Human Resources Management and Organization Performance in Organization with SEC as my Case Study
Chapter two deals with literature review. it examine the concept of performance/productivity, the basic requirement for human resource management, the human resource an assessment of future personnel requirement in relation to demand, an assessment and availability of current and future resource (supply), labour turn over and the eternal labour are vividly discussed.
Human Resource Management
Many scholars have attempted to define human resource management differently based on their intellectual and ideological perspectives.
In the light of the above argument, the United States Department of Employment and Productivity defined human resources management as a strategy for the acquisition, retention, utilization and improvement of enterprise human resources (Cole 1986: 134). Cole [1986: 135] however, argued that the above definition fails to reflect staff disengagement. Consequently, he defined human resources management as any rational and planned recruitment of sufficient and suitable staff, their retention in the organization, the optimum utilities of staff, the improvement of staff performance, and the disengagement of staff as necessary.
Ebegbuna (1992:89) argued that human resource management involved the process, by which an organization ensures that it has the right number of qualified people available at the time, performing jobs that are useful to the organization. He further contended that human resources management involves the definition of the corporate policy of the organization leading to an overall corporate plan, a forecast of employees skills and expertise, an inventory of audit of current personnel, an analysis of manpower supply, a programme to recruit, transfer or reduce staff and control cost.
Tokunbo quoting Vetter (1992: 120) maintains that human resource management is the process by which a firm ensures that it has the right numbers and kinds of people in the right place, at the right time doing the things for which they are economically most useful. Tokunbo further contended that human resource management is basically about a method for determining future manpower requirements and developing actions plans for enacting them.
According to Sikula (1996:1 18) defined human resource management as the process of determining the manpower requirement and the need for meeting those requirements in order to carry out the integrated plans of the organization.
Ogunniyi (192:62) see it as a concept that involves critical analysis of supply, demands, surplus, shortage, wastage and utilization of human resources. According to him, the primary goal is the adoption of policy, actions and strategies that will not be stressful and or be a negative endeavour to balance the question of supply and demand of manpower required for socio-economic and political development of a nation.
Gosh (1976:129), human resource planning is the integration of manpower so as to achieve the right number of people in the right job at the right time. In a comparative analysis, Geisler (1967: 130) opined that an adequate definition of the function and process of human resource management must be recognize the importance of effective utilization, forecasting needs, developing appropriate policies and programmes, and reviewing and controlling the total process.
Vetter (1967:200) observed that human resource management reflects a process by which management determines how organization should move from its current manpower position to its desired position. In a related development, Dyer (1982: 105) is of the view that human resource management is the process through which organizational goals are put forth in mission statement and business plans are translated into human resource objectives.
In the views of Strauss and Sayles (1980:36 1), a successful human resource operation requires:
- An understanding of existing independence among personnel systems and personnel flow.
- The establishment of guidelines and policies based on those understanding with which managers will make their personnel decisions and;
- Some mechanisms to detect when these policies either need changing or are being violated.
Blunt and Popoola (1985:35) looked at human resource management as the activity of management, which aimed at coordinating the requirements for, and the availability of different types of employees. The objective of this exercise is to ensure that the firm has enough of the right kind of labour at such times, as it is needed, involving also the need to adjust the requirement to the available supply.
It is worthy to mention that human resource management is more encompassing. Therefore it is not proper its definitional approach to optimum utilization of human resources, provision for the future man power needs of the organizations in terms of skills, numbers, competence and availability. Within this context, human resource management can be seen as multidimensional activity of an organizations or a nation, which integrates the various concerns of personnel management recruitment, selection, training and development, career advancement, pay, motivation, etc. also involves a sequence of activities which are carried out, and aimed at providing and establishing policies and programmes for targeting human resource needs to meet organizational or a nations goals and objectives on continuous basis.
The Concept of Performance/Productivity
Production implies a class of empirical out-put ratio that is widely used in economic history, economic analysis and economic policy. Production measures the fruitfulness of human labour under varying conditions effectiveness. In another sense, Productivity measures the efficiency with which resources as a whole (capital and manpower) are employed in the process of production. In a still another sense, Lt measures the forces that underlie the trend of real wages as well as a major factor in the determination of labour or capital requirements (Salter 1960:260).
Ikelegbe, (1995:5 1) the concept of effectiveness and efficiency are central to organizational productivity. He argued that effectiveness refers to the level of attainment or realization of policy programme, or organizational goal and objectives. In other words, it measures the level of achievement of organization goals and objectives and provides answers as to whether stated intentions, projected output and objectives are realized or not. In this light, an effective organization is one that realizes its objectives. An organization is said to be effective if for instance, a business firm makes a profit, a service oriented industry or agency provides qualitative professional services and a nation if it achieves its substantive goals related to foreign policy.
