Wednesday 14 February 2007

A REPORT ON THE STRATEGIC HUMAN RESOURCE MANAGEMENT APPROACH TO CENTRALIZING THE PERSONELL DEPARTMENT OF AMPERSTAND CLOTHING COY AND AMPERSTANDPLUS

Stoik Musah,
LBS,East Midland,
United Kingdom.
25 July 2006.



TABLE OF CONTENT




Section one. Page No

1.1 Executive Summary 1

1.2 Introduction and Terms of Reference 1

Section Two.

2.1 People Management 2

2.2 Strategic Human Resource Management 3

Section Three.

3.1 Centralizing People Management in an Organization 4

3.2 Debates on Strategic Human Resource Management. 5


Section Four

4.1 Conclusion. 7

4.2 Recommendation. 8

4.3 References 9




















SECTION ONE


EXECUTIVE SUMMARY
The subject of this report is to provide insight on Strategic Human Resource Management application to people management practice for Ampersand Clothing Company. The Management intends to centralize the operations of the personnel department in the two companies (Ampersand and Ampersand Plus Clothing Company).The report discuss in depth, Strategic Human Resource Management and People Management practice in organizational development. It introduced possible strategies to affect the centralization process strategic intent, with line managers saddled with the responsibility of enforcing these strategic policies on the operational level. Possible areas of conflict was identified in the process, with suggestive management tools to proffer solution to these conflicts. In understanding the ways these conflicts emerge, discussions on the latest debates on Strategic Human Resource Management (SHRM) was introduced. It is believed that, a comprehensive understanding of the idea behind each criticism and debate will help inform better judgment on the subject.




INTRODUCTION:
This report centers on the strategic change management process for centralizing the operation of Ampersand Clothing Company and Ampersand Plus. It explores the transformation process of People Management techniques and Strategic Human Resource Management policies required for this process. For this reason, after understanding what is it about people, that translate into value for the organization of which they are part with. Strategic Human Resource Management help to build the operating environment and organizational structure, to facilitate a best fit for the desired configuration process, to bring about the desired organization structure, required for Ampersand Clothing Company, to achieve this strategic organizational and people management objective.
The first section of this report discussed people management and strategic human resource management .The subsequent section provides insight on how the two companies: Ampersand Clothing Company and Ampersand Plus, can centralize their operation to operate as one organization .In the same way, to understand the complexity involve in this process, the report introduce and analyzed the conflicting views of reknown proponents of the strategic human resource management debate. In the end, recommendations on the best possible cause of action to go about the change management process was highlighted to serve as guide for individuals acting as change agent, for this organization reengineering process.




SECTION TWO


PEOPLE MANAGEMENT:
People management involves the range of methods and approaches used by employers in resourcing their organization in such a way that they can meet their key goals .This comprises of a set of management activities that facilitates the achievement of four fundamental groups of personnel and development objectives , which are : staffing, performance, administration and change management(Taylor 2005).Staffing objectives involves making certain that an organization is able to call on the services of enough numbers of staff to meet its set objectives. These staffs may be employed in a variety of different roles but one way or the other they must be able to carry out the task and duties needed for the organization to function effectively. Performance objective begins where the staffing objectives have being achieved .The purpose of performance objective is to effect all the range of methods used by employers to motivate the staffs and make them willing to perform to the best of their abilities .While administration process on its part is concerned with managing employment relationships which has being established with these staffs in accordance with the law and professional ethics. In order to achieve these aims, it is necessary for the management of Ampersand to write out personnel and development policies, accepted work procedures and other documents relating to employment of individuals like job description, offer letters, contracts, weekly expected work hours, targets and disciplinary warnings for staffs, which will serve as guideline to their work operation. The change management aspect of people management ensures that proper recognition is given to the importance of change in the organization and its management process. Basically organization management has its arguments embedded in the organizations business environment that is subject to continual change .Take for example, when two companies’s come together during merger and acquisition. In the integration stage, some certain parts of the organization structure is more open to environmental influences, and they in turn react sharply to it (Lawrence and Lorsch,1967 cited in John Walton,1999:495).This phenomenon to the organization sometimes, can be devastating. Therefore there is need to align these managerial practices and organization structures with environmental demands so that the desired work behaviors arise(Schuber and Jackson 1987).Alternatively effective people management practice by the management of Ampersand can function as an important change agent to redress this situation when the need arise(Taylor 2005).





