat employees as assets that mustiness be looked after. A overstuffed HRM policy would therefore place the emphasis on training and development in order to get the best out of the workforce as contrasted to tight controls (Beardwell & Holden 200198). Therefore, a policy of soft HRM seeks to increase production by communication, motivation and leadership (Storey 19876).Becker (1992 Nobel prize winner for economics) suggests that expenditures on education, training and medical checkup care could all be considered as investments in human capital. They are called human capital, because people cannot be separated from their knowledge, skills, wellness or value in the way they can be separated from their financial and forcible assets (Donkin 2002)If employees have an inherent capital value for their knowledge and skills, it would be reasonable to assume that an organisation can improve its competitive-edge through the excellence of its people (SHL group 2002).The work of Maslow s goes some way to explaining the reasons why humans need this development and training. Maslow suggests that exclusives have a hierarchy of needs (fig 1). Fig 1 outlines Maslows theory that human nature drives individuals to satisfy instinctual needs. The theory suggests that once an individual has achieved one set of needs they are no longer incite to seek this (as they already have it) and will continue to fatality to a greater extent thus rising up the hierarchy.Maslows theory would seem to suggest that a firm must ensure that employees needs are continually met not only the safety and physiological aspects (the legal requirements of an employees contract) to increase employee productivity. If a firm has to continue to meet ever increasing needs to motivate staff then this theory would be a good explanation of why firms use soft HRM.Types of soft initiatives* pliant working, working from home or allowing workers the choice of hours outside a plaza time of 1000-1500 for exa mple.* Job Sharing, by allowing employees to become multi skilled (training) they can operate in a miscellanea of roles thus making their job appear to a greater extent interesting except also allowing a co-occurrence if an employee were to be off work at any time.* Parental earmark, with the change magnitude pressures on family life some(prenominal) firms now offer special breaks for staff with children, from allowing days off for hospital appointments to paid paternity leave.* Performance link pay this could be seen as a hard or soft perspective dependant upon outdoor stage. If a system of bonuses exists for good work this would be a soft measure. If (tele sales) you only get paid if you hit accepted targets, this would be a hard measure. The primary argument in favour of PRP is that it acts as a motivator, through both providing incentives in the form of financial rewards and by recognising achievements. Further benefits cited include the fact that individuals can ident ify closely with their employers goals and that this can increase productivity and encourage quality, flexibility and teamwork (Armstrong and Murlis, 1991).As we can see from the above examples soft HRM is much more difficult to fix than hard HRM. It is more an overall approach to staff welfare and development than a put down set of rules and procedures. What makes it so difficult to quantify is that two firms may claim to be operating the above soft HRM policies exclusively in practise they maybe very different systems. For example, the belief of plastic working can be interpreted as allowing employees freedom to choose to work from home or the office, or the firm may use the system of core hours (as above). These are two very different systems just both however come under the heading of flexible working.To ascertain which method a particular firm is using will require a broad look at the pay and conditions and the freedom employees enjoy. It is also useful to note that it is seldom a character reference of an employer operating one form of HRM, it is necessary for firms to allow their workers some freedom but at the same time admit control. A good example of this is Microsoft they operate a seemingly soft policy on HRM with a upstanding range of employee benefits and training programmes (24hr nurse line, free entry to local events and professed(prenominal) development programmes). However, to retain the knowledge and skills that they develop the firm insists that if an employee is to leave the company they must not work in the computer industry for a period of 6 months. This shows that the organisation is willing to invest time and money to maintain a proudly trained workforce but at the same time keeps a tight control on them.why is Soft HRM Desirable?To examine the reasons why a firm should buy up policies of soft HRM we must look at the dangers of not doing this. A upstart CIPD espouse (CIPD 10/2001) has outlined the cost of organisation s for not retaining and motivating staff. The survey has shown that one in four employees left their organisation in 1999 (the gameest examine since the survey was created in 1995). What was even more alarming was the cost of replacement these lost staff. The honest price for replacing a management level employee was 6086 which was an increase of 28 per centum on 1999 the highest cost was to replace a professional services employee which was 8316. The danger for organisations is how this perturbation effects company performance, two thirds of organisations believe this to have a negative effect with 13 percent claiming that it has a serious negative effect.The CIPDs findings suggest that staff feel freer to leave an organisation when they know they can acquire employment elsewhere. In a labour market of low unemployment it seems that firms must make themselves more charismatic to their employees. RebusHR, a firm that deals with outsourced HR issues for a range