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HR Strategy and Planning

May 7, 2020

HR Strategy and Planning - Ethics and Outsourcing

Through our articles we have gone from individual subjects to more wider perspectives. Hence, todays article will serve as a wider narrative. HR strategy consist planning, selecting the best fit of strategy, implementing it and facing its challenges. As we go through these areas of HR strategy, we will also discuss managerial, employee and staff employee´s role in those areas. Over past decades HR activities have been outsourced to external companies which reflects government regulation complexity and greater awareness for ethics (Gomez-Meija, Balkin & Cardy 2016, 64).

 

Challenges of HR management

Before we go into the challenges, few definitions to go through. Managers are people who are responsible for the correct implementation of actions that promote their unit. Staff employees are for example HR employees, because their role is to support the line function. Line employees in turn are those that are directly involved in producing the company’s goods or services. (Gomez-Meija, Balkin & Cardy 2016, 30.)

 

Environmental challenges, organizational challenges and individual challenges can be described as three main categories that HR manager face. Environmental challenges are outside forces that affects the company’s performance and are beyond the control of management. Including everything from the rise of the internet, economic globalization to workforce diversity, skill shortages, and the rise of the service sector. However, it also includes events that result from natural disasters and terrorism. In terms of skill shortages and the increasing complexity of those skills, it would be ethical to ask is the company responsible for providing employees with those skills? (Gomez-Meija, Balkin & Cardy 2016, 31 – 37.)

 

The organizational challenges are challenges that are internal to the company. Hence, effective managerial capabilities include proactivity, before those issues become major problems.  choosing a competitive position (controlling cost, improving process quality and creating distinctive capabilities), decentralization, downsizing, organizational restructuring, the rise of self-managed work teams, organizational culture and the rise of outsourcing. As we have gone through these areas in our previous articles its clear that they all relate to the livelihood of the employees. So how are we to “control” costs or decide which unit to downsize from? Household name companies such as Home Depot decide to sanction employees that show evidence of unhealthy lifestyles. Why? Well it appears not for the love of the employees, but because healthcare cost has increased. (Gomez-Meija, Balkin & Cardy 2016, 38 – 43.)

 

The last category which is individual challenges are those HR issues that relate to decisions relevant to individual workers.  They involve matching people with the organization, treating employees ethically and engaging in socially responsible behavior, increasing individual productivity, taking steps to avoid brain drain and dealing with issues of job insecurity. Hence, managers would be measuring individuals based on their productivity, ability, motivation and how safe, satisfied or empowered employees feel with their jobs. Done correctly, it can result in low turnover and growth in your company, not to mention a good reputation (Gomez-Meija, Balkin & Cardy 2016, 45 – 43; AdvisoryHq 2020.)

 

 

Planning and Implementing HR strategies

Planning correctly HR programs and tactics that suit the firms needs can have various of different positive impacts. Let’s go through the different types benefits strategic HR planning can have. Encouragement of proactive rather than reactive behavior. Companies that are proactive vision where the company wants to be and better prepared than companies who react to issues as they come. HR planning can help communicate companie´s goals to employers. Hence, increasing positive results. Strategic HR planning can stimulate critical thinking and the development of new initiatives only if it is a continuing and flexible process rather than an inflexible procedure. (Gomez-Meija, Balkin & Cardy 2016, 49.)

 

Identification of gaps between current situation and future vision can be crucial for any firm to maintain good performance. HR planning can basically help with where we are now and where we want to be. Hence, aiding with goal achievement. However, for any HR plan to work line managers must believe into it. HR plan that is done correctly by the top executives with consultation to HR professional can still fail if it’s not implemented into the work by managers at all levels. A good tip to get everyone involved is to create common values of who we are as a company, it can redirect company values with a common goal and a common vision (Gomez-Meija, Balkin & Cardy 2016, 49.)

 

Challenges and choices in strategic HR planning

A firms strategic HR choices are tied to the option they have in planning their human resource system. Choices that for example must be made are in areas such as workflow, staffing, employee separation, performance appraisal, training and career development, compensation, labor relation and employee rights. Making these choices and choosing the best strategic method that suits the companies need comes of course with challenges and complications. (Gomez-Meija, Balkin & Cardy 2016, 52; AdvisoryHq 2020.)

 

Maintaining competitive advantage is usually short lived, because other companies are likely to imitate it. Hence, the challenges for HR is to provide a strategy that is more long-term and provides a sustainable advantage. A good example would be programs that are developed to maximize employee’s potential. The strategy would therefor reinforce the firm’s overall business strategy. This of course assist in taking a step back and looking at the big picture. Because, if managers are preoccupied with day-to-day problems, then by definition they don’t have the capacity to implement the firm’s long-term vision. (Gomez-Meija, Balkin & Cardy 2016, 50 - 51.)

 

No two firms are alike. Firms differ in history and culture. Hence, in developing an HR strategy firms unique needs have to be taken into consideration. At the very same time just as there are no two firms that are completely the same, no two firms operate in the same type of environment that affects them. Therefor, a major HR issues is to develop strategy that will work in the firm’s unique environment to give it a sustainable competitive advantage. However, if the plan is good, but its not implemented into practice its use will remain feeble. Meaning, that managers of all levels must support it and good communication of the plan delivered to employees for them to understand and also support it. (Gomez-Meija, Balkin & Cardy 2016, 51.)

 

Intended and emergent strategies are two types that most companies have. Meaning that not all plans are made with calculated rational, but some have emerged through interplay of power, politics and personalities. Hence, the challenge of HR is to find a way to combine these two separate ways of working. The final plan is never ready. In this we mean that the HR strategy that has been chosen to fit the needs of the company must be flexible and accommodate changes. The challenge here is to create a vision while staying flexible to adapt to everchanging market environment. (Gomez-Meija, Balkin & Cardy 2016, 52.)