Ikelegbe, Blau and Scott (1962: 180) observed that organizational effectiveness should be defined in terms of who benefit. Hence a business organization is effective if it reduces cost, because the owners have profit as their objective. In the case of unions, it refers to the collaborative efforts of both the rank and file as they participate in solving the needs of their members. Organizational effectiveness has to do with the ability of organizations to maintain its internal system in working order so that it can solve problems effectively as well as transform the human energy inputs into outputs at relative costs. It provides a balance between achieving objective, problem-solving competence and human energy utilization.
In a bid to enhance organizational effectiveness, Weber (952:44) identifies measures to through which this can be achieved. These are:
- Creating a system characterized by specialization of effort
- A clearly defined authority structure,
- Formal position description and
- A sense of impersonality
Most scientific, management scholars identify specialization, unity of commend, unity of direction, span of control arid employee loyalty as the underlying factors that could enhance organizational effectiveness.
On the other hand, efficiency as defined by Ikelegbe (1996:50) is the relationship between output produced and the input expended. It deals with the resources (input) invested to obtain a desired output. An efficient organization is one that achieved high output with minimum inputs and it is measured in ratios. It is the ratio of output produced to a given amount d inputs used by the organization.
According to Fuchs (1964), performance in a given period can be measured by the ratio of the output to the input of the period or it can be measured by the ratio of the output to the input of the period or it can be measured by the ratio of increment in output to the increment in input during the period i.e. productivity may be average or marginal with their respective indices, which are identical.
Fuchs further contended that productivity ratio may differ also with regards to the output included. The output of industry can be measured either by the real value added’ .ne organization or by its real value of product. Where the former excludes and the later includes the value of purchased materials, fuel, and energy. To measure an organization’s total productivity, it is convenient to compare its real value added with its labour and tangible capital output or its real value product with its labour tangible capital and material input.
Basic Requirements for Human Resources Management
Sound managements to be based on the principles and actions.
- It has to be fully integrated into the other areas of the organization’s strategy and management.
- Senior management must give a lead In stressing its importance throughout the organization
- In large organizations, a central human resource management unit responsible to senior management needs be established. The main objectives of this unit are to coordinate and reconcile the demands for human resources from different departments to standardize and supervise departmental assessment of requirements and to produce a comprehensive organizational plan. In practice, the personnel department would normally play a leading role in -the task. In smaller organizations, a senior member of staff e.g. the human resource manager or even the managing director, would probably carry out these responsibilities.
- The time span to be covered by the plan needs to be defined. Because of the abiding problem of making recasts involving the imponderable factors, a compromise is often adopted in which a general plan is produced to cover a period of several years and detailed plan produced
for the first year if the system is operated as a continuous
overlapping plan, the five year period of general forecasting is maintained and each first year is used in turn for purpose of review and revision for the future. For example, 2003 – 2008, 2004- 2009, 2005 -2010, 2006-2011, 2007-2012, is a series of five year rolling plan covering a total of ten years.
- The scope and details of the plan have to be determined. For large organizations separate plans and forecast may well be needed for various subsidiary units and functions. In smaller organizations one comprehensive plan will probably suffice for all employees. Where particular skills occupations may pose future problems in recruitment or taining, special provisions will be required in the planning.
- Human resource management must be based on the most comprehensive and accurate information that is possible. Such personnel information is essential in any case for the effective management of the organization. Details of format contents will naturally vary, but they will normally need to include details of age, sex, qualifications and experience and of trends likely to affect future forecasts, such as labour wastage, changes in jobs, salaries etc. Apart the routine collection of data from personnel records, special analysis may sometimes be necessary to provide particular information.
The Human Resources Management Process
There are four categories of staff that are important in human resource management. These are
- Existing staff
- New Recruitment
- Potential Staff
Each of these categories requires different decisions to be made by the managers concerned and some of these are set out
||Decisions required about
||Performance appraisal productivity, deployment, equal opportunities, training remuneration, promotion/career development.
||Recruitment methods, selection procedures, induction training terms of contracts
||Recruitment methods, public relations wage/salary levels employee benefits.
||Dismissals for poor performance retirement, redundancy procedures labour turnover.
