MAJOR VARIABLES IMPACTING ON HR
OBJECTIVE: To explore the major variables impacting on human
re-source management effectiveness in an ever increasing competitive
Human resources management is one of the major elements of business
operations. Its impact and effectiveness on the overall business is
dependent on the treatment and outcomes of the many variables characterising
its activities. This module therefore seeks to examine the components of
each of the major variables – strategic management, workplace planning and
human resource development, compensation and benefit management
and employee and industrial relations (see Figure 2). The discussions to be
followed give a generic reflection of the concepts and principles of human
resources management within the above stated parameters. However the
application of such principles and practices must be interpreted and applied
within the Caribbean context.
Strategy can be formulated on three different levels:
may be about competing and surviving as a firm, one can argue that products,
not firms compete, and products are developed by business units. The role of
the firm then is to manage its business units and products so that each is
competitive and so that each contributes to corporate purposes.
Goddard Enterprises Limited, (a successful regional conglomerate
based in Barbados) that pursues profits through a range of businesses in
unrelated industries. Goddard Enterprises has five core business segments:
While the firm
must manage its portfolio of businesses to grow and survive, the success of
a diversified firm like Goddard depends upon its ability to manage each of
its business/product segments. While there is no single competitor to
Goddard Enterprises, one can talk about the competitors and strategy of each
of its business units.
Corporate Level Strategy
Corporate level strategy fundamentally is concerned with the selection of
businesses in which the firm should compete and with the development and
coordination of that portfolio of businesses.
Corporate level strategy is concerned with:
– defining the issues that are corporate responsibilities; these might
include identifying the overall goals of the firm, the types of
businesses in which the firm should be involved, and the way in which
businesses will be integrated and managed. These usually form a part of
the company’s mission statement.
Competitive Contact – defining where the firm’s competition is to be
localised. The case of Sagicor Financial Corporation (the name of the
new company arising out of the Mutual Life and Life of Barbados merger)
and First Caribbean International Bank (the name of the new Bank arising
out of the merger between CIBC and Barclays Bank) are model cases that
should be examined in the context of the Caribbean Single Market and
Activities and Business Interrelationships – Corporate strategy
seeks to develop synergies by sharing and coordinating staff and other
resources across business units, investing financial resources across
business units, and using business units to complement other corporate
Management Practices – Firms decide how business units are to be
governed: through direct corporate intervention (centralisation) or
through more or less autonomous governance (decentralisation) that
relies on persuasion and rewards.
responsible for creating value through their businesses. They do so by
managing their portfolio of businesses, ensuring that the businesses are
successful over the long-term, developing business units, and sometimes
ensuring that each business is compatible with others in the portfolio.
Business Unit Level
A strategic business unit may be a division, product line, or other profit
centre that can be planned independently from other business units of the
firm. At the business unit, the strategic issues are less about the
coordination of operating units and more about developing and sustaining a
competitive advantage for the goods and services that are produced. At the
business level, the strategy formulation phase deals with:
the business against rivals
Anticipating changes in demand and technologies and adjusting the
strategy to accommodate them.
the nature of competition through strategic actions such as vertical
integration and through political actions such as lobbying.
Porter (1998) identified three generic strategies (cost leadership,
differentiation, and focus) that can be implemented at the business unit
level to create a competitive advantage and to defend them against the
adverse effects of other forces. If human resource professionals are to
successfully integrate peoples’ thinking and feelings to the jobs,
enterprise and environment, they must be able to appreciate and understand
how these generic strategies are formulated and function.
Departmental Level Strategy
The functional level of the organization is the level of the operating
divisions and departments. The strategic issues at the functional level are
related to business processes and the value chain. Functional level
strategies in marketing, finance, operations, human resources and R&D
involve the development and coordination of resources through which business
unit level strategies can be executed efficiently and effectively. The human
resource professionals’ involvement in putting together other functional
areas strategies is critical to the overall success and should be
Functional units of an organization are involved in higher-level strategies
by providing input into the business unit level and corporate level
strategy, such as providing information on resources and capabilities on
which the higher-level strategies can be based. Once the higher-level
strategy is developed, the functional units translate it into discrete
action-plans that each department or division must accomplish for the
strategy to succeed.
