Human resource management is the control, directing and managing people in the context of employer-employee relationship which involves the productive use of people in achieving the organizations strategic business objectives and satisfaction of individual employee needs. HRM seeks to integrate the interest of the organization and those of the employees which is much more than a set of activities relating to the coordination of the organizations of human resources (Lorange, 1996). Major contributor to the success of the enterprise is the HRM because it is the key position that affects the customers, stakeholder values and ultimate business results. This paper gives the empirical analysis on the determinant of human resource practices of Osborne Richardson food manufacturing company examining the determinants of the human resource activities of training and development, selection and recruitment, performance appraisal, career development and industrial relation in the context of internal and external environment of performing these activities.
Osborne Richardson is one of the largest professional food manufacturing industries in the whole of the Australia. That mainly specializes in the permanent placement and contract staffs across all levels of seniorities. Having established themselves as a market leader they have an excellent strategic location from where they can access a good number of customers. The Australian food industry that is made up of the retailers, producer and processors compete within a global market and they are actively seeking to maximize their returns through responding to wider market demands. In many aspects Australian food industry over the time have continued to remain dynamic with the desire to a achieve efficiency in production so as to meet the international competitions. HRM therefore became a primary reason to help identify key issues and challenges facing Australian food processing industry. Among the issues that the management should address in order to remain competitive in the global market area outlined below: concern about rapid integration and rationalization across the supply chain and the impact that these development small producers and processor. However, changing labor requirement food processing and distribution sector has made the Australian food industry to exist within a global economic food market. Many of the changes that occurred recently are the living evidence of the development. In response to this the Australian government launched the national food industry strategies to increase investment in innovations, improved productivity, efficiency and skills in Australian manufacturing food industries. Many of the companies in Australia are mainly multinational companies and therefore as a strategy, it is not obvious that investment on research and development can only occur in Australia but the important issue is to have a well-structured business organization that are efficiently operated by competent HR staffs. This will drive the focus of the business to new technologies and access to new information. In environments where international markets are continuously becoming independent, coming with new processes and technologies (innovations) are the critical solution to the future prosperity.
According to Ariss et al (2012), Australian economy can be categorized into a large number of industrial sectors, but the main distinction remains whether the industry is a manufacturing based or service based industry. These are the bases that are used to classify Osborn manufacturing company. This manufacturing industry is selected for a lot of reasons. One, the size of the firm varies significantly in the manufacturing industries. Two, while a wide variety of products are produced to diverse customers by some industries, other industries produce a limited line of products to homogeneous set of customers.
This perspective emphasizes on the internal factors affecting human resource practices, making it a major theoretical perspective used to account for the activities performed by the human resource department. In this framework human resource functions are well suited to the strategic objective of the functional organization that produces a limited line of products and services in a very efficient way, making efficiency and cost effectiveness to become the guiding philosophy in the management of the human resource for the attainment of the organization’s objectives as it focuses on the internal factors not explicitly considering external factors.
There have been crucial changes in both the structure and the management process of public and private organizations. Therefore, adjustments to these changes like in the structure, functions and the role of human resource are of considerable importance on how to respond to these changes (Caruth, Haden, &Caruth, 2013). Currently, both theoretical and practical levels of human resource management have been integrated to make a new line of research dominated approach as strategic human resource management (SHRM). The main idea is to put human resource as a strategic factor not only for its role in putting managerial strategy into effect, but also for its potential as a source of sustainable competitive advantage. It involves designing a set of internally consistent practices and policies to ensure that firm human resources contribute to achieving business objectives. The basic reason underlying SHRM is that organization adopting a particular strategy requires HR practices that are different from those required by the organization adopting the alternative strategy. In light of the organization’s purpose and mission, both internal and external environments are considered. HRM presents an integral part of achieving the broader goals of the organization once the organization’s strategies are set and determined forming the important HR practices that is common to the theoretical work of SHRM e.g. Result oriented appraisal, training, profit sharing, employment security and participation.
