Strategic HRM: Evaluating the Case of Euroflite
A considerable number of companies have developed into an essential part of the period of global competition, increasing development, improved business paradigms, and corporate reorganization. The continuing transformation from the traditional industrial framework with its hierarchical companies to a worldwide, knowledge-founded financial system and intelligent corporations, altering ideas regarding the social contract involving employers and employees, an progressively more adaptable pool of talent and a body of workforce, necessitates human resource (HR) purposes to realign and relocate itself in the vicinity of these drivers.
Changes in the nature of managerial work over the last years have a reflective and alarming impact on the roles of the HR managers within the new modes of organizational flexibility as well as leveling power of information technology. Generally, the emergence of HRM as a universal remedy for integrating business strategy and people management has exposed personnel practitioners to a fresh set of role challenges and managerial expectations that have stressed out the gaps between the HR language and reality. Further, the attempts to capture the changing environment of the HR personnel roles in response to major transformations in the workplace, the associated rise of HRM, and the competitive advantage of the whole organization through its manpower are few aspects that HR functions embark upon.
Managing human resources within organizations is among the greatest challenge of every HR Manager. From the basic HR functions, the role of the manager to formulate and implement the most effective HR strategy is crucial as it is practically the same as having the best people to fit the needed job position. It is recognized that having an effective HR strategy leads to organizational effectiveness (Conway and Monks 2008). Entrekin (2005) recognizes HRM as a fundamental element in an organization’s life cycle. There is a need to manage people as organizational resources because they are considered as fuels of production and resource-based assets. While Western management theories indicate people as identical, replaceable, and disposable things (Elkin and Sharma, 2007), more and more contemporary organizations believe otherwise. This means that the formulation and implementation of the most appropriate HR strategy from recruitment and selection, pay and remuneration scheme, training and development, performance evaluation, and conflict and labor management is required.
This paper will discuss Strategic Human Resource Management as applied to Euroflite – one of the leading low cost, no frills airlines set up in the United Kingdom. In particular it presents an analysis and evaluation of the Performance Management policies and practices being utilized in the company. Performance Management was chosen as the HRM area in which the evaluation will be conducted because the researcher believes that Performance Management is an important contributor to the success of the company and through performance management, the knowledge, skills and abilities of the employees are directed towards the achievement of the organizational goals.
Contributions of HRM to Organizational Success
Human resources management refers to the philosophy, policies, procedures, and practices related to the management of an organization’s employees. Human resources management is particularly concerned with all the activities that contribute to successfully attracting, developing, motivating, and maintaining a high performing workforce that results in organizational success (Sims, 2002, pp. 2-3). Human resources management (HRM) involves the establishment and execution of policies, programs, and procedures that influence the performance, capabilities, and loyalty of the employees of an organization. Through these policies and procedures, individuals are attracted, retained, motivated, and developed to perform the work of the organization. It is through these policies and procedures that the organization seeks to mold and shape the actions of its employees to operate successfully, comply with various public policies, provide satisfactory quality of employment, and improve its position in the marketplace through strengthened ability to compete and serve (Clardy 1996, p.1).
Human Resource Management is a source of an organization’s competitive advantage because:
1. It provides the right kinds of talent to the organization at the right time. HRM is expected to assure that a supply of qualified labor in a timely fashion (Clardy 1996, p.20).
2. It ensures that the organization is properly staffed. When done effectively, the staffing, recruitment, and selection process provides a flow of qualified individuals for filling open positions within the organization on a timely and efficient basis (Clardy 1996, p. 41).
3. Using appraisals, the employees are assesses and evaluated. Employee appraisals have very profound implications for both the employees and for the future success of the organization (Clardy 1996, p.58).
4. Using effective pay systems, the management can focus employees’ efforts toward desired organizational goals (Clardy 1996, p.79).
5. Ensures that the employees are properly skilled to perform their tasks and supports the organization’s growth through career development. The goal of training as part of the human resources management processes is to create cost-effective programs that build the skills to perform effectively (Clardy 1996, p.103).
According to Sims (2002), effective SHRM planning aids in creating a competitive advantage for an organization (p.30). SHRM planning when done correctly provides a number of direct and indirect benefits for an organization.
- Identification of gaps between an organization’s current situation and desired future
- Explicit communication of organizational goals
- Encouragement of proactive instead of reactive behavior
- Stimulation of critical thinking
- Creation of common bonds and a sense of shared values and expectations
- Identification of the potential problems and opportunities
- HRM costs may be lower because management can anticipate imbalances before they become unmanageable and expensive
- More time is available to locate talent because needs are anticipated and identified before the actual staffing is required
- Better opportunities exist to include women and minority groups in future growth plans.