Human Resource Management as a Strategic Tool
Human resource management (HRM) has been identified as an effective
strategic tool that helps firms formulate and implement their business
strategies and further improve their performance (Lengnick-Hall & Lengnick-Hall
1988; Pfeffer 1994; Schuler & Jackson 1987; Taylor, Beechler, & Napier 1996;
Wright & McMahan 1992). Human resources and HR techniques are considered to
generate and sustain competitive advantage in the increasingly globalise
market because they are not easily and quickly replicated or imitated by
competitors (Barney 1991). Recent research has shown that while competitors
may imitate technology, economies of scale and scope, and other resources
traditionally used in strategy studies, complex social structures such as
human resource management systems and workforce culture are difficult to
copy (Barney, 1986; Becker & Gerhart, 1996). In particular, human resource
management (HRM) has been increasingly considered a key-differentiating
factor between the winners and losers in multi-national corporations (MNCs)
since the 1990s. Twomey & Harris (2000) state that it is from this
perspective, human resource systems and strategies may be especially
important sources of sustained competitive advantage (Lado & Ewilson, 1994;
Pfeffer, 1994, Wright & MacMahan, 1992).
Strategic management generally is the process and activities used to achieve
organizational goals and objectives through the systematic integration of HR
practices and policies to meet the short to long-range organizational needs
and opportunities; effectively marketing HR functions to guide and lead the
change process and to evaluate human resources’ contribution to
organizational effectiveness. It promotes visionary and transformational
leadership and focuses on marketing techniques to convey the message
throughout the organisation.
A key objective of human resource strategic management is to seek to
integrate the organization’s goals with those of employees. When the
organisational goals are similar in principle to those of the employees,
integration can be achieved. If for ex-ample, employees want to be
remunerated at a cost greater then the business can absorb and at a price,
which will affect the competitiveness of the products or ser-vices, then it
is not possible to have such integration. However, if the employees’ goal is
to share in the profits of the business after he/she is “reasonably” paid
for his /her labour services (see compensation and benefit management
section of this module), it is highly possible for the organisation to
integrate such a goal with its own, since both “partners” stand to gain. If
employees’ expectations are greater than those, which the organisation can
realistically fulfil, it is not possible to have integration. The absence
of such integration fosters a relationship base on adversarial approach.
The effective Human Resource Professionals will seek therefore to: -
Interpret information related to the organisation’s operations from
internal and external sources including financial/accounting,
operations, in-formation technology, sales and marketing in order to
participate in strategic planning and policy making.
This virtually means that
HR professionals must have basic working knowledge
of finance and accounting, sales and marketing, information technology and
operations. Such knowledge is not necessarily obtained through institutional
learning, but can be sourced on the job by working closely with the experts
in the respective field, as well as developing an interest in being
self-taught in these subject areas. Obviously, this will be made possible
only if the HR professionals are keen in having such knowledge and wanting
to make a difference. Such knowledge will provide you with the confidence to
step out of the “HR box” when making contributions at the corporate table.
Again, to be a
successful human resource professional, it is important to have a good
appreciation and understanding of the business environment within which your
enterprise operates. Having a good understanding of the business environment
puts you in an advantageous position to anticipate as well as to
appropriately react to changes impacting on other areas of the business but
having potential human resource impact. There is the internal environment,
which is comprised of composite structures, values, culture, policies and
practices. The external environment would for example, comprise of the
markets, suppliers, customers, competitors, government policies, regional
and international trade agreements. (See Appendix B) The functioning of these
and others will have their impact, the results of which will provide
opportunities, threats or challenges for your company. Effective and timely
interpretation of these and the trends that are likely to emerge must be
critical to the human resource professional who wants to add value to
Being a business partner signifies a high level of responsibility as well as
a well-rounded knowledge base of the enterprise. This high level of
responsibility and knowledge base usually accompanied by a high level of
respect and integrity to which one is held accountable for by seniors, peers
and juniors within the enterprise.
Traditionally, HR professionals were not seen to be in the same league as
their counterparts’- example, in finance, sales and marketing, operations or
Information technology, because of the perceived lower value placed on their
contributions to the enterprise. However, there has been a paradigm shift
and organisations have come to realise that a firm’s competitiveness does
not rest on the products: instead it is on the quality of the human resource
inputs. Accordingly, enterprises are becoming more concerned about people’s
thinking, their feelings and needs and how these things impact on their
jobs, the enterprise and the environment. Because of this, human resource
professional’s role is being elevated and is now being treated as a partner
in the enterprise’s strategic planning. Not all HR professionals may
experience this elevated status. It is one that has to be earned, as the
biases are still present in a number of firms. It is true to say though,
that once the HR professional is committed to stepping out of the HR box,
show strong competency in portfolio responsibilities, and focus in adding
value, recognition will be assured.
