Question 2: Learning Approach to Development
For a developmental activity to be deemed ‘strategic’ organizations need to shift the focus from a ‘training’ to a ‘learning’ approach. Organizations today must deal with a plethora of challenges and problems such as changing business environments, stiff competition among firms, volatile economic conditions and the intensifying race for talents. In order to succeed in the current situation, organizations are starting to focus on their human resources. The organization’s human resources or its people is now considered as a source of sustainable competitive advantage. In order to use the full potential of their human resources, organizations are training and developing their people – helping them acquire the skills, knowledge and abilities that are sure to yield positive results. But, there is a growing acceptance among practitioners, managers and employees that training is not enough. In order for the organization to keep its competitive advantage and in order for its employees to remain competitive, the organization must adapt a learning approach to human resources development (HRD). Thus, lifelong learning emerged as a new approach to developing employees. Training is considered as planned learning experiences that teach employees to perform their current jobs. Training focuses on present jobs (Sims 2002). Based on this definition of training, we can assume that training is more focused on short-term acquisition of knowledge, skills and abilities. Trainings are planned learning activities. So form this definition, it is clear that training is not enough to ensure the success of the organization and it is enough to keep the workforce at pace with the changes in the business environment. So now, organizations are beginning to adapt a learning approach to employee development. Learning is defined as a relatively permanent change in an attitude or behavior that occurs as a result of repeated experience. Organizations must encourage learning through both formal and informal circumstances. Organizations must encourage employees to continue learning inside and outside their work settings. Thus, Human Resource Development (HRD) and lifelong learning emerged.
Human Resources Development according to Eggland and Gilley (1998) can be defined as the introduction of organized activities designed to foster increased knowledge, skills, and competencies and improved behavior. HRD refers to learning and to the activities that bring about desired change (p.5). Training alone is not enough to develop and prepare the employees for their present and future responsibilities. HRD according to Smith (1988) is a series of programs and activities, direct and indirect, instructional and/or individual that positively affects the development of individual and the productivity and profit of the organization. According to Donaldson and Scannel (2000), training is an attempt to transfer skills and knowledge to trainees in such a way that the trainees accept and use those skills in the performance of their jobs while learning is a lifelong process in which experience leads to changes within the individual. Learning is a change in behavior resulting from experience. Learning is the act of acquiring knowledge or skill. It is a mental activity by which skills, habits, ideas, attitudes, and ideals are acquired, retained, and utilized, resulting in the progressive adaptation and modification of behavior. HRD is the filed of study and practice responsible for fostering of long-term, work related learning capacity at the individual, group, and organizational levels. As such, it includes but is not limited to training, career development, and organizational development. According to Nadler and Wiggs (1986) HRD is a comprehensive learning system that releases the organization’s human potential; a system that is both experience and experiential, on-the-job experiences that are keyed to the organization’s reason for survival.
From the discussion above, it can be said that HRD is primarily a ‘learning’ approach to employee development. As such it facilitates organizational learning through training and development of individuals, groups, and organization as a whole. HRD is composed of a series, a lifelong learning that aims to increase the capability of the employees and the organization through performance based activities. HRD can then be described as a comprehensive learning system designed to enhance individual performance for improving organizational efficiency.
Lifelong learning (or continuous learning) provides extensive continuing training, from basic remedial skills to advanced decision-making techniques throughout employees’ careers. Tannenbaum (1997) defines continuous learning as the process by which individual and/or organizational learning is fostered on an ongoing basis. One of the major tenets of continuous learning philosophy is that employees at all levels of the company must actively pursue training and development activities. Continuous learning also requires employees to understand the relationship between their jobs and work units and the company’s mission. Continuous learning is an ongoing acquisition of new skills, which happens as the person senses the need for updating, as opposed to a less frequent, massive reskilling process. Continuous learning focuses on helping the employees to develop and update their knowledge and skills. Just as the current business environment demands that organizations unleash employee potential by empowering them and delegating authority and responsibility for meeting customer needs, employee also needs to be given responsibility, autonomy, and resources for his or her own continuous learning and development (Craig and Hall 2004).