This theory analyzes important and critical factors in the external environment of the firm with the major assumptions that organization has porous boundaries and human resource must respond directly to the demands of the environment. Khandekar and Sharma (2005) overlook and gave a reason that human resource practices are seen as a reaction to important external pressure like legal requirement and union activities. Legislation for example equal; employment opportunity has had a particular impact on the way organization might acquire and reward human resources. However, this view does not give any emphasis on internal factors in determining human source practices.
Analysis of the factors
Human resource practices are affected by both internal and external factors that have a significant difference depending on the country of origin, resulting to existence of extensive diversity in the human resource practices in both national and organizational context (Khandekar, & Sharma, 2005). However, human resource management does not operate in isolation and whether it is from the organizations external or internal environment the impact of every event must be considered by the HR manager. These differences in practice are linked to environmental and organizational characteristics like: type of the economic activity, size of the firm, industrial sector, national culture and organization culture, business strategy and age of the organization. This diversity of practices is reflected in the model of human resource and the changing influences of different factors in HR practices.
Khandekar& Sharma (2005) on his argument say that strategic HRM involves analyzing environmental influences which involves identification of factors that determine the success of the organization and those factors that help to achieve the objectives of the organization resulting into a conclusion that analysis of the strengths and weaknesses of the organization can also assist to identify the positive and the negative characteristics which hinder or help in a achieving the strategic objectives of the business. Since market environment has been extremely changing over the past few years, to maintain progressive success in the changing global conditions human resource plans and objectives must be judged by how well they help to achieve the business objectives of the organization, hence without such strategic views HRM will remain asset of activities that lack the purpose and coherent structure, firms must therefore do the identification and analysis of environmental characteristics that will enable them develop practices that will meet the market needs. Those pressures on the firm that cannot be controlled and changed in a favorable way within a short period of time are referred to external factors, and they are as explained below:
On technological changes; technology provides a series of advantages that shapes the relationship between the organization and employees of that firm making it an integral factor of the manufacturing industry to consider. In many cases when the organization is faced with the shrinking life cycle of the product, the organization must be forced to re-assess their operation and managing processes, this is so because technological advances create new skill, alter jobs, makes occupation obsolete and revise what employees need to learn and be trained on.
National and international economic changes; Ansari and Sajjad, (2013) argue that within the global economy the international dimension of the HR focus has shifted from the traditional topic like rewards and internal selection to concepts like globalization and international competition
On the actions of competitors; HR practices show considerable differences when comparing organizations that differ in the extent to which they are trying to gain competitive advantage. There are many ways in which organizations can gain a sustainable and long lasting competitive advantage over their competitor just to mention one of them is to develop a comprehensive human resource practice.
The culture of the nation; there is more pressure to understand how to establish HRM practices that can deal with cultural and national differences due to increasing globalization and internalization of the businesses. Culture has a crucial importance in the organization preferences in developing an appropriate structure for their human resource practices. In analyzing HR practices, organizations are classified as either manufacturing or service firms. This division is taken as the basis of the discussion that the idea behind this division is that different production processes calls for different HR practices.
These are the factors that the organization has control over and they strongly affect the HR practices. Internal factors are very specific to a firm and they influence operation of the firm in response to a given situation (Gurav and Mudalkar, 2011). At a point when a given decision is made, the effect of a firm-specific variable will depend on the situation facing the firm at a given point of decision. Examples of internal factor that affects the operation of the firm may include the following:
The size of the organization; HRM practices are a common feature within an organization and that size of the organization is an important factor explaining the intensity and type of human resource practices (Qureshi, Ansari, & Sajjad, 2013). Evidence reveals that most of the small firms do not practice any of the activities of the HR which might be a result of growth and functional division. Where two or one employee might conduct HR practices in a small size organization, large organizations might require a different human resource department for each of the functional levels. Moreover, organization culture can affect a variety of HR practices such as training and reward systems depending on whether it is a small or large organization. The structure of the organization; with the rapidly changing business environment, corporate strategies and structures are becoming more flexible and integrated to meet the demands of the global competition. Structural differences among firms affect the way in which HR practices are designed and implemented, making the firm’s strategy and structure to be an important determinant of HR flexibility and integration.