Many HR professionals will argue that success in developing HR programmes
and strategies is riveted in the professionals’ ability to influence their
partners at the “table” and build a cohesive working relationship. The level
of respect and trust that HR professionals take to the organisation; the
value that practitioners can add to each divisional objective and the
overarching objectives of the enterprise, drive such influence (see how to
build trust - Appendix D).
Relationship building is another critical area of the HR professional as it
provides a sound basis for improved communication and understanding between
the offices of the HR professional and his business partners. Building
effective relationships takes time and effort on both sides. It is however,
essential that the HR professional becomes proactive at all times by using
the consulting skills on his/her partners as a way of seeking out
information that can be used to improve the quality of advice to them (the
partners) that might other-wise be absent.
HR’s contribution to
organisational effectiveness, including assessment,
design, implementation and evaluation of activities with respect to
strategic and organization measurements in HR objectives.
Assessment of human resource contribution to
has not been easy. The use of job evaluations, performance management system
(performance appraisal), and human resource audits etc. have to some extent
helped in the past
But as executives steer their companies through tough economic environments,
by focussing scarce resources on carefully chosen priorities, the search for
a more effective system of evaluation is on. It makes perfect sense for HR
professionals to design and implement a creditable system to evaluate human
resources contribution to
organisational effectiveness. The objective is to
close the gap between the HR professional’s view and that of their business
partners’ of their true value to organisations.
Kaplan and Norton (1996) in their book, “The Balanced Scorecard: Translating
strategy into action”, introduces four different perspectives from which a
company’s activity can be evaluated: 1) financial perspective (how do we
perceive our shareholders?) 2) customer perspective (how do we perceive our
customers?) 3) process perspective (in what processes should we excel to
succeed?) 4) learning and innovation perspective (how will we sustain our
ability to change and improve?) This is designed to replace traditional
performance measurement, which focused on external accounting data with
something to provide the information age enterprises with efficient planning
The Balanced Scorecard (BSC) is a concept introduced to help company
executives translate strategy into action. BSC starts from the company
vision and strategies; from here the critical success factors (see appendix
“D” for definition of success factor) are defined. Measures are constructed
that aid target setting and performance measurement in areas critical to the
strategies. Hence, Balanced Scorecard is a performance measurement system,
derived from vision and strategy, and reflecting the most important aspects
of the business. The Balanced Scorecard concept supports strategic planning
and implementation by federating the actions of all the sections of an
organisation around a common understanding of its goals, and by facilitating
the assessment and upgrade of strategy.
Another form of measurement being used is called the “People Scorecard (PSC),
which aims to measure how well companies manage employees. It uses a set of
criteria that can be tracked and quantified. This helps overcome the problem
of companies neglecting human capital because it is difficult to measure and
the benefits of people strategy take time to emerge. However, there is
growing evidence to link company performance and people management.
According to Bilmes and Neal (2003) authors of the book, “The People
Factor”, an analysis of 200 companies in the US and Germany showed that
those companies that scored highest had a higher total shareholder return
than lower-scoring companies. People factor benefits take time to emerge.
Over four years and longer, a pattern becomes clear, with those companies
scoring highest on the scorecard enjoying strong performance versus their
competitors. But people-factor companies sometimes forego short-term profits
in pursuit of longer-term success. Companies with high HR scores but low
scores of “entrepreneurship” do not have superior stock performance. So HR
professionals should reinforce and foster entrepreneurial opportunity. A
company that does well on all sections of the scorecard is likely to
translate that into better performance through a more contented and loyal
workforce. Features that most increased job satisfaction was: allowing
people to influence decisions that affect their work life training and
do not often understand HR role and functions. In fact in some enterprises
Line managers are often in conflict with HR professionals as to what their
role should be. It is therefore important that line managers understand that
the HR professionals are not there to compete with other managers or to
carry out the line managers’ inherent human resource management duties, but
to assist, (through advice etc.) compliment and give support to the
achievement of the divisional or departmental objectives. HR practitioners
need therefore to be proactive in carrying this message forward and to
develop a marketing strategy to consistently inform managers and staff of
the changing role and responsibilities of the HR professional. It is the
experience of many professionals that once this is done a greater level of
understanding and appreciation will be achieved of the issues hence greater
levels of cooperation between HR professionals and other managers. (See HR
marketing strategy in module 3).