Macquarie maintains a flexible management and organizational set-up so as to be able to change according to the demands of the business environment. During the 1980s and 1990s changes occurred in the environment of Australian financial institutions. These included rapid deregulation of the financial services sector by the Australian Labour Government. The critical moves involved were the floating of the Australian dollar; progressive removal of restrictions on competition between banks, building societies, merchant banks and other institutions which offer financial and financially related services; approval of new banking licences including licences to 16 foreign-owned banks to operate in Australia. Macquarie Bank manages to remain successful by introducing incremental adjustments while operating in a rapidly changing environment.
Question 3: Strategic Performance Management
In the recent years, Strategic Human Resource Management (SHRM) increased in popularity among researchers, practitioners, and managers. SHRM is defined as linking the HRM function to the strategic goals and objectives of the organization to improve business performance and develop organizational cultures that foster innovation and flexibility (Verweire and Berghe 2004). The main objective of SHRM is to strategically improve the way human resources are managed within the organization. The definitive goal of SHRM is to improve organizational performance as judged by its impact on the organization’s declared corporate strategy, the customer or shareholders (Brewster et al 2000, p. 6).
Strategic human resource management (SHRM) is a philosophy of people management based on the belief that human resources are uniquely important to sustain the success of a business. SHRM can be defined as the process of linking the human resource functions with the strategic objectives of the organization in order to improve performance (Ahmed et al, 2006). Strategic human resource management involves the linking of HRM with the strategic goals and objectives of the organization in order to achieve a progressive business performance and achieve an organizational structure that promotes innovation and flexibility (Buyens and de Vos 1991). Strategic HRM according to Burke and Cooper (2004) has emerged as a major approach to improving the competitive advantage of the firm. The goals and objectives of HRM are aligned with the strategic objectives and plans of the organization. The role of HRM is to determine the human resources needed to support strategic objectives and to ensure that employees are selected, trained, evaluated, and rewarded in ways that further the achievement of business objectives. Strategic HRM is frequently described as a linear, balanced process that begins with the identification of goals that will guide human resource practices. The integration of the HR programs with the goals of the organization will result to the organization’s increased value. The recruitment, compensation, performance appraisal, promotion, training and other functions are designed and managed so that they work towards the strategic objectives of the firm (p.92). Strategic HRM has the purpose of improving the way that human resources are managed within firms. The main objective of strategic HRM is to improve organizational performance as judged by its impact on the organization’s declared corporate strategy (Brewster et al 2004, p. 29). Strategic human resources management means accepting the HRM function as a strategic partner in both the formulation of the organization’s strategies and the implementation of those strategies through activities such as recruiting, selecting, training, and rewarding personnel (Sims 2002, p. 27). The enhanced value of innovation in determining competitive advantage requires organizations to attract, train and develop, and retain employees of the highest quality. Over time and throughout rapidly changing circumstances, organizations must be able to sustain the competitive advantage that the knowledge and skills of these employees provide. In the past, competitive advantage could be gained through finding better, cheaper access to financial capital, or marketing a new product, or inventing some new technologies. While cheap and ready access to capital, high-quality products, and new technology remain important components of any organization’s competitive advantage, today’s business environment requires a greater focus on the human resources element in business. Out of this realization has come SHRM (Sims 2002).
In order for a performance management system to become strategic, it should be designed in such a way that it develops the potential of staff, improve their performance and, through linking an employee’s individual objectives top business strategies, improve the company’s performance. Performance management is about directing and supporting employees to work as effectively and efficiently as possible in line with the needs of the organization (Williams 2002). 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 the integration of performance appraisal systems with broader HRM systems as a means of aligning employees’ work behaviors with the organization’s goals. Thus, a performance management system consists of the processes used to identify, encourage, measure, evaluate, improve, and reward employee performance at work (Sims, 2002).