STRATEGIC HUMAN RESOURCE MANAGEMENT:
Strategic Human Resource Management cannot be discussed comprehensively without understanding the concept of Human Resource Management studies. This is because both SHRM and HRM do have areas of convergence in their operation. In other words, Human Resource Management concerns the human side of the enterprises and the factors that determine workers relationships with their employers, it covers, among other factors: management and workers communication, element of work psychology, employee relations, training and motivation, alongside conditions of work (Hannagan,1995:294).Similarly Strategic Human Resource Management is said to be the sum part of Human Resource Management with in depth insight of the organizations direction, a study on its environmental analysis, and organizational strategy formulation , together with this organizational strategy implementation and evaluation(Bratton and Gold 1999).It is also said to be the craft knowledge of the changing nature of work, to develop new human resource policies, to involve employees at all levels in the change process, to determine the most effective work process, and to build teams with the capacity to learn and become self managed. Strategic Human Resource Management also help managers to learn how to read and analyze their organization by: understanding and explaining the organizations problems retrospectively, restructuring an organization or part of it, identifying existing and preferred behaviours in the organization in order to improve work process and relationships(Jim Grieves 2003).Understanding how an organization Human Resource Strategy links with these different aspect of the organization will help to present a strategic map intended to guide all managers and change agents in their relationship with employees(Manson 2006).In the case of Ampersand Clothing Company and Ampersand Plus , the SHRM policies should be related to the internal operations of both company’s , from the composition of its activities in terms of product line in the shop floor and service undertaken, to the technologies on which these activities are based , and the shared behaviour/culture of the people in each organization, alongside the manner in which the organization is structured and controlled. This is important, since the central objective of the strategic human resources intent is to centralize the operations of both companies. To affect this objective the strategic planning should be jointly developed by the head of the central authority and business unit managers. Planning is centralized with the central authority or Head Office having the final say. The Head office further arrange and direct the HRM strategy development by setting and coordinating organization wide priorities- here people management has already being spelt out as both companies set objective to reposition the organization .This should be followed by a corporate vision of long-term perspective which requires central coordination and control. This vision should be realistic, feasible, simple and clear in the strategic human resource management objective. And then efforts are made centrally to create cross business synergies.



SECTION THREE



ADOPTION OF SHRM AS SOLUTION FOR CENTRALIZING PEOPLE MANAGEMENT PROBLEMS IN AN ORGANIZATION.

Here, Ampersand clothing company should move from an organization based on autonomous business units to an organization based on centralized coordination aimed to capture efficiencies and combine resources in innovative ways. One resolution of this structural shift is to substitute diverse processes in functional areas such as Human Resources with policy umbrella which permits bringing under the control of a central authority (Andrew Mayo 1995).The task of the Strategic Human Resource Management unit in the central unit is to determine the frame work of the best practice of work routine , which will enable linkage with the structural process, system, and strategic issues, and also to provide consultant help built around this items from the top.
This entails focusing initially on top officials like the weekly Monday morning meetings held with the management team by the Managing Director. This top officials who then operate as coaches and guide for their subordinates, who in turn were responsible for facilitating the Strategic Human Resource Management Policies among those who report directly to them (Burack 1991).As these Strategic Human Resource Management policies are being delegated down the organizational social hierarchy, at the operational level sometimes, these policies are met with constraints which sometimes disrupts its original intent. In the process consensus will be created among key managers .In a centralized organization the balancing process of this constraints can be institutionalized through the restructuring of relationship between the people at the top and those below. This can be done using a wide variety of management tools, which must be applied from the top, and down the line management, to manage the unit heads and the roots of the conflicts. In the same vain ,for each decision these conflicting sets of tools have to be traded off against the other, depending on the decision ,while overtime, from decision to decision an overall balance has to be maintained as the process continue(Dos and Prahalad 1984).For example if the conflict is considered necessary to deal simply with organizational roles, procedures and operational process, then the management tools to be applied for this particular situations will be to specify, and then slice up into roles, definitions for persons and groups in the organization. And if on the other hand it is considered that the problem is more fundamentally behavioural in origin e.g motivation, team, relationships, leadership issues, stress related work roles. Then the management tools should be geared towards dealing with emotional behavioural issues, and this requires appropriate social – psychological expertise (Jim Grieves 2003).
A successful centralized authority blends an array of these tools into a consistent management process. A company who fails in the appropriate application of these tools consistently will face difficulties in effecting coordination of its organizational resources, process and values. Jim Grieves (2002) makes it clear that it is very much important that Strategic Human Resource Development views the organization from a pluralistic perspective which sees agreement between the various sub cultures and units as a state of permanent negotiation .It is this internal development within organizational development that has given direction to the debates in the study of Strategic Human Resource Management to recognized the importance of proactive change in the organization.


