OPERATION OF HUMAN RESOURCE MANAGEMENT Many forces affect businesses and how they operate today depend on Human Resource Management. These range from globalization to increased competition, to the changing age and competency profile le of the current workforce. As an enabler for the knowledge economy, information technology can also be considered a driving force. In the wake of recent terrorist threats and corporate scandals, security and corporate governance concerns also expand the operational requirements of a business.While these forces may affect companies in varying degrees over time, some organizational realities remain unchanged. Human Resource Management will always want to leave a healthy organization for the next generation, and this may entail investing in and maximizing various assets. The increasing recognition of “human capital” as an asset with a signify cant impact on sustained competitive advantage is driving the transformation of many companies’. Operations management (OM) and human resources management (HRM) have historically been very separate fields. In practice, operations managers and human resource managers interact primarily on administrative issues regarding payroll and other matters. In academia, the two subjects are studied by separate communities of scholars publishing in disjoint sets of journals, drawing on mostly separate disciplinary foundations. Yet, operations and human resources are intimately related at a fundamental level. Operations are the context that often explains or moderates the effects of human resource activities such as pay, training, communications and staffing. Human responses to operations management systems often explain variations or anomalies that would otherwise be treated as randomness or error variance in traditional operations research models. In this paper, we probe the interface between operations and human resources by examining how human considerations affect classical OM results and how operational considerations affect classical HRM results. We then propose a unifying framework for identifying new research opportunities at the intersection of the two fields.
Human performance is crucial to an organization’s performance. ( HUMAN RESOURCE MANAGEMENT)An organization does not function without people; it does not function well without competent, motivated people. How the operations manager formulates a human resource strategy determines the talents available for operations. Human resources are expensive. Dowling’s study (1973) showed that in many organizations, a third of total cost is in wages and salaries and within the operations function, these costs range from 8% to 80%. Because of the importance of personnel and their cost, early consideration of human strategy options is necessary.In most organizations, the human resources function is responsible for resolving three basic problems related to human resources.
a). Recruitment of a sufficient number of people with adequate qualifications for the variety of job descriptions to be filled.
b). Effective utilization of existing personnel
c). Holding and improving existing personnel through tangible and intangible rewards
The proper planning of the internal working environment and the utilization of human resources must satisfy workers in the same way as the design of products and services must the needs of potential customers. In the past it was assumed that employee satisfaction was mainly related to wages or salaries and other financial incentives. In contemporary business. It is widely understood that to attract and maintain an effective work force requires the satisfaction of a wide range of human needs relating to working conditions, proper motivation and opportunity for self advancement.
The conduct of most activities undertaken by a firm especially those relevant to production, require the availability of capable and skilled personnel. Human resources represent the most valuable input to the production process and deserve the special attention of all levels of management because of their unique role in the total system
Human Resource Management functions may be briefly described as:
1. Manpower Planning: The HR considers the actual requirement of the staff for the organization. Because the overstaffing is wasteful and expensive, and understaffing leads to loses of the organization economics and profits.
2. Employee selection: Selection of employees for the suitable job.
3. Employees motivating: Motivating employees and encourage them to give their best in work productivity. Providing financial rewards to the staff.
4. Employee relation: Keeping a healthy relationship with the employees and their problems are redressed.
5. Payroll module: Payment of salaries and wages to the workers at the proper time.On the Interface between Operation and Human Resource Management
The fields of Operations management (OM) and human resources management (HRM) have a long history of separateness. In industry, it has been rare for an operations manager to become a human resources manager or vice versa. In academia, the two subjects have been studied by essentially separate communities of scholars who publish in nearly disjoint sets of journals. Despite this, operations and human resources are intimately tied to one another in virtually all business environments.
.OM design for their work and then motivating them to act accordingly the plant turned around its performance. But simply acknowledging human considerations such as motivation is not enough. Consider the case of a circuit board plant of a large computer manufacturer that was also plagued by low throughput. Recognizing that worker contributions were essential, management embarked on a motivational campaign, which included shirts, pep talks and illuminated signs with slogans such as “I love my job.” Not only did these efforts fail to promote higher output,
also the workforce was put off by them and became cynical about improvement efforts in general.