direction and guidance during changes in organization processes,
operations planning, intervention leadership training and culture that
balances expectations and needs of the organization, its employees and
Here the HR
professional needs to be proactive and analytical at the same time, being
focused on the management of the differences, which may flow from the
changes. People involvement and buy-in to the processes are critical to
success. Training should be focused and the results measured against the
training objectives over time. The organisational culture and values should
be constantly assessed to ensure that the environmental changes are
appropriately reflected in current practices.
professionals should ensure that the design and implementation of written
policies and procedures serve the purpose for which they were intended,
through constant monitoring against practices as well as periodic reviews.
Regular reviews will ensure that the policies remain relevant.
Policies exist to guide the behaviour and decision making of management and
staff. They however, should not be allowed to stand in the way of the
organisation achieving its legitimate objectives. In other words where the
execution of a policy is likely to prevent the company’s objective from
being achieved, such policy should be waived and or discontinued. The human
resource professional, in executing his/her change management
responsibilities must see to it that organisational policies relate to the
organisation’s management of its human resources and are reflective of the
relevant changes at all times. A useful way of ensuring this is to form a
small policy review committee. Such a committee would be responsible for
periodic review of all HR policies and practices. While it is important for
this process to be driven by the HR professional, it would send a powerful
signal if such a committee was to be chaired by the Chief Executive Officer
of the organisation.
professionals should keep abreast of best practices and the results of any
behavioural research studies impacting on the management of human resources.
Regular staff survey (e.g. once every two years) should be carried out to
solicit feedback from staff on the effectiveness of policies, management
practices, benefits, the environment etc. on their jobs. To ensure its
integrity and credibility, an independent person or organisation should
carry out such surveys.
HR professionals should be familiar with existing labour and social
legislations and keep abreast of all legislative changes thereto. There
should be close collaboration with the relevant government agencies, and
employer/employee organisations through discussions, to foster understanding
and communication of the changes impacting on the various labour
legislations that are likely to affect management and labour and their
representatives (see Appendix “B”).
Reference should be made to a number of leading Caribbean enterprises
(example, Trinidad Cement Limited,
St. Vincent Electricity Company (VINLEC),
Goddard Enterprises Limited and Alcan Jamaica Limited) when discussing each
of the above points. The results of individual cases will demonstrate that
human resource strategic decisions have the power to shape a company’s’
direction and determine its future success.
The key challenges HR Professionals face every day; from strategic
implementation and training practices to fostering competencies and
developing leadership skills; must be based on preparation, inspiration and
forward thinking. HR strategy exists to support the achievement of the
business strategy. This support should be both pro-active and reactive (see
Proactive in the sense that it suggests how the organization can
maximise the added value provided by its human resources.
in that when HR implications of established business strategy are
assessed, decisions can be reached on what directions should be taken to
help achieve it. Those decisions can take the form of re-sourcing,
development, reward, and employee relations.
It is important
to emphasize that strategic integration is necessary in order to provide
congruence between business and human resource strategy, so that the latter
supports the accomplishment of the former and, indeed, helps to define it.
The aim is to provide a strategic fit and consistency between the policy
goals of human resource management and the business. It may be useful for
users of this manual to share with their colleagues their experiences in
handling integration problems. Each organisation may have a different
experience and so the approaches in dealing with those problems might be
The role of HR in facilitating the success of a merger or reorganisation has
been well documented. Key tasks include reconciling cultural differences
between organisations; educating the workforce regarding the cultural change
integration; helping to make the changes and to create a smooth integration.
Figure 1 depicts how well coordinated and integrated business and human
resource strategies should be. Users should use Figure 1 to trigger a merger
and acquisition brainstorming exercise.
(2001). Strategic Diagnosis.
WORKPLACE PLANNING AND
Workplace planning and employment is the process by which management ensures
that it has the right number and kinds of people in the right places, and at
the right times, who are capable of effectively and efficiently completing
those tasks that will help the organization achieve its overall objectives.
