Section : MODULE 1
 


MAJOR VARIABLES IMPACTING ON HR MANAGEMENT EFFECTIVENESS

 

OBJECTIVE: To explore the major variables impacting on human re-source management effectiveness in an ever increasing competitive business environment.


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 employment, 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.


STRATEGIC MANAGEMENT


Strategy can be formulated on three different levels:

  • Corporate level

  • Business unit level

  • Functional or departmental level

While strategy 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.


Consider 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:

  • Airline Catering

  • Import Distribution/Marketing

  • Manufacturing & Services

  • Motor Vehicle Sales & Services

  • Finance and Insurance

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:

  • Reach – 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 Economy.
     

  • Managing 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 business activities.
     

  • 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.

Firms are 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 Strategy


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:

  • Positioning the business against rivals

  • Anticipating changes in demand and technologies and adjusting the strategy to accommodate them.

  • Influencing 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.


Functional or 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 encouraged.


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.

  • HR professionals should ensure that their contributions at the “table” are not restricted to human resource issues – pure and simple – but to issues in other areas with potential impact on the organisational competitiveness and effectiveness. To be relevant in doing so you must be constantly improving your knowledge of the company’s operation and its environment.

  • Interpret information related to the general business environment.

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 his/her organisation.

  • Participate as a partner in the organisation’s strategic planning process.


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.

  • Establish strategic relationships with individuals in the organization to influence organization decision-making.


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.

  • Evaluate 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 organisational effectiveness 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 tools.


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 performance-linked pay.

  • Strategically market HR functions within & outside the firm.

Line managers 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).

  • Provide 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 other stakeholders.

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.

  • Develop and shape organization policy related to the organisation’s management of its human resources.

Human resource 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.

  • Develop a strategic approach to manage emerging HR challenges & opportunities.

HR 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.

  • Monitor legislative environment for proposed changes in law and take appropriate action to support, modify or stop the proposed action.


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 Figure 1).

 

  • Proactive in the sense that it suggests how the organization can maximise the added value provided by its human resources.
     

  • Reactive 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 different.


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.

 

Figure 1: Strategic Diagnosis

Source: Scholl (2001). Strategic Diagnosis. http://www.cba.uri.edu/Scholl/Notes/Macro_Diagnosis.html#Top

 

 

WORKPLACE PLANNING AND EMPLOYMENT:


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 developmental plan.


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 don’t.


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.

  • Identify internal and external recruitment methods and implement them within the context of the organisation’s goals and objectives.

Cross training 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.

  • Develop strategies to market the organization to potential applicants.

This would 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.

  • Establish selection procedures including interviewing, testing and reference background checking.

Selection procedures 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.

  • Facilitate and or administering the process by which CARICOM graduates and technically skilled nationals and non-CARICOM nationals can legally work in CARICOM territories.
     

  • Develop management performance systems including succession-planning process.

Managers cite 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 managerial talents.


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 management.


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: -

  • Conduct needs analysis to identify and establish parameters regarding human resource development activities.

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.

 

  • Develop and implement training programmes.

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.

  • Evaluate training programme effectiveness.

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.

  • Develop and evaluate change management programmes and activities.

Change usually 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.

  • Develop and implement training policies and procedures.

Training policies 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:

  1. The diversity of the workforce
     

  2. People will expect meaningful work and involvement
     

  3. More people will do knowledge work, which requires judgement, flexibility, and personal commitment rather than submission to procedures.
     

  4. A shift is occurring in the nature of the contract between organizations and their employees.

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 following areas.

 

  1. 1). Changing workforce demographics
     

  2. 2). Competing in regional and global economies
     

  3. 3). Eliminating the skills gap
     

  4. Meeting the need for lifelong learning
     

  5. Facilitating organizational learning


COMPENSATION AND BENEFIT MANAGEMENT:


How Are Pay Levels Determined?


The goals of compensation administration are:

  • To design a cost-effective pay structure that will attract and retain competent employees.
     

  • 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.

  • Some organizations don't pay employees any more than they have to.
     

  • Others commit to a compensation philosophy of paying at or above average wage levels.

Why Do Organizations Offer Employee Benefits?

  • When an organization designs its overall compensation package, it has to take into account another element, employee benefits.
     

  • Employee benefits are non-financial rewards that are designed to enrich employees' lives.
     

  • Once viewed as "fringes," they have grown in importance and variety.
     

  • The benefits 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 transfers.


In developing a compensation system, users of this manual are advised to:

  • Establish a compensation philosophy.
     

  • Identify elements of a total pay programme that are most appropriate to the business objectives, operating environment and culture of the company.
     

  • Design a competitive base-pay programme; merit and incentive pay programs that provide strategic advantages to attracting and retaining highly skilled and creative employees.
     

  • Benchmark positions to industry, local, regional and international market data.
     

  • Establish base pay structure and benefit programme.
     

  • Establish performance management and merit pay system.


Users will need to:

  • Ensure the compliance of compensation and benefits with applicable territorial and local laws including Inland Revenue regulations.
     

  • Analyse and evaluate pay rates based on internal worth and external market conditions (include wage and salary surveys).
     

  • Develop, select and implement integrated payroll system.
     

  • Evaluate compensation policies to ensure that they are positioning the organization internally and externally according to the organisation’s strategic objectives.
     

  • Analyse, 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 attitude.

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).


EMPLOYEE AND INDUSTRIAL RELATIONS:


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 dispute prevention.


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 establishing work rules and monitor their application and enforcement to ensure fairness, firmness and consistency (for union and non-union environments).
     

  • To resolve employee complaints involving employment practices (formal, legal complaints).
     

  • 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 administration.


The concept of social partnerships should also be examined alongside other industrial relations models as an alternative to effectively managing labour/management relationships.


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 management.


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


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 objectives.


Employees


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 relations process.


Third-party Neutrals


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


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.

 

 

Figure 2: The key Human Resource Variables Impacting on Human Resource Professionals’ Experience.