Human Resource Management (HRM) is now a term which is now widely used, yet loosely defined. So, what is HRM? Derived from this and certain theories addressed later in this research, HRM in the field of organisational behaviour engages a set of policies designed to maximise organisational integration, employee commitment, flexibility and quality of work. With this perspective, and rapidly changing trends, it is no surprise and even merit that Industrial Relations (IR) are starting to play a minor role in organisations today.
Yet how can one define such a broad area of an organisation? There is no one theory on Human resource management, and certainly not enough ‘evidence’ to suggest its benefits within a competitive market force, especially gaining competitive advantage for a specific company. This must be done through analysis and evaluation that may be conducted through various forms of communication, for example; confidential employee questionnaires that don’t disclose the employee’s name for a true indication of staff morale, or cross team meetings to analyse certain aspects of staff outlook for their company. Ultimately, a harmonious and ‘happy’ workplace whereby staff actually are excited in a sense to actually go to work and sit down at their desk.
The term ‘Human Resource Management’ is certainly not new in the workforce, but in recent years has been addressed in depth and with new trends there has been a shift to focus on the staff, and thus is becoming almost ‘fashionable’. Many believe that this open approach to HRM can increase competitive advantage for a firm. There are beliefs that competitive advantage can best be achieved as Guest put it “by seeking improvements in the management of people and organisational structures; in other words, through better utilisation of human resources.”
Bearing this in mind, there are two functions that are necessary to note when describing HRM. These are the ‘legal’ and ethical compliances within an organisational structure that the firm, including managers and staff, must adhere to. It is essential that HR managers have a basic understanding of the law of employment and what is considered ‘illegal’ as opposed to ‘legal’. In any legal relationship, there are mutual obligations for both parties, and the arena of employment is certainly no exception. It is only when these mutual duties integrate successfully with the objectives and mission of the company that productivity levels will supposedly improve.
There are many things that must be considered when entering into a discussion on legal matters within HRM, ranging from contracts between certain parties, to Occupational Health and Safety requirements which must be fulfilled as preventative measures must be taken for health and well being of employees in any field. For example, Ghetto shoes implement a strategy that involves using a specific type of ladder with strong ground support when looking for boxes on high shelves, preventing any damage that may ultimately be quite harmful to employees. Another may be safety gear and helmets when working in a construction site where there may be falling debris that could injure someone quite badly, and thus have implemented signs allowing employees to realise the importance of such matters.
One major issue in the law is that of ‘awards’. These are certain contracts with employees, set by state and federal industrial relations, outlining the minimum terms and conditions that an employer must provide for the employee, this includes conditions such as: rates of pay, hours of work, types of leave (holiday, sick) and termination. Yet, it is at the employer’s discretion whether they would use these minimums or decide to increase that standard. Note that employees may have a specific contract designed for their specific job, which would exceed the award in various ways, and are to be discussed confidentially between the parties involved.
Discrimination is also a huge factor in the legal aspect of HRM today. According to Stone discrimination involves “making a distinction between individuals or groups so as to disadvantage some and advantage others.” This may be direct or indirect. Direct being an obvious form whereby a woman may be terminated purely on the basis of her gender. Indirect is more when a company makes a promotion dependant upon five years continuous service, which is discriminating against women who take time off to handle newly born babies, therefore being unable to stay at work consecutively. A terrific example derived from Stone was O’Neill whereby the plaintiff had undergone a medical examination just before he received the title of ‘purchasing officer’. He was unable to have the job, as he had an acute back condition due to gardening in his younger years. Yet, under the Equal Opportunity Act 1984 this act was found discriminatory as refusing to employ the man had meant he was treated less favourably than someone who did not have a stiff back. As it is shown here, along with millions of other similar examples, there is a fine line between what is seen as ‘fair’ and ‘unfair’.
