Strategic human resource management
Dsicuiss about the Strategy For Improving Employee Recruitment.
Strategic human resource management is a concept that has emerged in the past few decades and has gained a lot of importance amongst business organisations. It is a concept that aims at aligning the human resource management practices of a company with its organisational goals and objectives in order to achieve a long term market success (Daley, 2012). On the other hand, the changing market trends are having a huge impact on the human resource management practices of business organisations. Internal and external environment. such as legal and political, social, technological, economic, etc. are posing significant issues for human resource managers in almost all the industries, which increases the need to make a shift to strategic management of human resources (Truss, et al., 2012).
I have been working in ABC Company Pvt. Ltd. since the past 3 years. ABC Company was founded in 1998 by an American entrepreneur to provide technical solutions to the customers of his business associates spread all over the globe. The company has its foreign subsidiaries in 10 countries where a workforce of 890 employees works in shifts to offer 24/7 technological solutions to their clients. With the evolution of the IT sector, the company has been experiencing a number of human resource management issues. Therefore, in this report, we will discuss two major issues that the company is most likely going to experience in the near future from a strategic human resource management perspective.
In the last few years, there has been a complete about-turn in the fortunes of many IT professionals. Some of the figures indicate that there have been approximately 100,000 IT professionals who have lost their jobs. There is a huge deficit of staff with specific skills in the IT sector and despite of recession, the salaries of IT professionals are increasing continuously.
As discussed above, the changing market trends and the ever increasing competition amongst rival firms is having a huge impact on the human resource management practices of business organisations and is making human resource management tougher than ever. Human resource management issues that ABC Company Pvt. Ltd. is most likely going to experience in the near future are discussed below:
The IT sector is the most importance sector for most of the major economies in the world and is experiencing a great boom in the present economic conditions. Most of the people believe that there is a high availability of potential candidates in the IT sector because of the recessions in the past, but there is still a great deal of shortage of staff that possess certain skills or knowledge in technological areas, such as Java and .Net (The HR profession , 2010). In most of the cases, business organisations have reported that out of all the applications that come in for recruitment and selection, only 10% of them match the person specification that the management desires.
Industrial background
Recruitment of candidates has been one of the biggest issues in the IT sectors because fresh and talented pool of employees have a greater tendency to work with multinational firms that have a high reputation in the market as employers. As a result, most of the talented employees are already taken up by huge multinational firms, which makes it tougher for small and medium sized enterprises to find the right candidates for their organisations. Business organisations operating in the IT sector have to carry out recruitment and selection processes over and over again, which increases their operational costs (DQINDIA ONLINE , 2015). Further, to compensate the lack of a competent workforce, business organisations have to implement training and development programs for their new staff so that they can achieve the desired skills and competencies. Overall, shortage of a competent pool of talent in the market is one of the biggest issues in the IT sector, which is also having an impact on the financial resources of business organisations.
As discussed above, there is a large pool of fresh candidates who apply for jobs in the IT sector every year. People not even belonging to the IT sector are also willing to work in IT companies because of the greater employment opportunities that the IT sector offers. Further, the lack of a competent workforce in the IT sector always keeps business organisations on a hunt for talented employees and to recruit them by hook or by crook. One of the most common strategy that business organisations use to attract talented employees from their rivals is to offer them a greater salary or a benefit package (Clapon, 2015). Talented employees working in the IT sector are aware of their worth and are always ready to make a switch to business organisations that can offer them a better salary plan. Therefore, the IT sector experiences very high labour turnover ratios, which increases the problems for business organizations working in the IT sector.
IT sector organisations invest a lot of their resources in training and developing their employees so that they can learn the skills and the competencies that their company requires. When these employees leave their company, the resources invested in their development goes in vain and business organisations have to make more investments to recruit new staff members to fulfil the vacancies formed (McKechnie, 2014). Therefore, high retention rates in the IT sector result in loss of talent, wastage of resources and an increase in the operational costs. Therefore, it is another major issue that the human resource managers working in the IT sector industry are currently facing.
Human resource management issues
It is important for the human resource managers of ABC Company Pvt. Ltd. to analyse the issues identified above using different strategic human resource management models because some issues can look big but might not be experienced by the industry in the longer run. Further, there can also be certain issues that are experienced by a few companies alone and are not persistent in the industry. Therefore, let us analyse the issues discussed above using Harvard model of strategic human resource management.
The Harvard model of strategic human resource management was first published in Managing Human Assets by M. Beer, Bert Spector, Paul R., Lawrence D.Q., Mills, Richard E. The Harvard model consists of six components i.e. situational factors, stakeholder interests, HRM policy choices, HR outcomes, long-term consequences and feedback loop (Armstrong & Taylor, 2014).