of companies se es soft HRM as a good way of retaining and attracting the best staffgiving people choice and a feel-good factorit shows that youre interested in them and get wind to what they say(Shepherd K 2002).In the article entitled Profitable violence (People management 199828-31) West and Patterson suggest that good employee traffic are directly inked to increased performance. In their survey the Sheffield effectiveness programme they found that people management is not only critical to business performance it also far outstrips emphasis on quality, technology, competitive strategy or investigate and development in its influence on the cigarette line.The survey looked at a firm called Zotefoams, which operated an edify HRM policy. fielders on the take a crap floor operated in teams and were multi-skilled they also had a certain level of responsibility for dealing with work priorities and quality businesss. The aim was to create a multi-skilled and motivated workforce with more respon sibility at the lower levels freeing up management for other tasks. With the management freed up for other duties this allowed the firm to be that much more flexible.Out of the 100 firms surveyed, Zotefoams enjoyed the highest profits and productivity over the seven-year period of the survey. In the final paragraph of the article, West and Patterson sum up their conclusions those in which the theater directors have eagerly addressed these challenges developing skills and ownership that have experienced rapid improvements in financial performance.The findings in the Sheffield effectiveness programme are backed up by a study by the Sunday Times (100 Best Companies to Work for 2002) in which 21,000 people were studied over a period of months from the bottom end of the corporate ladder. In an article within this publication, Milton Moskowitz and Robert Levering suggest that universe a generous employer is not just good public relations its also good for business, especially when tim es are hard. This viewpoint makes sense if we take into consideration the negative effect of labour overthrow on a companys performance and the high cost of recruitment. Entering into soft practices in human resource management should save the organisation in the long term.The Human Capital Index, developed by the consultancy Watson Wyatt (Overell 2002) is based upon data of HR policies and practices gathered from 600 companies. This data is correlated against financial information. The firm believes it has identified how HR policies are effective predictors of value and which policies receive most value to the organisation. Organisations with the best HR practices deliver twice as much value to shareholders as their average competitors (Overell 2002).Is soft HRM achievable? concord to RebusHR (a large human resources organisation which handles HRM issues for clients such as DaimlerChryslerUK) the biggest barrier to the concept of soft HRM practices is the administrative burden o f co-ordinating the information (Shepherd K 2002). This stems from the problem that soft HRM is intangible, whilst it is assertable to relate high staff dollar volume to lack of enlightened HRM policies, it is not possible to directly quantify the benefits derived from the universe of discourse of soft policies. This leads organisations to see the cost and extra burden placed upon the HR department with an adit of a soft HR policy, but it is difficult for this to be weighed up against the benefits on paper.In the IPD survey Benefiting from a balanced life (July/Aug 1999) of the firms questioned many were operating soft policies with 75% offering paternity leave and 57% offering parents special dispensation for time off to look after their children. touristed also were job sharing schemes (57%) and flexi-time systems (47%). From this survey we can see try that firms are operating soft HRM policies, what is unclear from the research is to what extent these policies hazard the bottom line. The impact of soft HRM is intangible which means it leads us to the problem of quantifying any real benefits.The whole concept of soft HRM appears to be to retain and motivate staff, in the TUC economic forecast we see a high level of employee turnover in the services sector (hotels, restaurants) show the highest levels of employee turnover, but is this as a result of hard HRM practises? true turnover costs are more complex than simply figuring out the average cost of replacement. The costs of losing a good performer are greater than the costs of losing an average performer. The true cost of losing a key veteran(a) player is hard to estimate. There is the investment in development of the employee, the value of the knowledge and experience gained, and the lost productivity that also have to be considered to arrive at a true cost figure.In the case of McDonalds we see a split between management staff and shop floor workers. Whilst the management have many flexible benefit s (PRP, bonus, life/health insurance etc) the workers on the shop floor do not (McDonalds 2002). They are regarded as cogs in the wheel and are treated fairly but firmly as in the hard school of HRM. As a consequence of this, shop floor turnover is higher than that of the management. However, is this higher turnover a result of the HRM policy? Or is it a nature of the type of work? What I would suggest is that the sort of work involved with working on the shop floor of McDonalds is not conducive to a long career in that position. The result of this would be the high staff turnover for low skilled repetitive jobs.The dilemma facing HRM managers is that they need low skilled workers to provide the services such as discussed and to operate soft HRM policies such as training would move these workers away from where they were needed. We therefore cannot have it both ways there must be a balance between employee development and