Table 1: representing category of staff and decisions about them. The forgoing list indicates some far reaching implications of human resource management activities and a consideration of a process which affects every aspect of personnel or human resource management (recruitment, training, remuneration, performance assessment, terminations of employment) etc. More than this, it is a process which is linked inextricably both to the economic, social and political environment. Arguably, the personnel functions role in human resource planning activity is as follows:
- To stimulate awareness amongst management of the importance of planning human resource policies and programmes for the future well being of the enterprise.
- To encourage the allocation of appropriate resources to raining, retraining and development of staff to meet organizational and individual needs rather than relying mainly on external recruitment on ad-hoc unplanned work.
- To work closely with management and advise on the development and implementation of up-to-date approaches to planning the human resources.
- To monitor and adapt plans on a continuity basis with corporate and line management. Comparatively, the role of tine management in the human resource planning activity seen as follows:
- To give systematic consideration to the factors likely to affect their part of the organization over coming years and the likely impact on these factors on the numbers and skills of the people employed. ii. To identify the training and development needs of staff in the light of performance, potential and likely positions to be filled.
- To ensure that employees clearly understand the standards of performance required of them and how these link to the reward system.
- To discuss training and development needs with employees in the light of the organization’s objectives and to implement the human resource plan.
- To establish regular and regular systems of communication with employees and to monitor their effectiveness. The human resource management can be summarized diagrammatically below:
A Chart Showing the Human Resource Management Proces
Source: Atiomo, 2000
The chart shows that human resource planning begins and with a review of the organizations corporate objectives. The most important areas of study will be those concerning marketing and production since these represent the organizations intentions about where it will direct its goals or services and at what level of activity. Once some interim understanding about what kinds of people might be required is arrived at, the managers responsible for implementing this new strategy have to decide the level of activity to be entered into.
The Assessment of Future Personnel Requirements (Demand)
Whenever an organization requires people quickly, it is more or less obliged to recruit trained staff from other organizations, possibly at a premium salary or wage. Some existing staff or employees undoubtedly could be used in such a venture while some new recruits will also be required from amongst the local populations and some jobs could be put out to third parties such as leasing sub-contractors and professional advisers. Three other questions can be raised here:
- Should the organization train its own staff for selected key posts?
- Should it buy inexperienced people from outside?
- How much time is required to staff for selected key post.
The organization’s gross demand for labour can be shown simply as follows diagrammatically:
Table 2.3 Showing gross demands for labour.
The objectives of the organization are translated into intentions and for assessing and securing sufficient manpower resources, while the state of economic demand represents a collection of external pressures on the organizations awareness of its labour requirements. At a more detailed level, the net demand for labour, i.e. the requirement for additional personnel can be demonstrated as follows:
Table 4.2 showing net demand for labour
Source: Atiomo, 2000
At this level of detail, several other factors are introduced and discussed below, notably trade union pressures and effects of technology.
On this note, Braham (1982:86) makes the useful point that important question to ask is whether certain work is need at all suggest that systems and procedures tend to last longer than purpose for which they were intended… The fact that certain tasks have been performed in a particular way by a particular number of people does not necessarily mean that working methods and numbers involved should remain unalterable. Old practices die-hard, as the experience of the railway operations shows. In the days of the steam engine, two men were required on the footplate, one to drive the engine, the other to maintain the steam. When diesel and electric locomotion took over, it seemed natural for many of those concerned to assume that two men were still required in the drivers cab, when all that was needed for safe operation of the locomotive was trade union pressures to main employment in the occupational group concerned that enabled over manning to continue.
Another factor in assessing the organization’s effective demand for labour is technology. To that extent could machines or electronic carry out tasks? In offices, there has been a reduction in the demands for clerical and administrative posts because of the advent of computers and word processors, which are able to undertake a far greater volume of work than any manual system. Such changes have not obviated the need for people but have certainly had a major effect on reducing the demand for particular categories of job.
The accuracy of an organization’s forecast of its demand for labour depends considerably on the state of its external market for goods and services. If the organization is operating in a relatively stable
market, where demand is constant, the product is efficient and reliable and there are few competing products then forecasting for all purposes becomes relatively straight forward. If however, the external market is a turbulent one where demand fluctuates wildly, where technological innovation is common place and where the competition is intense, then forecasting becomes an extremely difficult affair.
The task of estimating the quality and quantity of human resources needed to meet the objectives of the organization is as important as it is vast. Several methods of forecasting are in regular use, some of them simple and non-technical, others sophisticated and involving specialist statistical knowledge and skills. These include:
- Estimates based on manager’s experience, opinions and
calculations (managerial judgment)
- Statistical methods and techniques
- Work study methods and techniques
- Forecasts based on measures of productivity.