- Development of managers can be better planned
The Case of Euroflite
Euroflite is one of the leading low cost, no frills airlines in the United Kingdom. Recently, Euroflite plan to expand its operation in the United Kingdom, requiring it to recruit more staff to work on principal airports in Stansted. Edinburgh and Manchester. The company is expected to expand its employees from 1,000 to 2,000. The company’s plan to grow is faced with challenges, especially in the are of Human Resource Management. The management will need to redevelop and redesign its HRM practices in order to accommodate the company’s new size. One area that must be given particular attention is performance management.
Performance Management
Performance management helps organizations sustain or improve performance, promote greater consistency in performance evaluation, and provide high-quality feedback. Performance management helps organizations link evaluations to employee development and to a merit-based compensation plan. Moreover, it form a basis for coaching and counseling, permits individual input during the evaluation process, and allows for a blend of qualitative and quantitative expectations of job demands and factors that reveal how well the job is done (Gilley and Maycunich, 2000).
Performance management is an outgrowth of management controls whose purpose is to ensure that work is progressing according to the organization’s plans. Performance management according to Snell (1992) is the principal set of practices by which control is manifested in organizations. Control is defined as any process that is used to align the actions of individuals to the interests of the organization (cited in Gratton, et al, 1999 p. 60).
As part of the control process, the purpose of performance management is to make sure that employee goals, employee behaviors used to achieve those goals, and feedback of information about performance are linked to the organizational strategy (Sims, 2002a). Performance management systems also help organizations reduce turnover of highly skilled and experienced employees by providing environments conducive to growth and development and help eliminate outdated expectations for career opportunities. Performance management helps to motivate employees, who take responsibility for their own development and continue to add value, encourage employees and managers to support continuous learning, and help managers develop their employees. Performance management systems permit employees to understand the importance of keeping skills and abilities current and increase retention of experienced employees by providing career advancement. They enable employees to create meaningful development plans and match realities in the organization to recruiting promises (Gilley and Maycunich, 2000).
Performance Appraisal
Performance appraisal is the process by which an employee’s contribution to the organization during a specified period of tine is assessed (Sims, 2002b). Performance appraisal is integral to the successful operation of most organizations. During this process, employees are evaluated formally and informally to determine the nature of their contributions to the organization. Appraisal occurs during time periods and in meetings that are scheduled to produce reasoned consideration of contributions, but it also occurs informally as employee contributions are observed, or when an evaluation is brought to the attention of others (Dickinson, 1993).
Performance appraisal is treated as an evaluation and development tool, as well as a formal legal document. Appraisals review past performance – emphasizing positive accomplishments as well as deficiencies and drafting detailed plans for future development. The performance evaluation also serves a vital organizational need by providing the documentation necessary for any personnel action that might be taken against an employee (Sims, 2002b).
Evaluation of the Performance Management Policies and Practices at Euroflite
Euroflite uses a combination of performance appraisal tools in measuring the performance and identifying the strengths and weaknesses of each employee. The performance management system that is in place in Euroflite is aimed at ensuring that work is progressing according to the company’s plans and goals. The performance management system of Euroflite aims to achieve the following objectives:
1. Establish Performance Standards – in order to set expected performance levels, performance is used to establish performance standards.
2. Monitor Performance – the primary purpose of monitoring performance is to provide information on what is actually happening in the organization.
3. Take Necessary Corrective Action – corrective action can be taken after the actual performance has been assessed and compared with performance standards.
Evaluation of the Performance Appraisal at Euroflite
From the birth of the company, the management has been using Management by Objectives and Rating Scales to measure performance. Throughout the company’s years in operation, these performance appraisal tools have been useful in establishing performance standards, monitoring performance and identifying effective corrective actions for underperformance. However, because of the changes in the company’s goals and objectives, and because the management must adapt to the changes in the business environment, the performance appraisal system must be redesigned and redeveloped.
Management by Objectives
Management by Objectives involves a joint determination by subordinate and superior of common goals, major areas of responsibility, and results expected; these measures are used as guides for operating the unit and assessing contributions of members (Miner, 2002). MBO is the best known of result-oriented methods of performance planning and review and, in some form; probably the most frequently used approach to performance planning and review. MBO is a target-setting or results-oriented approach to performance management. It recognizes that employees perform better when they have targets, and even better, when they have participated in setting those targets.
