Human Resource Management and Organizational Profitability
Organizations are emerging from recession and issue related to people management such as strategic workforce planning, employee engagement, leadership development and talent management are becoming critical in the determination of profitability and sustainability. There is a recognition of the impact of effective people management by organizations and more so those which operate in the service industry. People management impacts the financial health of organizations with workers being referred to as “human capital”. Human capital is the aspect of recognizing that people in businesses and organizations are essential assets to the organization and are important in contributing to its growth and development in a way which is similar to physical assets such as money and machines (Taylor, Doherty & McGraw, 2015).
The collective abilities, skills and attitudes of workers contribute to organizational productivity and performance. Therefore, expenditure incurred in training, health, development and support is regarded as an investment and not just an expense. Efficient people management is thus important since a competitive edge gained after an organization introduces new technology is short-lived since competitors will adopt the same technology.
The main aim of the report is to analyze the work of human resource managers and the challenges they face while executing their duties and responsibilities. In addition, it covers the literature review, background of Oporto Restaurant in Australia, what human resource managers do, the challenges they face, the lessons learned from the experience and its implication to the author and other students as future managers and team members.
Literature Review
Managing people and organizations correlates with an organization’s measure of its profit performance. According to Bush & Middlewood (2013) a minimum of one hundred percent improvement in organizations’ measure of profit performance correlates with high scores of practices of managing people. The study covered more than two hundred firms where one hundred and fifty organizations were Fortune 500 companies. The study measured five key indicators of profitability and correlated them with organizations which showcased high practice scores of organization and people management versus low scores of people management practices.
The key indicators results were 19% versus 8.8% for total returns, 16.7% versus 4.7% for growth in earnings per share, 6.4% versus 3.3% for profit margin, 18.2% versus 4.4% for profit growth and 16.1% versus 7.4% for sales growth. In the studied companies, increased profit averagely equated to US$67 million. Organizations which recorded an improved score added US$294 million in profits per firm and a three-year gain of 60%. Organizations which did not record any change had an initial gain of 16% which amounted to US$78 million. The remaining 8 companies which recorded a score decline experienced a profit reduction of US$16 million which was an equivalent of 3% decline.
Most recently, further research by Hershatter & Epstein (2010) involving 142 of the world’s largest organizations showed their conclusive direct relation with their policies of people management and the organizations’ financial results. According to the results of the study, larger organizations have the resources and scale of developing strategies of talent management which are more comprehensive. Large companies which are highly profitable share three areas of profit which result in a differentiation from the companies which are least profitable. The areas include directly linking the payments to employees with the company’s productivity or to the respective manufacturing plant, performing formal succession planning across the workforce and the definition of an explicit and clear strategy which has been linked to the strategy of the business (Drucker, 2012).
Literature Review
According to Jackson, Schuler & Werner (2009) all business strategies are depended on people so as to be executed successfully. However, few human resource managers have developed a documented and explicit strategy for the management of people tailored to the goals of the business. In addition, it has currently been a challenge for many human resource managers to identify, attract, and retain the best employees due to the shift in attitudes of employees and various combinations of changes in the business practice. Furthermore, the business landscape has in the past decade changed dramatically resulting from many factors which range from boom to recession of the industry thus affecting the performance of the human resource manager.
Moreover, employees’ attitudes change dramatically during the period of recession and boom due to exposure to corporate scandals and haphazard job cuts thus making them more loyal to their professions as opposed to their companies (Langley, 2013). Therefore, human resource managers face numerous challenges in looking for and hiring talented individuals who are not attracted by packages of payment but who require job satisfaction and better working profiles.
Firm Background
Oporto is an infamous fast food restaurant in Australia which has a Portuguese theme design. Its name “Oporto” is derived from “Porto” which is the second largest city in Portugal. The restaurant specializes in Portuguese style chicken. A Portuguese immigrant Antonio Cerqueria founded the restaurant in North Bondi. Upon arrival in Australia, Antonio realized that he could not find home-grilled Portuguese chicken. Therefore, he opened a shop where he served friends and family chicken which had special Portuguese chili sauce. The company’s philosophy was to serve delicious and simple food to friends and family and has one hundred and forty outlets in Australia with plans of building more outlets in the country.
Operations
What Managers Do
A manager’s job title is used in an organization to signify a staff with specific responsibilities and duties to lead employees, departments or functions. According to Tamrakar et al., (2010) a manager is an individual in charge of a particular subset of an organization or a certain group of tasks. The manager is assigned to a certain organizational chart level and diverse roles and therefore some group of employees are mandated to report to him. Furthermore, different managers have diverse leadership styles to lead others.