Top management; the key to organizational success is the active participation of both top and line managements in the designing an implementation of HR activities. Management styles, priorities, and practices within the organization must be considered first as managers are responsible for creating value they therefore should integrate HR practices in their work. This calls for a dynamic power and information sharing relationship between HR departments and line managers.
Power and politics; the influence of power and politics is a very common and frequent phenomena in the organization setup, especially when considering why new policies are not implemented and whether internal or external HR manager is faced with the task of which of the array of the stakeholders confronting the organization are the important constituent of the HR practices. Following history and past practices, a number of closely related factors like tradition tend to generate resistance to change in most organizations, hence it is important for the organization to consider in any change process this conduct of resistance that tries to keep the status quo.
Professional influences on HR practices; Gurav and Mudalkar (2011) argue that the decision making processes about HR policies are often done by the HR staffs and therefore their knowledge about alternative HR practices may present important variables in their own rights. However, Foster (2008) on his part argues that organization which has set profit improvement as strategic business objectives may need HRM strategies that are aimed at reducing cost of business operations. These objectives, then necessitate the development of an action plan for specific HR activities, for example, developing performance linked reward system that is aimed at promoting employee motivation and productivity. Potential inputs to these knowledge bases should be: consulting firms, knowledge obtained from peers, especially those working in the same industry, written body of HR theory and research.
According to Fisher & Marciano (1997), analysis of both internal and external factors influencing HR practices are not same in how they affect the operations of the organization and the channel through which the factor exerts its effects remain equally different. Therefore, organizations should consider appropriate training programs that will help maintain and enhance employee competence and appraisal. For example, economic factor will affects the determination of the wage and employee recruitment more than how it will affect other aspects of human resource practices are highly encouraged. To determine which factor has more effect than other factors on the human resource practices, I have conducted an empirical analysis on the Osborne manufacturing industry with the aim of determining the dominant factor that influence greatly both HR practices and individual sub practices. On the basis of the analysis carried out in the above discussion, I have constructed a simple model where human resource practices are taken as a function of external, internal and control variable in the Osborne manufacturing industries. Control variables that are included in the model are like firms market orientation that affects characteristics in employment and therefore HR practices. A measure of the size of the organization is included in the model because the size of the firm is considered to be correlated with some human resource practices. Other control variables are the existence of total quality management, mission of the organization and the human resource strategy which may take the practices regarding performance appraisal, training development, selection and recruitment, compensation and benefits and any other more.
The HR practices should be organized in a way that they meet the company strategies in meeting its set goals more effectively. It is however possible for the model to work effectively only if it is supported by the whole management. The model acts as a change agent in the organization management in that it instills appropriate characteristics required by the employee of the company to work more effectively. The employees are therefore required in this model to undergo the appraisal process as discussed earlier, training and development. This is directly linked to evaluation of the performance of the employee in the organization as far as competence is concerned. The organization should give a high recognition of communication function in its operations and that for it to operate in a more effective way it has to be a two-way flow, to ease communication between the management and the staff members. The model sets strategies that are appropriate to different roles that are performed by the company and are to improve the very performance. The policies used should be one that is able to solve the shortcomings of the organization at all time. For proper management of the human resource, proper selection of the employees is done to staff the organization with competent employees. The employees are then made to socialize with fellow employees to allow easy flow of communication between the different levels of management in the organization. This gives the employees a commitment to work hard in satisfying their objects, thus meeting the desired change in the organization.
The current changes in the economic waves are associated with the intense pressure and stiff competition that increase the level of productivity, making human resource manager to take a strategic management approach. Coordinated efforts should be made in relation to analysis of the jobs by human resource managers so that improvement is done on the productive contribution of the people in meeting the strategic business objectives. The organization will definitely fail and collapse if business objectives cannot be met. Therefore, for the organization to be successful in meeting their aims and objectives they must manage their employees quite well to enable them compete in the world of business where human resource are the competitive advantage. Leading organizations must therefore seek to develop in collaboration with the HR professionals a systematic frame work design to improve performance of the organization in away that5 can be reviewed and measured.
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