DEBATES ON STARTEGIC HUMAN RESOURCE MANAGEMENT;

Strategic Human Resource Development perspective is informed by four debates on issues relating to organizational development .First is the argument that internal changes to an organization should be considered in relation to key contingencies and possible future event and from technology in particular. This is the views of those authors in support of the contingencies theory thesis (Burns and Stalker, 1961cited in Jim Grieves 2003:93).The second conflicting view of reason is that change results from the internal movement of forces in more than one organizations in which different interest groups seeks changes that maximizes their own interest, and resist changes that minimizes their interests. This is the labour process approach .The third thesis, is the argument that change is driven by well informed consumers whose insatiable appetites have force organizations to replace mass-produced goods and services with segmented market products. This the flexible specialization thesis .While the fourth view is represented by the fact that organizations are managed by key players – which are called managers , who make decisions .These decisions appears to be rational in reality, and its very convincing and fair, but is itself circumscribed by political boundaries(Woodward,1965 cited in Jim Grieves 2003:98).
The contingency approach emphasize technology as the most important variable in any organization .Here the organization structure was seen to be determined by the requirements of technology, as it applies to its resources, which are define as tangible assets: people, money and also intangible assets: relationships, brand name e.t.c .In this context decision about resources includes staffing and retention issues (Bower2001). This is to say, the staffing and retention issues, in the integrating organization should aim at retaining the local managers at the newly acquired company (Ampersand Plus) since they are knowledgeable in the local operational issues of the firm even before the acquisition. This is ideal for the acquiring company to enable the central authority keep tab with event in this company’s operating unit at the local level. Also in the area of retention , a key factor by the Malaysian company in obtaining successful people management structure in place at Ampersand will be instituting effective mechanism of a resourced based SHRM practice to facilitate the transfer of knowledge individuals from the acquiring firm to the newly acquired firm(Jackson 2001).Here a slow assimilation process should be encourage in the integration process over time .This will go a long way to redress Ampersands difficulty in recruiting and retraining quality employees to replace the skilled machine operators retired.#

Further more the change management process emphasis on technology should be reflected in every area of the organization work operation. In other word, a re-engineering of every area of its operation will be a better alternative, from accounting and stock control unit, ordering and distribution unit to clerical services and personnel. The personnel department should move from its traditional function to getting more involved in the implementation of SHRM practices that involves organizational development. Effort from the part of the central authority would be to link the personnel department functions with the organization business strategy. This approach is also known as the Best fit school of SHRM practice. The personnel department should aim at building employee behaviour in line with the firm’s strategic objective. Broader functions as employment security, work teams, performance appraisal, incentive compensation, employee ownership, competitive strategy, and advice on organization structures, should be embedded in the personnel department work routine. In this context Bower (2001) in his work argued that for two firms to integrate successfully, they need to align their HRM strategy with their integration strategy. He stressed that it will be of great importance for the organization to have a clear understanding of the integration strategy to be able to specify the role SHRM should play.
By contrast, the labour process approach challenges the assumptions that technology determines change. Rather, organizational change was seen to result from the attempt to control the labour process. As a result management control systems emerge as direct result of management intervention in the inevitable contest between the interest of capital on one hand, and labour on the other. In this way, whereas technology was the main determinant for the contingencies debate authors as John Woodward and other researchers from the labour process perspective saw the key determinants as control of the workforce with technology viewed as a mechanism in this process. In the works of Jim Grieves (2000), he stress in support of this claim that, when new technology is used, it is used as a strategic weapon in the struggle to maximize profit, principally through the deskilling of the job content and secondly by the attempt to remove control over the execution of task by workers themselves.
While the flexible specialization thesis has its debate, viewing change as a result of transformations in markets and products .Here the use of technology was seen as enhancing design and work process. As Mcloughlin and Clark(1994) argued ,that the approach viewed technological innovation as an attempt to separate the unintended consequences of mass consumer goods, by replacing them with relatively low volume, efficient process , and segmented markets. Perhaps the central core of Mcloughlin and Clark’s position was the attempt to resolve the unfavorable politics of the work place that had emerged as a result of the era of mass production of goods, when organizations were only concern with increasing production unit output.
The assumptions of the strategic choice perspective differs from the other three perspectives, this is because of its choice of methods used in selective fields of the organization. This approach was name by John Child (1972) who according to Mcloughlin and Clark, introduced the concept of “strategic choice” as a means of emphasizing the role of managerial choice rather than technology in shaping work process and organization (Mcloughlin and Clark 1994).Child suggest that the major focus should be with the process of decision making in an organization .He draws attention to the question of – who makes the decision in an organization and why these decisions are made. Strategic choices suggests that an organizations strategic choices are made in three general areas, which are (a) the domain, e.g country of origin, alongside the limitations and the constraints facing the organization (Potter1990).(b)its structures and systems e.g. this refers to choices of how centralized and standardized an organizations activities will be.(c)performance standards, which partly determines the extent of flexibility an organization has within its economic environment.
An organizations country of origin tends to influence its organizations structure and development. Take for example when two firms of the same country of origin, come together. The Human resource management strategic fit will be far different in the integration process, than when the two merging firm belongs to two different country group (Aguilera and Denker 2004).Thus we hear distinction in organizational operational practice between Liberal Market Economies like Britain,Canada,USA,Australia and Coordinated Market Economy like Germany ,France , Switzerland and Japan , where integral re-engineering process of the organization has to take into consideration the influence of environmental contingencies from these economies . For example issues like shareholders capitalism culture, national models, customers and financial institutions, are part of the context, judgment on strategic issues will be made .Thus the market for corporate governance is such that the network of relationships among stake holders will restrict centralization in a number of ways. A recent example highlighting this differences in corporate governance of the aforementioned illustration of two company’s of different country of origin is the successful take over bid of Mannesmann(German) and Vodafone (English) in 1999.Vodafone had to deal with entirely different ownership structure influence by banks , opaque accounting and disclosure rules, different company’s laws ,German corporate culture with strong orientation towards production and engineering (Hopner and Jackson 2001).However in the case of Ampersand clothing company ,there were no such issues ,stating in precise terms, the country of origin of the newly acquired company Ampersand plus to discern if the same principle apply .
Furthermore organization structures and decision making systems maybe participative or authoritarian .This system determine the nature of strategic choice decisions in an organization .In the views of Child(1972),he emphasized his position on this subject that decision making is a political process whereby strategic choices on issues such as long-term organizational objective , the allocation of the resources and organization design are normally initiated by a “a power holding group” or “dominant coalition “ within the organization .These are a group of individuals whose interest forge the direction of an organization strategic decisions.
On the other hand, performance standards on its part relate the organization within its economic environment.It partly helps to determine the extent of flexibility the organization has within its economic environment For example, performance standard based on innovativeness will lead to organization decision relating to technological literature and research and development, while performance standard based on market share will lead to organization strategic decision relating to competitor monitoring. Similarly, an organization performance standard based on reducing costs will lead to the development of cost control systems. A better approach in understanding how strategic human resource management can add value to business performance with concentration on what constitute organization performance was introduce in the US best practice model of HRM; where the application of professional human resource techniques –if when implemented by an organization will have the potential to improve employee attitude and behaviour to work (Holden etal 2004).
Taken together, these three strategic choices constitute an organizations strategic configuration and once a particular configuration has been chosen, it will be very difficult to transform it, under this circumstances the organization tend to experience extended periods of equilibrium. Therefore a change in any of the subcomponent within the configuration will lead to the need to effect transformation of the entire configuration. It is advisable that the application of strategic human resource management should not be zero down to one approach alone. But a combined application of different model approach at every stage of Ampersands people management centralization process life cycle