Employment planning translates organizational mission and objectives into a
human resource plan. Assessing future human resource needs and developing a
program to meet such needs is to be considered critical to any company
Firms that do business in a rapidly changing, highly competitive regional
and global market must hire for the organisation rather than for the job.
Recruitment and selection is an expensive and time consuming process, and
the enterprise must make sure that, as it continually adapts, and if
necessary, transforms itself, the employees it has recruited and selected
are also able to adapt and transform themselves.
As the nature of the “job” changes, the individuals in those jobs must also
have the ability and flexibility to change. Job analysis, person job fit,
person environment fit, and recruitment and selection are factors to be
taken into consideration. It is important to develop a recruitment plan, a
selection plan and an interview protocol that yields the quantity and
quality of employees needed to make the business successful. Companies
should determine the performance culture it considers best for their
continual success – whether high or low. It should then define what set of
attitudes and values are best likely to achieve the desired success and use
these as guides when recruiting staff. This approach will assist human
resource professionals to shift focus from the traditional factors of
qualification, skills and experience to putting emphasis on having the
required attitudes and values that best contribute to success. Traditional
factors such as qualifications, skills and experience though very important
should be regarded as basic requirements. The “required attitudes and
values” factors should be the ultimate in any selection decisions. In
addition, while skills and experience can be obtained on the job, attitudes
and values are difficult to acquire on the job, you either have it or you
The aims of the above plans are to:
Identify staffing requirements
to meet the goals and objectives of the organization within the short,
medium to long-term.
Develop Job analysis and the
writing of job descriptions and performance standards and the need to
develop job competencies. It is important that all new recruits are
given a statement outlining what he is required to do and the standard
that is expected of him/her. This makes the process of evaluation and
assessment in the short to long run much easier and transparent.
Establish hiring criteria based
on required competencies. The competency skills required for each job
should be listed as part of each job profile, and should be reviewed
against any significant changes to the job.
Assess internal workforce,
labour market and recruitment agencies to determine availability.
Based on the
effectiveness of the firm’s human resource information system, an accurate
forecast of human resource needs should be made. This forecast will show the
likelihood of a short fall or an excess of skills due to expansion,
retirement, promotions or terminations. Assuming there is a shortfall, it
will be necessary to determine the supply sources from both within and
outside the enterprise. Regular attendance to schools and colleges fairs is
to be encouraged. Also, enterprises should develop and maintain a skills
bank to be reviewed regularly for example, every three to six months,
depending on the size of your operation and the level of employee turnover
experienced. Having a succession plan with annual reviews and updates is a
useful tool to use to track internal talents.
within the company should be encouraged. It helps to create multi-skilling,
which in turn helps to promote greater flexibility among staff. It is a
useful practice to advertise internally all vacant positions. This
should either be done before advertising them externally or
simultaneously. It is important when doing so to list very clearly the
job objectives and the required competencies.
include visits to, schools, colleges’ fairs and organisations dedicated
to executive search. A brochure of the company outlining its history,
nature of business, director’s profile, management structure, and
achievements should serve as a useful marketing tool.
may depend on the size of the firm and the level of staff being recruited.
For the selection of supervisory and managerial personnel, it is recommended
that the supervisors and managers in the department or division to which the
new recruit will be assigned should participate in the selection process.
This will certainly help to reinforce the point made earlier about assessing
demonstrated attitudes and values against the established “required
attitudes and values” best suited to achieve the organisational objectives.
The attitudes display in the different interviews by the interviewee will be
compared and analysed against the “required attitudes and values” of the
company. Some senior positions may require panel interviews. Whenever this
becomes necessary, the human resource professional should chair the panel.
When recruiting non-supervisory staff, the supervisor(s) to whom the new
recruit will report should participate in the selection process.
The use of
psychometric testing has been proven to be useful when used
correctly, and perhaps need to be part of the selection process. It should
not be used as a stand-alone tool, but as complimentary to the traditional
interviews. Therefore the test should be taken before the interviews.
