Human capital contributes to organizational performance and helps businesses to establish and maintain a competitive advantage. According to human capital theory, knowledge gives people greater cognitive skills, hence, enhancing their productivity and efficiency potential. Human capital is an inimitable asset unlike resources such as raw materials and technology. Consequently, it is vital for organizations to attract, recruit, and employ workers with the right combination of knowledge, capabilities, and skills that can contribute to achievement of company’s goals and objectives. It is a powerful tool that HR managers can use to report, track, and impact strategy and organizational performance. HR practices such as job enrichment, team building, participation, performance evaluation, and compensation are vital in enhancing human capital in an organization. This papers looks at some of the core human resource management activities in an organization.
Explain the environment in which human resource managers operate
The human resource managers work in an environment where workforce diversity is vital. Organizations that embrace diversity benefit through bottom line returns, enhanced efficiency and innovation. HRM diversity practices also enhance organizational performance and distributive and procedural justice. Workforce diversity is broader than Equal Employment opportunity (EEO) and Affirmative Action (AA). AA is focused on bringing in minority groups in the workplace while EEO promotes equality of such groups. EEO and AA are largely driven by legislation while workforce diversity is a proactive intervention of creating an inclusive organizational culture. Workforce diversity goes beyond legal compliance with EEO and AA requirements to fully embracing cultural pluralism in the workplace. Some of the laws that are relevant to HR managers include Equal Pay Act of 1963, Civil Rights Act of 1964, Age Discrimination in Employment Act of 1967, Civil Rights Act of 1991, Rehabilitation Act of 1973, Pregnancy Discrimination Act of 1978, Americans with Disabilities Act of 1990, and Americans with Disabilities Act of 1990. The HR managers are also obligated to use recruitment processes that do not lead result in disparate treatment and disparate impact discrimination.
The work of HR managers is influenced by many internal and external factors. The HRM activities are affected by the state of the economy and the competition levels. In this regard, small companies are unable to recruit talented personnel compared to large organizations. In addition, when the economy is strong unemployment rates decrease resulting in higher wage and salary levels. Conversely, deterioration of the national economy results in workforce reduction and significant cuts in wages or salaries. The HR managers must also constantly evaluate compensation structures to ensure that they remain competitive. They must also engage with the employee unions and adhere to all existing and new legislations. Most importantly, they must stay updated about changes in technology, which plays an important role in improving HR functions such as selection, recruitment, training, and performance appraisal. Other internal and external factors that affect HRM activities include the action of competitors, organizational strategy, the size, and the structure of the organization, politics, the priorities of top management and line managers, professional organizations, and the national culture and traditions.
Explain the human resource planning function
Human resource planning is important in forecasting future personnel needs, coping with changes in the external environment, and creating high talented personnel. The process involves analyzing organizational objectives, taking inventory of present human resources, forecasting future manpower needs, assessing manpower supply, matching manpower demand-supply factors, and monitoring the human resource action plan (Ulferts, Wirtz, & Peterson, 2009).
Job analysis is the process of gathering and analyzing information about the content, context, and human requirements of jobs. The process starts by formulating an objective of the proposed analysis. The process should be supported by the top management and union representatives. The next step is to identify jobs to be analyzed and reviewing existing documentation. Job analysis is conducted using Versatile Job Analysis System and specialized questionnaires (Zula & Chermack, 2007). After that, job descriptions and job specifications are drafted that are updated as organization changes. On the other hand, the selection process entails screening of application forms, conducting tests, conducting interviews, and making selection decisions.
Explain human resource development
According to Ganesh (2012) training provides employees with knowledge and skills that they require for present tasks. On the other hand, development involves preparing employees for future jobs or responsibilities. Training has a direct impact on the employee productivity, and it comes in different forms including basic skills training, on-the-job training, off-the-job training, coaching, and mentoring. It also enhances employee performance, employee satisfaction, consistency, and the quality of services and products. According to Gupta (2012) training could also increase the quality of communication process between employees and their superiors, and improve teamwork ability and the quality of workplace results. On-the-job training methods include coaching, monitoring, job rotation, understudy and apprenticeship while off-job-training methods include lectures, vestibule, simulation, sensitivity and transactional trainings. On-the-job training methods are less distributive and inexpensive compared to off-the-job methods. On-the-job training is normally used in manufacturing industries while off-the-job training is suitable for managerial and non-production related jobs.