 

What about effective human resource management in companies that are international and have multiply sectors all over the world? In these situations, the company has the extra responsibility of efficient monitoring especially if their companies are in countries where problems such as use of child labor is common. In the name of ethical trading child labor should be taken extremely seriously. According to BBC new panorama had investigated factories in Turkey and found that clothes being made for brands such as Mark and Spencer and Asos had been made using kids as young as 15 years old. Moreover, refugees where also found to be working in those factories. (Panorama 2016.)

 

HR department and Manager

The role of HR professionals is to act as consultants, assisting managers to do their jobs better. Which is effective use of human recourses. Its obvious that relationship between HR professionals and managers is critical. And, steps to increase or strengthen their relationships include the acceptance of the notion that HR personnel are internal consultants who can provide valuable advice. Moreover, companies should also periodically conduct and HR audit to evaluate how effectively managers are using their human recourses. (Gomez-Meija, Balkin & Cardy 2016, 62 - 63.)

 

 

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Outsourcing: What HRM areas are most commonly outsourced and why?

 

HR outsourcing involves hiring companies to manage personnel which includes administration of health benefits retirement plans, and employee compensation insurance. These are just few to mention and as you can notice a lot of legal issues. Thus, companies that are growing or barely maintaining their daily functions should consider the option to outsource their most valuable asset employees to a company that specializes in HR management. In this part of the article we will be concentrating on the question of whether or not to outsource?

 

Having an in-house HR team that you can easily access is a great benefit to management. However, there are reason to outsource that would benefit the company’s performance. Everything in HR does not have to be outsourced. In fact, small businesses are more likely to outsource other human resource functions such as payroll administration and recruitment. Therefore, the company can focus on their core businesses and maintain their competitive advantage. Company's leaders don't have to get distracted by HR issues. (Biro 2017.)

 

Having your own HR department means having HR professionals on payroll and that’s expensive. Therefore, small and medium-sized business find it more beneficial to outsource part of HR to a company that provides HR services instead of having them in-house. The financial savings that can be made by outsourcing has been found to be significant. This can be seen in the popularity of outsourcing. (Biro 2017.)

 

Offering competitive benefits comes along when having HR outsources. Providing a good health benefit is expensive, but necessary to recruit and hire major talents. Having an outsourced HR to a specialized company can provide access to large group benefits. At the same time benefits and payroll are key issues to keep your staff satisfied, but deal with these issues by yourself? Let someone else handle them. (Biro 2017.)

 

Better staff for hiring, because HR services develop an efficient hiring process to ensure talented people attract to your company. Once people are hired HR services may also assist to help with getting the employee familiarized with the responsibilities and company culture. This in return helps them to get on track faster and provide results quickly. Overall satisfied employees don’t leave their jobs, meaning lower employee turnovers. (Hamlin 2019.)

 

Laws and regulations are changing all the time and complying is not only important, but it’s also your company’s legal responsibility. HR companies one major function is to ensure compliance. Compliance includes of course legal issues, but union and regulations as well. Failing to meet these standards can have serious financial consequences. Preventing this headache with outsourcing this function to HR company seem like a small gesture. (Hamlin 2019.)

 

Good news is that the process of outsourcing can be done by a software. Quantum workplace provides an employee engagement software that helps managers to implement a positive workplace culture. The software gives team leaders direct access to employee feedback and real-time insight. Hence, resulting in better management. Some of the features of the software includes providing managers with tools to better coach and mentor their employees, increase visibility among employees and the platform gives managers the insight to engage their teams in cycles of continuous improvement. (Quantumworkplace n.d.)

 

Its not all roses, outsourcing has its risks and disadvantages as well. Every time there is change there will be of course resistance. Because, change is hard. Outsourcing is risky having everyone under the same roof helps to monitor workflow. HR services are responsible for day-today operation and poor performance by outsourced company results in negative impact on the company (customer). Employees might also feel distance when not being able to access HR personnel’s, because the service is outsourced. And, lastly but not least a major issue is information leaks that might occur during the process of turning over the HR service to an outside company. These information’s can include sensitive information about the company’s culture or for example products. (Roberts 2019.)

 

Sources

 

AdvisoryHQ News 09 April 2020. Finding the Best HR Consulting Company to Help Build a Strong and Motivated Team. URL: https://www.advisoryhq.com/articles/hr-consulting-firms/. Accessed: 07.05.2020

 

Biro M. 25 August 2017. Outsourcing HR: The Good, the Bad, and the Tasks. Talentculture. URL: https://talentculture.com/outsourcing-hr-good-bad-tasks/. Accessed: 07.05.2020

 

Gomez – Meija L., Balkin D. & Cardy R. 2016. Managing human resources. Eight edition. Pearson.

 

Hamlin K. 12 March 2019. The Advantages of Outsourcing HR Functions. Small business. URL: https://smallbusiness.chron.com/advantages-outsourcing-hr-functions-21169.html. Accessed: 07.05.2020

 

Panorama 24 October 2016. Child refugees in Turkey making clothes for UK shops. BBC news. URL: https://www.bbc.com/news/business-37716463. Accessed: 07.05.2020

 

Quantumworkplace N.D. Website. URL: https://www.quantumworkplace.com/product/employee-engagement-software. Accessed: 07.05.2020

 

Roberts C. 12 February 2019. The Disadvantages of Outsourcing HR Functions. Small business. URL: https://smallbusiness.chron.com/disadvantages-outsourcing-hr-functions-56209.html. Accessed: 07.05.2020

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