Introduction Companies in the 21st century are facing fierce competition, economic and global challengers.
In the midst of challengers organisations should have distinctive competences to resist it. Survival depends on the maintenance of market share by having good image, cost leadership, sound technical or service superioty, committed employees and speed of market. Organisations success depends on how well the use of resource are utilised in achieving the core competences. Human assets are becoming the most important resource because of the rapid growth in the service sector.
Human resources hold valuable knowledge and information, which sets them a part as the source in creating intellectual capital that sets a firm a part from its competitors (Kamoche, 2001) The most important resource for successful organisation is its human resources therefore firms cannot treat human assets as commodities. To create value, management should try to find ways to utilise employees efficiently. The importance of human resource management to align with the business strategy is fundamental to the firm’s achievement of competitive advantage. As Bratton and Gold (1999: 08) describes human assets have the characteristic of creating value to the firm, be unique, difficult to imitate and substituted. In the past decade diversity has been the forerunner in the argument of human resource management.
Workplace diversity is about acknowledging differences adopting to work practices to create an inclusive environment in which our diverse skills, perspectives and backgrounds are valued (Nicholas, 2000:14). This article will examine the benefits and the issues the firms would have in capturing diversity. The article will also concentrate on the central issue of the importance of integrating the human resource strategy with business strategy. Finally the article would conclude the problems faced by the HR managers in implementing practices and policies.
Diversity has been a competitive tool for most organisation because of the development of technology that results in the relocation of resources and people, increasing globalisation, aging of workforce, continued ethnic diversification (Hudson, 2002). Diversity is commonly referred in relation to ethnicity gender and culture but its scope is widened as far as age, disability, language, religouis beliefs, life stages and education. Diversity is beneficial to companies as job satisfaction reducers cost on turnover and absenteeism (Hudson, 2002). With the increase in job satisfaction higher levels of production also can be achieved.
This is similar to the Soft Approach of human resource management. The soft approach takes the view the benefits will accrue in the long run. Organisations persistence for good work practise will earn the reputation tag as a good place of work. All these are consequences in the long term reiterated by the theorist of the soft approach.
Beer et al (1984) and Guest (1987) stated by applying human resource policies firms could achieve committed, competent employees, which would be cost effective in turn increasing the companies bottom line. Shiel (2001) based a review on South African Beers (SAB) reputation for implementing equity-employment plan aimed at significantly increasing the number of African, Asian and black people throughout the salaried staff, so that these ranks would be more demographically representative of the markets served. These were in place 27 years before equal opportunity legislation was introduced in South Africa. This earned a good reputation for the firm, which was a benchmark for other firms.
Another benefit stated by Robbinson and Dechant (1997) from diversity is the ability to create value through creative, innovative ideas to solve problems. A diversified workforce will enhance the creativity as individuals are from different backgrounds. This in turn would create innovate ideas. Ideas to be creative and innovative workforces and teams have to be managed productively. This type of team building and creating groups tend to be theorised under the Hard Approach of human resource management. Hard HRM emphasises treating employees as a means to achieving the organisation strategy, as a resource that is used in calculative and purely rational way.
Hard HRM assumes that increasing productivity will continue to be management’s principal reason for improving HRM. Creativity and problem solving can create conflict in organisations. Companies have to be careful to foster conflict in a positive direction. Organisations work in complex cultures locally and across boundries. Australian society for example has changed in the past 20 years.
According to the Australian bureau of statistics out of the 18. 7(m) population 43% are either born overseas or parents are migrants. Further out of the total work force 23% are migrants. As the statistics reveal the society the organisation operates have become complex therefore appreciating the impact of these changes are crucial.
Recent government statistics estimated in United States revealed that minority groups have a collective spending power of well over $1 trillion USD (Kamoche, 2001). Women and minorities are starting new business and growing existing ones at a much faster pace than their more – established counterparts. A talent pool comprising diverse backgrounds and experience will help provide stronger communications, new ideas and innovative solutions for this emerging marketplace, resulting in a distinct business advantage for companies (Robbinson and Dechant, 1997). The Scottish financial institution Halifax CEO quoted as saying ” people do business with like people, so it is important that our workforce represents the communities in which they operate”(Hudson, 2002). The inclusion of ethnic workforce to represent the markets is a strategic imperative, which is similar to the hard approach of HRM. But there are academics that might argue to the contrary to this stating it is the organisations genuine interest characterising the Soft approach of HRM.