Bowey (1974:47-56) notes that manpower management is not a clearly defined practice. To some it is a statistical technique in which rates of wastage are incorporated into a computerized model and predictions made about required rates of recruitment. But scientists have pointed out that trends in statistics are only the result of social process.
Thus in practice, the qualitative approaches (methods) to human resources management often used in combination, especially in larger organizations, with the following essential features:
- Estimates by management: In a typical work organization, the single most important element in forecasting personnel requirement is managerial judgment. This is the simplest method of assessment and is therefore the commonest method in use, especially in small organizations. Assessments of this kind are provided from two main sources – the estimates submitted by individual line managers and the corporate estimates produced by senior management advised by the human resources department. Since these forecasts rely entirely on personal judgments, they have an obvious potential weakness of subjectivity. However, this can be mitigated in the following ways: First In submitting assessments, managers should include explanations and reasons to support their claims. Second, these assessments from the bottom UP! should be compared with those prepared by senior management, perhaps by an ad-hoc staffing committee with the purpose of discussing and reconciling discrepancies. In large organizations, it is invariably the head of the personnel function that has the responsibility for this final review and coordination. Much personnel forecasting is carried out when unit managers are working out their draft budgets for the coming year. The personnel budget is an important feature of any unit budgetary control activities, and it has the advantage of being considered in the context of financial and the targets which are central to the attainment of corporate objectives.
- Statistical methods and techniques: A number of statistical methods are now used for forecasting in varying degrees of sophistication. This is a task for specially qualified staff, and such methods are used therefore, mainly by large organizations for which human resource management poses complex problems. Some of the simple extrapolation, which attempts to predict growth decline of a variable or set of variables for a period of time, regression analysis based on assumption about the stability of certain relationships; econometrics models, in which past statistical data are studied. The assumption that relationships between a number of variables will continue in the future. The use of statistical techniques in human resource management the concern of research organizations and government statisticians. However, many organizations make use of analyses of labour turnover, labour stability and similar ratios.
- Work study methods and techniques. This is a systematic analysis of work in terms of people, skills, materials and machines, and in particular the work hour needed per output unit to achieve maximum productivity. Work-study data may be used for forecasts of productivity, for detailed production schedules for specific periods of time within the plan and for estimating the total numbers needed to achieve production targets within a specific period. The production schedules may comprise the following details: product quantities, production methods, machinery needed and available, times for individual operations, and quantity and quality of labour needed and available.
Work study techniques are particularly appropriate for estimating human resource requirements for work that is directed towards end products, where the product mix and the forecast changes are too complex to use this approach a simple added value method can be adopted.
Assessment and Availability of Current and Future Resources (Supply)
- Current Resources: As a basis for estimating the future supply
of people, a detailed and accurate account of the current situation is needed. Although accurate comprehensive information is virtually important in management, there is a danger of producing records in excessive details, which may make it difficult to see the bigger picture, waste valuable resources and increase the possibility that information may not be kept up to date. In the end, each organization has to decide for itself the quantity and quality of information it needs, but some broad bases can be established for analyzing existing resources namely, operational functions, occupations, status and skill levels and other specific categories e.g. qualification, trainees, age distributions) in accessing the supply of labour available to organization, there are two major areas to be reviewed:
- The existing workforce (internal labour market)
- The supply of potential employee (the external labour market).
A typical analysis of supply will focus on the following as represented on the table below
|Perform and flexibility
Source: Bello-Imam 2000.
No workforce is static. People are always leaving and entering the organization even if the bulk of the workforce is stable. Typical questions that managers need to ask when assessing the state of their internal labour market are as follows:
- Job categories: what categories of staff do we have? (e.g. engineers, process workers etc.)
- Numbers: how many people do we have in each category?
- Skills: what skills are available amongst existing employees
- Performance: what level of performance are we getting from our various categories of employees?
- Flexibility: how easy is it to transfer employees between jobs?
- Promotability: how many of our employees are ready for promotion in to more demanding roles?
- What training could be reasonably provided to assist promotions?
- Age profiles: do we have any age-related problems due to imbalances between experienced and inexperienced staff?
- Sex distribution: have appropriate balances between the sexes, given the requirements of our business.
- Minority groups: are minority groups properly represented in the work force?
- Leavers: what is our labour turnover rate by staff category and department?
How many people are due for requirement? Are any redundancies likely? How many people left for reasons of dissatisfaction? Are any trends noticeable? Answers to these questions can provide a reliable picture of the state of the organization’s own labour force. The resulting information can be matched with the demand forecast for labour in the variou