Under the Harvard model, the developers suggested that there are four areas where the 6 components can have implications for human resource managers while formulating human resource management policies. These areas are:
Human resource flows à this area is related to recruitment and selection, placement, appraisals, promotion, termination, etc.
Reward system à pay systems, motivation, etc.
Employee influence à related to the delegation of authority, power and responsibility
Work systems à designing of work and jobs and the correct alignment of people.
If all of these four key policy areas are correctly managed by the human resource managers, it would lead to the four Cs, which are the most essential elements that are required to be successful and competitive in the market. the four Cs are commitment, competence, cost-effectiveness and congruence (Agyepong, et al., 2010).
Analysing the situation of the IT sector using the Harvard model of SHRM, it can be clearly observed that one of the key policy areas i.e. human resource flows, is not much effective in the industry, which makes it difficult for the IT sector business organisations to achieve commitment, congruence, competence and cost effectiveness. Further, the inefficiency in to achieve the four Cs can have negative long term impact on individual well-being, organisational effectiveness and societal wellbeing. Therefore, it can be clearly stated that recruitment and retention of employees are two major issues in the IT sector industry.
To achieve organisational success, it is important for companies like ABC to have a competitive human resource management staff that can strengthen its employee management practices so that recruitment and retention issues can be properly dealt with. Some of the strategies that would help the human resource managers at ABC Company Pvt. Ltd. to deal with recruitment and retention issues are discussed below:
Recruitment and Selection
First of all, investing in human resource planning systems can be of a great benefit for the company. It has been found that a large number of companies undermine the benefits of a human resource planning system and avoid investing resources into it. Human resource planning is a system that allows business organisations to forecast workforce demand of its workplace, using employee data from the past as well as from the present, and finding out the best possible ways to fulfil the demand (Hughes & Rog, 2008). Human resource planning systems can be very helpful to companies like ABC Company that operate in a sector where the human resource demand and supply patters fluctuate in real time. It will help the company in avoiding shortage of staff as well as ensuring that the number of employees do not exceed the workplace demand.
Secondly, having clearly defined job and person specifications can help the company in attracting a greater pool of talented employees who possess the qualities that the company actually wants. Most of the times, business organisations add up too many things in their job descriptions and specifications just for the sake of making them look more fancy and competitive. Such strategies can limit the number of candidates who apply for a job as the job roles and responsibilities sound too tough or are unclear (Yang, et al., 2012). Therefore, preparing effective job specifications and descriptions can help in strengthening recruitment process and attracting a greater pool of candidates.
Thirdly, establishing itself as an employer of choice in the market will help ABC Company in attracting as well as in retaining a better pool of employees. Fresh talented as well as the existing employees like working with companies who cares about its workforce. In such companies, the employees demonstrate a lesser tendency to quit (James & Mathew, 2012). To establish itself as an employer of choice, the company will have to ensure welfare of its employees by offering them better work-life balance opportunities, salaries and benefits plan, on-the-job welfare activities, etc. Such a strategy will be very helpful in becoming a competitive employer in the market.
Fourthly, human resource managers can start a system of employee feedback where they can ask for the feedback of their workforce about the workplace conditions. The surveys can be made anonymous and should contain subjective questions, such as, are you happy working with us? If no, please mention you reasons for the same. Such questions and survey feedbacks can be very helpful in identifying things that can lead to high employee turnover and can be dealt with before hand (Samuel & Chipunza, 2010). Further, making the survey feedback forms anonymous will help the managers in getting reliable and accurate data as the employees will not be questioned for the answers that they give.
Conclusion
Recruitment and retention issues can be a great challenge for business organisations as well as for human resource managers. They can have a long lasting impact on a company’s market reputation, productivity, efficiency and profitability. Especially for companies like ABC Company Pvt. Ltd. that are operating in the IT sector, where recruitment and retention are major issues, it is imperative to deal with these issues in the best possible manner because being able to deal with issues can make a company more competitive in the market while not being able to deal with issues can make a company lose all of its market share to its competitors. Therefore, the managers at ABC Company should look into the above recommendations and implement them in their workplace so that the company can meet its organisational goals and objectives.
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DQINDIA ONLINE , 2015. The big HR challenge for Indian IT service providers. [Online]
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Armstrong, M. & Taylor, S., 2014. Armstrong’s handbook of human resource management practice. s.l.:Kogan Page Publishers.
Agyepong, S. A., Fugar, F. D. & Tuuli, M. M., 2010. The applicability of the Harvard and Warwick models in the development of human resource management policies of large construction companies in Ghana. [Online] Available at: https://dspace.lboro.ac.uk/dspace-jspui/bitstream/2134/11549/8/The%20Applicability%20of%20the%20Harvard%20and%20Warwick%20Models.pdf[Accessed 11 May 2018].
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