retaining quality people for their positions. If soft HRM see ks to address the memory board and motivation of staff we must not lose sight of the fact that we do still need low skilled workers.Soft HRM assumes the existence of a knowledge society (Livingston 2001), the emphasis is on the human resources manager the harness the knowledge. Knowledge work is typically considered to be about variety and exception rather than routine. It is generally considered to be performed by professional workers with high levels of skill and expertise. Livingstone makes the point that the potential for waste of this knowledge through corky management is immense and gut wrenching. This claim is given substance by Thompson. In his research only 14 percent of employees received any training at all and that almost half of that lasted for less than a week (figures referring to the UK 2001).For HRM to work effectively we must reorganize work to for the first time make the most of existing knowledge and human capital but also to develop this human capital to maxim ise future performance. In this modern business environment knowledge takes the leading place from other drivers of economic change such as labour, technology and markets.The dilemma we shell with soft HRM is that (as explained above in the McDonalds example) a lot of routine work is done by workers with minimal training and knowledge and only puny numbers of highly skilled employees are required. Thompson pointed out that if employment growth is not dominated by knowledge work its qualifying to be dominated by something else. There are strong and clear indications that it is dominated by low skill, routine work largely in the service sector.We cant make every job high skill, high wage, and high learning because there are jobs that neither the employee nor employer can grow. One of the reasons they cant be grown is because, in our other guise as consumers, a lot of us want the cheapest possible flights, goods, services and so on. We cant have it both ways. If we want cheap, contr ollable, efficient service, were not going to create a lot of high wage, high skill, high learning jobs.There are many dilemmas associated with the ideas of hard and soft HRM. We must realise that we cannot expand the knowledge and skills of all members of society infinitely. There will always be a place for the unskilled worker and as such there must be a place for hard HRM. However, in todays changing environment soft measures must come to the fore. The notion of the velvet glove concealing the iron fist of hard HRM (Beardwell & Holden 200193) shows that even soft measures are still measures of control. No matter how soft a companies HRM policies appear to be, they will still be designed for the benefit of the organisation rather than of the individual. The bottom line must always come first.Figures and tablesFig 1Fig 2 TUC (2002)Fig 3 Cornelius et al 2002BibliographyACAS, found at http//www.acas.org.uk/ accessed 10/11/02Armstrong, M and H Murlis, 1991 & 1994. Reward Management A Handbook of Remuneration outline and Practice Second & Third edition. London Kogan Page ltd.Beardwell & Holden, Human vision Management, A coeval Perspective, 2nd Edition, 1997Beardwell & Holden, Human preference Management, A contemporary Perspective, 3rd Edition, 2001Becker, G, cited in Donkin R, 30/10/2002 Employees as investors FT 30/10/02Bexhill College, http//intranet.bexhillcolledge.ac.uk Accessed 18/10/02CIPD, Labour turnover survey, October 2001 found at http//www.cipd.co.uk accessed 30/10/02Cornelius N, Gagnon S, Found at http//www.thomsonlearning.co.uk/businessandmanagement/ cornelius2/intro.pdf Accessed 13/11/02Derek Duffy, TMS Institute, http//www.tms.com.au/ fabrication/dcforumid5/59.html1 Accessed 18/10/02Dewe, P, cited in Overell, S, 30/10/2002 The calculated system for performance FT 30/10/02Heery, E. and Noon, M. (2001) A vocabulary of Human Resource Management, Oxford University PressIPD, Benefiting from a balanced life, July/Aug 1999http//www.cipd.co. uk accessed 30/10/02Livingston, D. (1999). The Education-jobs gap Underemployment and economic democracy. Toronto, ON Garamond Press.Livingston, D. (2001). Worker control as the scatty link dealings between paid/unpaid work and work-related learning. In Second International convention on Researching Work and Learning Conference Proceedings. Calgary, AB University of Calgary Faculty of Continuing Education.Mandelson P, Business Link annual conference 7 October 1999.Microsoft Website, http//www.microsoft.com Accessed 19/10/02Overell, S, 30/10/2002 The metric system for performance FT 30/10/02People Management, 8 January 1998Peoplesoft, on tap(predicate) from Financial Times 31/10/02Sennett, R. (1998). The corrosion of character The personal consequences of work in the new capitalism. New York, NY W. W. Norton & Company.Shepherd, K, cited in Murray S, 30/10/2002 Marrying Performance with Reward FT 30/10/02SHL group, Available from http//www.shlgroup.com/cases/philips.htm Acces sed 31/10/02Storey J, 1987, Developments in the mangenment of human resources an interim report, Warwick papers in industrial relations, Vol 17Storey J, 1989, New perspectives on Human Resource ManagementSunday Times, 100 Best Companies to Work for 2002, 24th treat 2002.Thompson, 2002, Available from http//www.ucalgary.ca/cted/confer2001/pres_summary.html Accessed 31/10/02TUC Economic Forecast, 2002, http//www.tuc.org.uk/economy/tuc-4028-f0.cfmUK Government White Paper , Competitiveness White Paper, Our Competitive Future building the knowledge driven economy 1999Van Ruysseveldt et al, 1995, Comparative Industrial and Employment RelationsWatson T, cited in Mayo A, 1998 Memory Bankers People Management 22(1) 34-38Welton MR, 2002, Available from http//www.ucalgary.ca/cted/confer2001/pres_summary.html Accessed 31/10/02White Heat 5, Video recording, Beat of the System, London BBC, 1994