SECTION FOUR



CONCLUSION.
In this report, we highlighted in depth, the understanding of the concept of SHRM, HRM and the different variables embedded in the operations of people management practice in an organizational context. Basically the central objective of this report is to highlight possibility of how both organization (Ampersand Clothing Company and Ampersand Plus) can operate as a central organization .This was discussed in details by highlighting the need to effect a top down approach of the strategic human resource management practice in the organization structural hierarchy, with line managers saddled with the responsibility of enforcing this strategic policies at the operational level. As this SHRM policies is delegated down the organization structure ,the report highlighted possible causes of conflicts in the process , and suggestions was made on the effective management tools required as solution for each possible emergent conflict. In understanding the forms these conflicts sometimes identify with, the report introduce the various debates and criticisms by scholars and researchers in the field of organization development. Individually, stating clearly, convincing assumptions based on real issues, on why they strongly belief in their position. An understanding of these different views is required by any organization change agent if the individual intends to view SHRM and organizational development from a pluralistic perspective. This will help to facilitate better judgement on strategic choices and decision.






RECOMMENDATION
The management of Ampersands Clothing Company should be aware that the coordination and integration of an expanding organization requires greater central control of its SHRM, if its determine to achieve its set objective of integrating the people management of both companys.This is because a centralized SHRM is advantageous since it can plan its own activities independently by coordinating work process and maintaining a communion of shared ideas, thereby achieving more synergy and a identity as a group. This can be done by defining broader roles to the personnel unit as succession planning and strategic staffing among staff and in relation to organization positions, since the bulk of the work for this strategic process will rest in the desk of the personnel units and the line managers. The managers at all level should be aware of the benefits - centralizing people management can provide for the organization and the techniques that are applied for this process. It is generally recommended that these processes should begin small at the onset. An initial seed project is useful for trying out the methods and demonstrating the benefits in the early stages .This is because the organization changes may take some experimenting and modifying, before a comfortable structure is found; for you can’t expect everything to run smoothly from the beginning. Starting small lets people practice and get used to the idea slowly. This is preferable to a diverse intervention that tries to uproot the existing process and organization. Such a disruptive approach will likely alienate employers and managers. By beginning slowly and making changes in small increments event will unfold to result in an efficient development process and organizational structure.











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Stoik Musah writes from LBS,EastMidland,United Kingdom. Email: stoik_joy@yahoo.com

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