The ranking method is the fastest of all other appraisal methods. However, it is less objective and is only suitable for a small workforce. The behaviorally anchored rating scale combines the attributes of critical incident and graphic rating scale approaches. It provides an actual performance of the employee performance, hence, making assessment more objective. Generating BARS is a time consuming process, since it requires the participation of managers and employees. Graphic rating scale is simple, reduces personal bias, and allows comparison between employees. They are used in formal performance appraisal and can be applied in many different types of jobs. On the downside, graphic rating scales tend to be subjective. The narrative method provides detailed information about employees’ performance but it is time-consuming and supervisors could abuse the process to punish workers that they do not like. The management by the objective (MBO) method involves setting individual objective plans, giving feedback and evaluating performance, and rewarding according to performance. The MBO method can be likened to the critical incidents methods as employees are provided ongoing feedback. However, just like the graphic rating scales, MBO method is time consuming, lengthy, and expensive. The critical incidents method is based on directed observations and easy to develop and administer. Critical incidents method, ranking method, and graphic rating scale are traditional appraisal approaches while MBO, behaviorally anchored rating scales, 360-degree appraisal, human resource accounting method, and assessment centers are modern performance appraisal systems (Purohit 2015).
Explain compensation and beneﬁts
Having good compensations plans is vital for employee motivation. External and internal equity is observed when setting wages and salaries. Observing internal equity creates perception of fairness and reduces exposure to discrimination. Equitable compensation also promotes team work and maintains consistent performance standards. Companies have four options, including to pay what the market is paying (follow), pay more than the market rate (lead), pay less than the market rate (lag) or a combination of follow, lead and lag. Organizations whose pay levels are commensurate with market rates are able to attract talented workers just like other firms. Some organizations pay above-the-market rates to attract high qualified candidates, to reduce personnel turnover, increase employee productivity, and to discourage unionization. Others prefer to pay less than the market rate if there is excessive number of qualified workers or when organization is facing financial challenges. An effective compensation program entails job analysis, job evaluation, and job pricing. According to the Fair Labor Standards Act, employees are designated as either exempt or non-exempt. Exempt employees are compensated with a salary while nonexempt employees are compensated with hourly wages or the time they work. They receive compulsory benefits in form of compensation and social security. They also receive discretion or non-compulsory benefits such as health and security benefits, disability insurance, and premium pay.
Individual-based plans are based on the expectancy theory where an individual is rewarded for meeting the expected performance standards. Some of the individual-based incentive plans include merit pay, bonus programs, and lump-sum payments. Individual-based incentive plans help organizations to achieve individual equity. They are used when teamwork is less critical for successful organizational performance or when job demands autonomy. Team-based plans reward members equally based on group outcomes. They foster team cohesiveness and facilitate performance measurement. On the downside, they promote free-riding effect, inhibit an individualistic culture, and could lead to inter-group conflict. Unlike individual-based plans, group-based plans are not suitable when work tasks are independent. Organization-wide incentive plans involve returning a portion of the company’s cost savings to the workers in form of a lump-sum bonus. This form of incentive plan elicits active employee input and increases the level of cooperation. However, it could lead to management-labor conflict and protection of low performers.
Explain employee and labor relations
Although labor unions were formed as early as 1800s, they did not gain significant membership until 1860s and 1870s. Some of the prominent labor unions include the National Labor Union which was formed in 1866, Knights of Labor in 1869 and the American Federation of Labor in 1886 (Klikauer, 2014). Some of the famous strikes include railroad strike of 1877, homestead strike of 1892, and the Pullman strike of 1894 (Klikauer, 2014). However, over time, union membership and power have reduced due to layoffs, lack of financial resources, the growth of service sector, and anti-union pressures. Dramatic drop in membership since 1980s is also attributed to aggressive anti-union strategies employed by the private sector.
Employees join collective bargaining units to enjoy higher wages and benefits. Unions have strength of numbers and professionals to negotiate on behalf of the members. Unions also offer members greater job security as employers are limited from arbitrarily hiring and promoting workers. The collective bargaining process includes preparation for negotiations, contract negotiations, agreement, union ratification, and contract administration. An impasse during negotiations is resolved through mediation, fact-finding or arbitration.
In summation, the paper has examined the importance of work diversity and the existing legislations that promote equity in an organization. It has also looked at the role of human resource development and planning in enhancing human capital and meeting manpower demands. Employees ought to be motivated by using a suitable incentive plan.
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