The manager does a variety of tasks. In the organization, the manager practices empathy and respects the personal ideas, opinions and values of all people he interacts with irrespective of gender, culture, race and ethnicity. Furthermore, the manager offers praises and encouragement when making progress as well as listening and responding to both customers’ and staff’s queries that arise in the organization. The practices have built trust and self-esteem in Oporto Restaurant hence creating a conducive working environment suitable for every member.
In addition, an ability to build confidence and trust resolves issues and problems that exist within the workplace jurisdiction resulting in a goal-oriented workgroup and employees’ productivity (Six & Sorge, 2008). In a situation where the employee’s morale is very low, the manager encourages their team to ask for help on key areas they feel not satisfied with and get involved and participate in organizational core activities.
Firm Background
The manager also communicates the plans and vision of the company to subordinates for him to achieve both long and short-term goals and commit to the strategies of improving the organizational profit margins. Furthermore, the manager breaks the goals of each individual and advice on strategies to use in order to achieve them. According to Adair (2009) setting goals and deadlines saves resources and time and at the same time, it eases the operations of the organization. Therefore, the manager makes sure employees understand their professional growth path in the organization.
Setting visions also involve coming up with objectives for the group and decisions of what must be done in order to meet those objectives and ensure the company continues in the future. This is done by the manager dividing the work into manageable activities and selecting the competent employees to accomplish the tasks. Managers also measure the progress of its vision by establishing appropriate yardsticks, interprets performance and analyses appraisals of employees to determine the key areas that need improvement.
The manager also plans for training and team building for his team to learn from both the internal and external environment of the organization. The training is a core development element of people as it equips employees with knowledge and skills that are desirable in the organization to increase their output. According to Utz, Schultz & Glocka (2013) people are the most important assets of an organization and what a manager does determines how the assets are developed and managed. A manager also provides effective communication with the employees.
The manager, being a middle person between the team that reports to him and top management level, persuades and negotiates when needful to enhance the success of projects and team. Through the creation of effective relationship and communication with employees, the manager supports team achievement and individuals by providing career advancement guidelines for accomplishing tasks. Furthermore, the manager ensures that communication between the two pillars of management is appropriately conveyed to avoid dissatisfactions and misinterpretation of information that might lead to workforce conflicts or create a negative organizational culture. Further research by Cook (2010) showed that effective communication skills are a crucial element in developing customer service skills and the enhancement of customer satisfaction.
The manager also empowers, rewards and motivates employees in the workplace. According to Myers & Sadaghiani (2010) when employees are motivated and well communicated, they become more productive and increase their performances. Furthermore, for an individual to meet the needs of an organization they need extra information, inputs, and skills. The manager makes sure his team is motivated by offering placements, promotion of experienced and qualifies staffs and adjusting payments decisions. Argyris (2017) referred the ability to motivate and communicate with staff as “integrating” managers’ functions. When employees are satisfied, they feel secured especially if management puts priority to cleanliness, safety and health issues. In turn, this assists in customer satisfaction and high quality of services.
Furthermore, setting of daily targets and offering good compensation and employment packages in the company is the best strategy used by managers to achieve their visions, targets, objectives and clearing workload in time. A manager also acts as a decision maker as he determines how to approach non-performing employees and how to bring change to his team. When a manager applies the right decisions, the employees feel like part of the company and many sign a long time engagement with the company.
Human Resource Manager‘s Roles and Responsibilities
The manager also acts as an appraiser by evaluating and examining a procedure or process and determining the best choice to produce desired outcomes. The manager considers values, qualities and importance when taking the best approach and further tracks individual progress on assigned activities and reviews them so that he can be in a good position of offering positive feedback and counseling to the employees or customers. The manager also uses power and authority appropriately.
According to McClelland & Burnham (2008) in order to achieve set goals, deadlines and targets, a manager must use power to act in a manner that stimulates responses that are positive from the workers. Depending on the situation, the manager exercises different types of power like expert power and viz reward power to ensure employees are compliant as per the organization’s policies and procedures.
Furthermore, the manager always remains positive and recalls what an employee has done for the company and if there are some mistakes from the employee, an appropriate course of action is taken. The manager creates an effective message that fits employees, supervisors, middle managers and executives. The message explains vividly day-to-day duties when the organization attains high performance and he touches on the pride and values of the employees. A direct face to face interaction by the manager and employees reinforces positive attitudes and employees inspiration hence they are able to adapt to any organizational change that might occur.
Challenges Faced By Managers
The manager faces a lot of problem from his employees in Oporto Restaurant. The type of challenges he faces is both official and personal. Poor performances from the team is a great challenge faced by the manager. The challenges occur due to lack of skills and expertise or by employees being disorganized. The poor performance affects the manager psychologically as it puts his job contract at risk and at the same time risks the company losing from competing with other firms. However, the manager suggested that the problem can be solved through proper guidance. In case the challenge of underperformance is related to lack of skills, additional coaching and training can solve the problem.