Diversity is commonly referred in relation to ethinicity, gender and culture but it is focused in other areas. As for example age diversity benefits have been the hallmark of the UK giant consumer production producer Tesco. As stated by Hudson (2002) Tesco provides training to all age groups whether it’s a school leaver or a post-retired employee. Tesco’s ability to provides training builds a career regardless of age.
A good example of a gender based diversity programme is the Australian financial institution Westpac that initiates workplace initiatives and sponsoring for women (Nicholas and Semmartino, 2000). The two schools of thought reiterate the achievement of overall objectives of the organisation through HR practices and policies. Bratton and Gold (1999: 08) argue that hard approach is needed because of competition. This model is closer to reality as it takes into consideration the business performance and the preference of the superior stakeholder i.
e. shareholders. The limitation of the soft model is the above reference but some companies have resulted in this approach accruing long-term effects as the SAB beer company. It is difficult to find any one approach applied by one company. Schuler and Jackson (2000:10) emphasised that companies have a mix of hard and soft approaches. Now let us consider how policies and practices are implemented to achieve the strategic objectives of the firm.
Both the models look at policy formulation in the same vain taking into consideration of the organisation objectives. Harvard model emphasises the need for its policy to have employee influence, managinging into, through and out of the organisation, reward system, work system integrated without having dis joint and adhoc systems (Beer et al, 1984). Most of the companies use diversity programmes to disguise themselves as socially responsible personal or as to avoid litigation from the law. This kind of policy making would disrupt the potential benefits of diversity.
Harvard model emphasises the need for all stakeholders’ interest taken into consideration in formulating strtegies. The reality is somewhat different, as dominant stakeholders would have an upper hand on company’s direction. Most organisations debate on socially responsible matters and shareholder wealth creation. These two are correlated to the share price, organisations willingness to exert excess funds and time on socially responsible activities would be seen by the shareholders as negative effect on there investment. There is research that shows that more diverse the team, the more conflict there would be. But the eventual outcome was determined not by the team’s diversity, it was how everyone handled the conflict.
As stated by Liberman and Harrington (2002) if it was a group that saw conflict as part of the creative process to get best results, then the diversity paid off. Better managers are best at finding the good conflict in diversity and turn it around. As Guest (1995:25) states in his theory, if the organisation is constantly changing, change can be managed to the benefit of the firm by implement policies and practicers. HRM to act as change agent, a coherent strategy linked to hrm should be implemented. Where Dunphy and Stace (1990:56) concluded in a finding that HRM becomes important when management attempts to change strategy to re- establish fit. In a diversified environment if the management did not utilise the benefits of the learning organisation by creating appropriate practices and policies the advantages would not be accrued.
The problem with the practices and policies of diversity is the difficulty in linking the benefits to it. In a survey done by professor Thomas Koochan cited in the article by Liberman and Harrighton (2002) was that he could not find the link between diversity and performance. For example increased diversity training did not have any impact on the business performance. Koochans Research was criticised because of the small no of companies investigated. There is the other problem of having policies implemented by the management at the strategic level.
In a study done by Guest in (1990) he found out that only a few companies implement a human resource strategy aligned to the business strategy. As can be seen from the problems inherent in the implementation of the policies and practices organisations are still reluctant to approach HRM in a strategic sense. Conclusion The following article has provided with the developments in Human resource management. HRM has been in the drawback for many years under personal management. Diversity benefits are accruing as the latest HRM fad to hit the management wavelengths.
Diversity benefits the organisation through cost savings on employee turnover, building of innovative ideas and acquiring an understanding of new business opportunities. Approaches adopted by different companies can be categorised into hard and soft elements of hrm. Hard hrm focuses on achieving the strategic goals by manipulating the employees in a rational way. Soft Hrm focuses on outcomes for people and achieving the objectives in the long term. In practice companies have a mix of both approaches.
The criticism of these models is the failure to prove the link between implementation and performance. Despite the recent research and scrutiny, many employers say they maintain diversity programs because they help their company be better. At Dell, officials say diversity programs help access top talent, improve customer experiences and drive globalisation efforts (Hudson, 2002). “We believe it’s essential.
You have to have a clearly defined business imperative to do this,” says Thurmond Woodard, Dell’s vice president of global diversity (Hudson, 2002). Anything you do in business that doesn’t give you a competitive advantage won’t be sustainable. In conclusion for companies to achieve business strategies successfully Hrm strategies has to be linked. References Australian Bureau of Statistics (2001) website (Acessed 18 August 2003). Bratton, J & Gold, J (1999), Human resource management phenomenon’ Human resource management: theory and practice.
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