Background checking should be carried out after the first interview and
should be done by an independent third party.
or administering the process by which CARICOM graduates and technically
skilled nationals and non-CARICOM nationals can legally work in CARICOM
management performance systems including succession-planning process.
performance appraisals or annual reviews as one of their most disliked
tasks. Performance management eliminates the performance appraisal or annual
review and evaluation as the focus and concentrates instead on the entire
spectrum of performance management and improvement strategies. These include
performance improvement, performance development and training, cross
training, challenging assignments, 360-degree feedback and regular
performance feedback. Once this system is in place and is working well,
succession planning is made easy. There is not a structured system of
leadership/executive succession in many Caribbean enterprises. According to
Hunte-Cox (2004) as an implication for practice, organizations need to
establish a process of identifying the executive competencies needed for
leadership and management continuity that are critical to creating the
competitive advantage, and establish a programme to facilitate such. The
absence of such a system inhibits enterprises from focussing on talent and
skills development –hence it is often very difficult to find the required
HUMAN RESOURCES DEVELOPMENT
The process of ensuring that the skills knowledge, abilities and performance
of the current and future organization are in place; that the individual
needs through developing, implementing and evaluating activities and
programmes are adequately addressed; and that programmes are in place to
carry out employee training and development, change and performance
Users should explore experiences of their colleagues in determining how
training and development is achieved in other organisations and seek to
establish the extent to which Caribbean enterprises invest in training and
development in relation to other competing countries outside the region.
Users are advised to pay special attention to the following issues and to
ensure that they understand the importance of the need to: -
Such needs are to be
identified during the annual employee performance assessment exercise. In
the absence of such an exercise, companies may wish to engage an independent
professional to perform this role, perhaps once every two years.
Once the training
needs are identified, the next step is to develop a training programme after
discussions with the key players – managers, employees to be trained, and
instructors. The programme objectives should be clearly defined so too are
the expected outcomes for participants and company.
On completion of
each training programme, the supervisors/managers should meet with the
participants to discuss his/her participation. The objective here is for the
employee/participant to state whether learning had taken place and how such
learning can help to improve his/her performance or behaviour. The
supervisor/manager should then monitor his/her employees’ performance and or
behaviour over a three to six months period. The supervisor/manager should
communicate the results to the employees as well as to the HR professional.
The HR professional must drive this process.
A factor that may determine the effectiveness of the training programme is
the environment. For example, the employee armed with his/her new found
knowledge might be eager to put to use new ideas, methods and techniques,
but may be hindered from doing so because of “mitigating factors” within the
environment. Examples of such factors are supervisors’ /managers’ management
style, non-cooperation of colleagues etc. In assessing the effectiveness of
training programmes, one has to take into consideration a number of factors
including: the intent and purpose of the training; the commitment of both
the managers and employees to make maximum use of the training; and how
facilitating the support system is. Participants to all short-term training
programmes should be asked to evaluate the content and delivery
methodologies immediately on completion.
involves the introduction of new procedures, people or ways of working which
have a direct impact on the various stakeholders in the enterprise. The key
to successful change management lies in understanding the potential effects
of a change initiative on the stakeholders. Will employees be scared,
resistant, pessimistic or enthusiastic about proposed changes? How can each
possible reaction be anticipated and swayed?
As you begin to think about any kind of significant change be aware of how
the change will impact others in the enterprise and your customers. A new
vision, a set of driving values, mission or goals constitutes significant
change. So do new performance standards, new policies or procedures or new
computer equipment installation or relocation of business. These challenges
may manifest themselves under different names or other guises but are
essentially the challenges of leadership, commitment and focus.
HRM professionals should have a way of thinking about change. They should
have a “model” which will guide analysis of the situation and help them to
formulate the process of change to be implemented. HRM professionals must
have a clear idea of what results the change will generate. They should
influence the initiative to change at the point where they have the most
control and can make reliable predictions about the consequences of the
actions of the initiators. It is important for HRM professionals to
recognise that change in any one point of the situation affects the whole,
and therefore must be alert for unanticipated consequences of their actions.
should reflect the companies’ philosophy toward training and development. It
should make the distinction between training as a human capital investment
and that as an expense. The policy should also define the procedures to be
used in the treatment of employee initiated training programmes, as opposed
to company-initiated programmes.
There are training programmes that deal with performance and behavioural
issues. There are also those that are designed to meet the unique needs of
particular employees, for example, fast track programmes for future
development and to fulfil succession-planning objectives. Not only is it
useful to cover these situations in the policy, but also provisions should
be made for regular reviews and evaluation for effectiveness.
Policy formulators should pay special attention to the four major trends
affecting the practice of HRD in the 21st century:
The diversity of
expect meaningful work and involvement
More people will
do knowledge work, which requires judgement, flexibility, and personal
commitment rather than submission to procedures.