Job incompatibility is another challenge faced by the manager. Sometimes in the organization, employees are not compatible with their regular duties and assigned tasks. The aspect has been linked to why some employees cannot hit their daily targets as they spend much time on a simple task. The manager should suggest that the solution to the problem is offering employees additional training and providing them with different tasks. Hiring, firing and resigning of employees is another challenge the manager faces.
The manager feels demotivated to see an employee who has been developed in the organization for several years resigning. Retaining the employees has emerged to be the main challenge to the manager as it has become costly to the company. Furthermore, the employees have developed a trend that if they are not rewarded well with good compensation and benefits packages they might leave the company. The firing of employees is another dilemma that the manager faces. Some employees might be underperforming but have a good working experience with the company.
Interesting Lessons Learned From the Experience
From the interaction with the Human Resource Manager of Oporto Restaurant, I learned that being a manager is not an easy task as many people assume. Being a manager requires dedication, commitment and ability to work under pressure. The interesting thing I also learned is that managers spend less time with their families as during the interview I realized that the manager was also planning to lead his team to work during night shifts and weekends in order to reduce the departmental workload. Managers are really overworked and not paid well as many people thought. Being a manager is a demanding career and a challenge to transition. Moving from worrying about own responsibilities and duties and start getting other people to work as a team and perform excellently requires outstanding dedication and commitment.
Conclusion
Managing people and organizations is a complicated undertaking which requires a high level of professionalism, patience and sacrifice from human resource managers. Their roles and responsibilities must be parallel with the requirements of the dynamic organizational environment. Companies which are successful are becoming more customer-centered, are quick to change direction, resilient and adaptive. Therefore, the human resource manager is a strategic partner, a change mentor, an employee advocate and is considered necessary by line managers. Their role in providing a support system to employees, the human resource manager guarantees ability and viability for the organization to be successful in its operations.
By assessing the effectiveness of the human resource function, the human resource manager actively contributes to achieving the company goals. In addition, he takes part in identifying the company action plans, goals, values, vision and mission. Furthermore, he assists in the determination of measures of organizational prosperity by dealing with psychologically and physically diverse people. Organizations should support the human resource function as it is key to the success of the company by assisting them in challenges faced and offering required support resources. Future managers should observe organizational culture, ensure employees are satisfied and happy with their roles and organization, review employee performance occasionally and take leadership with positive energy and attitude.
References
Adair, J. (2009). Effective time management: How to save time and spend it wisely. Pan Macmillan.
Argyris, C. (2017). Integrating the Individual and the Organization. Routledge. Doi : 9781351512176
Bush, T., & Middlewood, D. (2013). Leading and managing people in education. Sage.
Cook, S. (2010). Customer care excellence: How to create an effective customer focus. Kogan Page Publishers.
Drucker, P. (2012). Management challenges for the 21st century. Routledge.
Hershatter, A., & Epstein, M. (2010). Millennials and the world of work: An organization and management perspective. Journal of Business and Psychology, 25(2), 211-223.
Jackson, S. E., Schuler, R. S., & Werner, S. (2009). Managing human resources (p. 358). Mason, OH: South-Western Cengage Learning.
Langley, A. N. N., Smallman, C., Tsoukas, H., & Van de Ven, A. H. (2013). Process studies of change in organization and management: Unveiling temporality, activity, and flow. Academy of management journal, 56(1), 1-13.
McClelland, D. C., & Burnham, D. H. (2008). Power is the great motivator. Harvard Business Review Press.
Myers, K. K., & Sadaghiani, K. (2010). Millennials in the workplace: A communication perspective on millennials’ organizational relationships and performance. Journal of Business and Psychology, 25(2), 225-238.
Six, F., & Sorge, A. (2008). Creating a high?trust organization: An exploration into organizational policies that stimulate interpersonal trust building. Journal of Management Studies, 45(5), 857-884.
Tamrakar, S., Ekberg, J. E., Laitinen, P., Asokan, N., & Aura, T. (2010, December). Can hand-held computers still be better smart cards?. In International Conference on Trusted Systems (pp. 200-218). Springer, Berlin, Heidelberg.
Taylor, T., Doherty, A., & McGraw, P. (2015). Managing people in sport organizations. Taylor & Francis.
Utz, S., Schultz, F., & Glocka, S. (2013). Crisis communication online: How medium, crisis type and emotions affected public reactions in the Fukushima Daiichi nuclear disaster. Public Relations Review, 39(1), 40-46.
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