Evaluation
The strengths of MBO as a performance appraisal system are:
- It increases the employee’s involvement in setting performance objectives and increases the motivation required to reach those objectives
- It offers an objective, factual basis for measuring accomplishments
- It is entirely job centered
- It establishes the appraiser as a facilitator of performance rather than a critic of performance
- It assures the organization that all employees are working toward a common purpose
- It supports psychological concept that people will exercise self-direction and self-control in the accomplishment of organizational aims that they have participated in setting.
Organizations that use MBO frequently report that they are very effective, highly motivating performance appraisal systems. MBO systems communicate to employees exactly what is expected of them, and provide clear behavioral benchmarks for performance. Developmental feedback is inherent in the entire MBO process, because the employees skills and abilities are taken into account at the front end when goals are initially set and along the way as progress toward the goals is measured. In an MBO system, goals are highly personalized and reflect the employee’s experience and training (Kulik 2004).
MBO as a performance appraisal tool has also some weaknesses. These include the following:
- It is an organizational philosophy and can not operate at one organizational level without operating at all levels
- MBO ca not be implemented at all organizational levels simultaneously, nor can it be implemented from the bottom up – it must begin at the very top of the organization and works its way down
- It requires a total and sizable commitment of management support, interest, and time if it is to succeed
- MBO is not applicable to all types of jobs. Individuals performing routine, repetitive, or machine-paced jobs are better appraised by another method
- Employees require extensive training before they normally respond in a positive way to MBO (Caruth and Hadlogten 2001).
Rating Scales
In addition to management by objectives, the company uses rating scales to measure performance and other work-related factors. Rating scales according to Rudman (2003) are readily adaptable to suit specific jobs and organizations, and there are virtually no limit to the aspects of person or performance that can be rated. In simple terms, rating scales require the reviewer to rate the employee’s performance in an absolute sense, not in comparison to other employees. Employees can be rated on virtually any trait or characteristic or dimension of performance or behavior. The characteristics to be assessed are chosen and each step on the scale is given a brief description in terms of quantity and quality.
Evaluation
The company uses a rating scale in appraising employee performance. The rating scale is among the widely used method of appraising the performance. The method is simple and easy to use. Rating scales according to Rudman (2003) are readily adaptable to suit specific jobs and organizations, and there are virtually no limit to the aspects of person or performance that can be rated. In simple terms, rating scales require the reviewer to rate the employee’s performance in an absolute sense, not in comparison to other employees. Employees can be rated on virtually any trait or characteristic or dimension of performance or behavior. The characteristics to be assessed are chosen and each step on the scale is given a brief description in terms of quantity and quality.
Problems with Rating Scales
Rating scales are among the popular performance appraisal tools. They are easily to construct, use and understand. However, there are significant problems in using rating scales.
1. Ratings are sometimes subjective.
2. Not all the characteristics of a job are equally important and certain characteristics are more important for some jobs than for others.
3. Ratings can be given easily enough for individual characteristics or dimensions, but it is more difficult to turn into a valid or useful overall assessment.
The performance appraisal tool that the organization uses is simple and easy to understand which is good because performance appraisal should be like that. However, it also has limitations and weaknesses.
Performance Discussion
The company holds performance discussions at least once a year, particularly at the end of each year. The aim of the performance discussion is to review the employee’s performance and to encourage the employee to participate in the review process. The performance discussion is a one-to-one activity in which the employee meets with his manager to discuss the results of the performance appraisal. The aim of the company’s performance discussion is to involve employees in the assessment of their performance and incorporate their suggestions as to how that performance might be changed or improved.
Contributions of the Performance Management to Euroflite
The performance management system that is being used in Euroflite contributed to the overall success of the company. The performance management system has enabled the company to continuously improve employee and organizational performance. Performance management helps Euroflite reduce turnover of highly skilled or experienced employees by providing environments conducive to growth and development. Performance management helps motivate employees to take responsibility for their own development. Performance management permits employees to understand the urgency of keeping skills and abilities current and increase retention of experienced employees by providing career advancement.
The management believes that effective performance is key to productive, high-quality work groups and organization, and performance management is an excellent tool for maintaining and strengthening performance. Performance management allows the organization to obtain the highest quality work from employees, and allows employees to understand their performance and what they can do to improve it. Performance management facilitates and focuses communication of performance information between managers and employees and provides a method of assessing performance. Performance management helps employees improve their skills, abilities, competencies, or behaviors.
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