A shift is
occurring in the nature of the contract between organizations and their
Users of this manual
may wish to discuss with their colleagues, the challenges to HRD
Professionals by utilizing as much as possible each other experiences in the
2). Competing in
regional and global economies
the skills gap
Meeting the need
for lifelong learning
How Are Pay Levels Determined?
The goals of compensation administration are:
To design a
cost-effective pay structure that will attract and retain competent
To provide an
incentive for these individuals to exert high energy levels at work.
To ensure that
pay will be perceived as fair by all employees.
Fairness means that
the established pay levels are adequate and consistent for the demands and
requirements of the job.
The primary determination of pay is the kind of job an employee performs.
Different jobs require different kinds and levels of skills, knowledge,
and abilities and different levels of responsibility and authority.
Pay levels may be influenced by the kind of business, the environment
surrounding the job, geographic location, and employee performance
levels and seniority.
The most important
factor is management's compensation philosophy.
Organizations Offer Employee Benefits?
organization designs its overall compensation package, it has to take
into account another element, employee benefits.
benefits are non-financial rewards that are designed to enrich
Once viewed as
"fringes," they have grown in importance and variety.
offered by an organization will vary widely in scope.
Most are required to
provide Social Security and workers' and unemployment compensations.
Users should focus on the legal framework surrounding compensation decisions
in the Caribbean, competing models of “best practices” in pay design, the
elements of direct and indirect pay, strategic options in designing
compensation for job-based versus skill-based systems, and the forms of
equity necessary for successful compensation systems.
Users need to be mindful of the expected free movement of “classified
designated” labour throughout the territories when CSME comes into force,
and the possible impact on regional compensation systems especially as it
applies to regional or international companies transferring staff from one
territory to another. Comparative analysis of different compensation systems
of various territories will be necessary when addressing cross-border
In developing a compensation system, users of this manual are advised to:
elements of a total pay programme that are most appropriate to the
business objectives, operating environment and culture of the company.
competitive base-pay programme; merit and incentive pay programs that
provide strategic advantages to attracting and retaining highly skilled
and creative employees.
positions to industry, local, regional and international market data.
pay structure and benefit programme.
performance management and merit pay system.
Users will need to:
compliance of compensation and benefits with applicable territorial and
local laws including Inland Revenue regulations.
evaluate pay rates based on internal worth and external market
conditions (include wage and salary surveys).
and implement integrated payroll system.
compensation policies to ensure that they are positioning the
organization internally and externally according to the organisation’s
develop, select, maintain and administer executive compensation, stock
options and incentives (including profit sharing and bonus plans). Stock
options and profit sharing are not very common in the Caribbean, but
wherever they are to be found, have proven to be quite useful in
creating a higher level of management commitment and entrepreneurial
The compensation and
benefits policies should be communicated to the employees as they tend to
forget the total picture while focussing on the take home pay. Efforts
should also be made to communicate to staff the results of any compensation
survey with comparative benefits data without committing any breach of
confidentiality. This will establish an environment of openness and
transparency leading to the perception of fairness and competitiveness
regarding the company’s compensation policy. Where there is a perception of
unfairness or un-competitiveness, it will lead to mistrust, lack of
commitment and generally a poor attitude to the job and the company (see how
to build trust – Appendix D).
The process of analysing, developing, implementing, administering and
performing ongoing evaluation of the workplace relationship between employer
and employee (including the collective bargaining process and union
relations), in order to maintain effective relationships and working
conditions that balance the employers’ needs with the employees’ rights in
support of the organisation’s strategic objectives.
Industrial relations and human resource management are relevant to
competitiveness. How these are managed will impact on enterprise performance
(e.g. its productivity and quality of goods and services, labour costs,
quality of the workforce, motivation, and prevention of disputes) dispute
settlements and assist to align employee aspirations with enterprise
objectives. Users are encouraged to examine the differences between the
greater managerial discretion that exists in the absence of a union and the
lesser managerial discretion that exists when the firm’s employees are
represented by a union.
Users should also examine the current industrial relations issues e.g.
minimum wages, flexible/performance pay, cross-cultural management and
The pros and cons of employee based versus union based HRM systems should be
examined within the Caribbean context.