This is just one of the many legal aspects within human resource management, and certainly more legal aspects will be covered, yet the ethical factors are also extremely important as well. These mainly include cultural differences within the workforce, and differences in race, gender, religion, etc. Although these heavily comply with legal aspects, it is recognisable that regardless of this, there is still that responsibility of managers and employees alike to be ‘ethically correct’ which may involve hiring a person of a certain race, despite their particular beliefs. Furthermore, hiring someone that is suited for the job, with the qualifications to exceed levels expected, even though they may have a wheelchair or a different colour skin. In the rapid movement towards equal opportunity for all, this is an absolute must for firm’s today, and the managers should have open minds to all, as it may actually be more effective for the company hiring this person over another. There is limited amount of information concerning the ethical practices of HRM, and it is found that it is more a direct objective by the company, and the employees within that company that determine what is ‘ethically correct'.
There are many functions within HRM that may determine structures, morale and overall competitive advantage within the specific industry. These include; HR planning, Job Analysis, Job Design, Recruitment, Selection Career Planning and Training and Development. Specifically, the selection process and training and development activities will be focused on within the retail industry in Australia. Yet, what is selection? What is training and development?
Selection is the ‘hiring and retention of key human resources’, and strategically an organisation’s ultimate success depends on the best applicants being selected. Jobs and people must be matched to ensure employee satisfaction and effectiveness. Some issues surrounding the selection policy are that of the EEO, the quality of the people, the source of people, the manager’s roles and selection techniques implemented to gain all the positives out of employees. The costs of poor selection are direct, whereby an employee may not compare probationary period, and indirect, which involves disruption of work routines, loss of investment and difference in performance levels, all of which affect a firms’ competitive advantage. Many tests can be taken by potential employees at a company in the selection process, which include employment tests, where the company asses’ the match between applicants and the job’s requirements. Interest tests, where there is a comparison in the applicant’s interest patterns with successful people in a particular job. Aptitude tests measure special abilities that are required in specific jobs, alongside intelligence tests, which measure applicants IQ. Last but not least, personality tests which measure the basic aspects of personality, all of which are reliable, yet only an indication of the persons ability, and if done correctly can influence a firm’s competitive advantage.
Once this is assembled, one must bear in mind the question types that adhere to the law, and are ethically correct. An interviewer must not be vague and ambiguous, too direct, or use trick questions to ‘catch’ the interviewee out on a limb. Certain models have been implemented to determine who is right for the job, including the most commonly used model - the compensatory approach where the manager considers all of the selection data for the candidates who have successfully passed the initial screening. Thus, allowing a better overall impression of the applicant. Another model is the Person-Job match, where the company matches the whole person with the whole job. These models along with others can be successful, if used in the correct manner, and will be outlined with a specific company for a more in depth analysis.
Yet, training and development is also extremely important when assessing the firm’s competitive advantage in their specific industry. So, what is training and development? It is the development of existing employees, the induction and orientation of new employees, the training of existing employees to teach new methods within and organisation and the education of employees to ensure overall competence, and thus achieve competitive advantage. Theories have been applied when dealing with training and development, three of which are applicable in every situation. Firstly, the Neo Human Capital Theory, whereby the company will train to develop worker flexibility and responsiveness. Secondly the HRM Theory, where training is used to increase employee commitment, and thirdly, the Learning Companies Theory. This is said to promote individual and organisational learning to make them more adaptable to change. Benefits of these mindframes are huge for firms. As it increases performance improves flexibility and adaptability within the workforce, allows career development, which entails promotion, and allows the company an all round better skilled workforce Sisson, 1994. Programs may be implemented to gain a wide variety of training and development, which may be on the job, such as job rotation or traineeship, or on site which may entail interactive video training. McDonalds actually implement this for all new staff with the first shift solely based on videos and front counter training. Off site training where employees may attend a seminar or formal course to enhance knowledge of the industry is also another form. Yet just like any other activity, it must have a plan, where the company outlines objectives of training schedule, implements them, assesses them, them if need be, adds to the already existing format.