Performance management is founded in the following intentions and expectations:
- It transforms organizational goals to individual, team and unit goals
- It aids in clarifying the organizational goals
- It supplies a process for measuring outputs compared with objectives but also examines the inputs needed to achieve the objectives
- It relies on consensus and co-operation
- It encourages self-management of individual performance
- It is a continuous and evolutionary process and achieves improvement over time
- It is strongly associated with development and especially identifying what development is needed (Thomson 2002)
As an instrument of strategic human resource management (SHRM), a system of performance management is predicted on the need to take the wide, strategic goals of the organization, and translate them into goals for smaller groups and individuals (Mabey et al 1998).
In the case of Macquarie Bank, the firm hurdled through the different challenges imposed by the changing business environment. The firm has taken a strategic approach in management of its human resources. Studying the history of the bank from its inception up until now, it is evident that the bank has undergone restructuring and changes. It was first established as a merchant bank that later on diversified. Macquarie continuously adjusted its operations and strategies depending on the demands of the business environment. The bank demonstrates features of SHRM.
The bank views its people as a source of competitive advantage and important to its success. The goals and objectives of the HR department are linked with the overall goals and objectives of the organization. This is evident on the amount of attention the bank is giving on developing its Recruitment and Selection, Performance Appraisal, Rewards and Compensation, and Organization and Development. The bank began to expand in the 1980s and 1990s. This created problems of co-ordination. In order to deal with the problems, the bank took a strategic approach to HRM by creating a ‘Goals and Values’ statement. The goals and values statement is an articulation of deeply held values about cultural and business behavior, including how the process of change should be managed. The values statement is essentially a set of values and norms; internal controls, that substitute for external control systems. This was supplemented by developing business units into highly autonomous profit centres and then creating cross-functional synergies through more systematic communication by management across these centres.
The bank also maintains its small size, and align all its strategies with its business philosophy. The management also believes that as the bank grows, the management philosophy, policies, procedures and Human Resource Management must be assessed and developed.
References
Ahmed, F., Ullah, M. H. and Uddin, M. K. (2006). ‘Strategic Human Resources Management: Linking HR Practices with the Business Strategy, 34(3),15-30.
Brewster, C. Mayrhofer, W. and Morley. M. (eds.) (2000). New Challenges for European Human Resource Management. England: Macmillan, Basingstoke.
Buyens, D. and De Vos, A. (1999). ‘The added value of the HR department’, in C Brewster & H Harris (eds.), International HRM: Contemporary Issues in Europe (31-47). New York: Routledge.
Craig, E. and Hall, D. (2004). The New Organizational Career Too Important to be Left to HR? In R. J. Burke and C. L. Cooper (Eds.), Reinventing Human Resources Management: Challenges and New Directions (pp. 115-132). New York: Routledge.
Donaldson, L. and Scannell, E. (2000). Human Development: The New Trainer’s Guide. Cambridge, MA: Perseus Books.
Eggland, S. and Gilley, J. (1998). Principles of Human Resource Development. Reading MA: Addison Wesley.
Mabey, C., Salaman, G. and Storey, J. (1998). Human Resource Management: A Strategic Introduction. Wiley-Blackwell.
Nadler, L. and Wiggs, G. (1986). Managing Human Resource Development: A Practical Guide. San Francisco: Jossey-Bass.
Sims, R. (2002). Organizational Success through Effective Human Resources Management. Westport CT: Quorum Books.
Tannenbaum, S. (1997). Enhancing Continuous Learning: Diagnostic Findings from Multiple Companies. Human Resource Management. 36, 437-452.
Thomson, R. (2002). Managing People. Butterworth-Heinemann.
Verweire, K. and Berghe, L. (2004). Integrated Performance Management: A Guide to Strategy Implementation. SAGE.
Williams, S. (2002). Managing Employee Performance: Design and Implementation in Organizations. Cengage Learning EMEA.
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