Users should examine the practices in their own organisations and compare
such experiences with other practices within and outside of the Caribbean.
Particular attention should be focused on:
How to ensure
compliance with appropriate labour laws and regulations including the
International Labour Organization (I.L.O) basic standards.
How to develop
and implement employee relations’ programmes that will create a positive
organizational culture example, employee assistance programme, and
employee wellness programme.
How to assist in
work rules and monitor their application and enforcement to
ensure fairness, firmness and consistency (for union and non-union
employee complaints involving employment practices (formal, legal
How to develop
grievance and disciplinary policies and procedures to ensure fairness
and consistency in their application.
The process of
collective bargaining and the post activities including contract
The concept of social partnerships should also be examined alongside other
industrial relations models as an alternative to effectively managing
The Focal Point in Employee/Industrial Relations
The focal point of attention in employee/industrial relations should be
regarded as the work rules negotiated between management and employees or
their union representatives. It is important to understand the influences
determining whether a work rule exists and if so it’s particular content.
Work rules can be placed in two general categories: 1) rules governing
compensation in all its forms – overtime payments, vacations, holidays, and
so on, and 2) rules specifying the employees’ and employers’ job rights and
obligations, such as performance standards, promotion qualifications and
procedures, job specifications, and layoff procedures.
An analysis of work rules helps us to understand the complex output of the
labour relations process. The formal labour agreement in this sense
represents a compilation of jointly negotiated work rules. However,
industrial relations activities are not limited to those involving the
establishment and content of the work rule; it is also appropriate to
examine how the particular rule is administered between union and
Work rules also respond to changing workplace conditions and social values
overtime. For example, the common use of cell phones by workers of all
categories (with multiple features) and the deadly Acquired Immune
Deficiency Syndrome (AIDS), represented a dramatic new working condition
that has commanded management and union concern and shaped work rules.
Participants in the
Industrial Relations Process
The negotiated and administered work rules involve managers at several
organisational levels and functions as major participants in the industrial
relations process. HR managers and representatives are typically found at
corporate, divisional, and subsidiary company levels. Industrial relations
objectives are developed and coordinated at the corporate and subsidiary
levels to ensure that a particular work rule, such as a wage rate for a
particular job classification, does not adversely alter precedents or
conditions at another subsidiary company or division.
Other participants in the industrial relations process are union officials,
employees, third party neutrals and the government.
Union officials, usually elected by the members (of the workforce),
represent the membership, but they do not necessarily represent a consensual
group since unions experience internal differences of view. Members and
officers do not completely agree on priorities; sometimes conflict occurs
over specific tactics to be used in accomplishing commonly shared bargaining
Employees represent perhaps the most significant participant category since
they often determine whether a union is even present in an organisation.
Employees also determine whether a negotiated labour agreement is accepted
or rejected and whether a threatened strike is actually carried out.
Employees may have loyalties to both management and union organisations.
This situation is found in both the private and public sectors; for example,
public sector employees such as the police and teachers may feel torn
between the critical or professional nature of their jobs and the strategic
advantages of a strike. Employees want their organisations to thrive and
prosper; at the same time, they want to share in the rewards of success.
Since their desires may shape the existence and content of particular work
rules, employees can be considered the third participant in the labour
Often differences of opinion between management and union officials are
revealed in contract administration through the grievance procedure or
negotiations. Third-party neutrals are available to assist the parties in
settling their differences. The chief labour officer, labour commissioners
and arbitrators are considered third-party neutrals.
The government participates through three activities: executive,
legislative, and judicial. In the public sector, government officials also
serve as management officials in the industrial relations process. This
situation can become complicated during collective bargaining. For example,
where government officials are confronted with intransigent union
negotiators, they can bring a halt to negotiations by asking government to
legislate their offers.
The desires and composition of the industrial relations participants can
affect the development of work rules – hence the relationships. However,
these participants are in turn influenced by several variables or
constraints in their industrial relations activities. These influences may
relate to the particular firm, the local community, the technology, regional
and international forces and the society in general (see Appendix B)
The outcomes of the application of these variables will be exclusively
dependent on the competency skills, HR philosophy and the effectiveness of
the strategies applied by the HR professionals and operating managers of the
firms. The next two modules will seek to highlight the competency skills and
the strategies required to assure effective application of the activities
contained in this module.
The key Human Resource Variables Impacting on Human Resource