OM principles and a more sophisticated understanding of motivation. It included training the workers in the principles and key success variables of pull systems, investment in additional capacity that gave work teams more ways to share and combine tasks, and installation of new
Control systems that the workforce understood.
Ultimately, performance of production systems (both manufacturing and service) is vitally dependent on effective management of the interface between OM and HRM. To understand how and to help us identify research opportunities on this interface, we propose a framework of factors required by people to perform their jobs.
1. Capability: The skills, knowledge and abilities necessary to execute an action associated with the objectives of the organization.
2. Opportunity: When individuals are provided or encounter situations in which actions can be executed with the desired effect.
3. Motivation: The drive to execute those actions, created by a perception that they are linked to desired outcomes and rewards.
4. Understanding: Knowledge of how an individual’s actions affect the system and overall goal achievement.
The Impact of Human Resources on Operations Management
Simplification is an essential part of all modeling, and OM researchers and managers are aware that their models involve simplified representations of human behavior. But they may not always be aware of the consequences these simplifications can have on decision making. To
gain insight into this issue, we begin by listing some of the most common assumptions used to represent people in OM models. We then give a number of examples where more realistic consideration of human behavior can have a significant impact on conclusions. Finally, we discuss previous and potential future research.
The following assumptions are commonly used to simplify human behavior in OM models.
1. People are not a major factor. (Many models look at machines without people, so the human side is omitted entirely.)
2. People are deterministic, predictable or even identical. People have perfect availability (no breaks, absenteeism, etc.). Task times are deterministic. Mistakes don’t happen, or mistakes occur randomly. Workers are identical. (Employees work at the same speed, have the same values, and respond to same incentives.)
3. Workers are independent (not affected by each other, physically or psychologically).
4. Workers are “stationary.” No learning, tiredness, or other patterns exist. Problem solving is not considered.
5. Workers are not part of the product or service. Workers support the “product” (e.g., by making it, repairing equipment, etc.) but are not considered as part of the customer experience. The impact of system structure on how customers interact with workers is ignored.
6. Workers are emotionless and unaffected by factors such as pride, loyalty, and embarrassment.
7. Work is perfectly observable. Measurement error is ignored.
Team Build Recent OM practice has seen a trend toward using teams of various types in the workplace. In contrast to the highly specialized division of labor prevalent in most assembly lines, teams offer the potential for workers to share labor in a dynamic fashion. An extreme version of this practice is that of “team build,” in which a group of workers collaboratively produce a product from beginning to end.
Systemic Changes in Our Approach to OM Research
There are many ways in which human variables affect OM. The list below is not meant to be complete, but captures some major dimensions along which we have observed HRM variables affecting OM systems. Our impression is that OM scholars are familiar with these (and use them in consulting assignments) but often leave them out of their research.
1. Individual productivity is affected by many variables, such as:
a. Incentive systems, learning and forgetting, tiredness, boredom and other
b. Retention/turnover effects on individual performance and system training costs.
c. Flexibility and agility, which influence how effective a worker can be in a dynamically changing system.
d. Motivation, or psychological reaction of a worker to his/her environment that produces the desire to behave in certain ways. Motivation can have a powerful influence on speed, quality and almost every other aspect of worker performance.
2. Team structure affects performance of individuals and the overall system.
a. Other workers’ abilities affect performance either positively (e.g. facilitating learning or increasing motivation) or negatively (e.g. encouraging slacking).
b. A team setting may allow the faster worker to do more than his/her share of the work, thereby increasing productivity.
c. A team setting allows increased communication, which can increase or reduce productivity in several ways.
3. Information is a design variable that affects performance.
a. What people know affects their ability to identify and perform tasks.
b. When and how people get information can make a big difference (e.g. quick feedback, in an easily understood format, is most effective.)
c. Clarity of information and connection to organizational goals is important to ensuring that information is converted into useful knowledge.
4. Problem Solving is important to long-term system performance.
a. Cross training implies more minds to examine a process and therefore can provide better solutions and flexibility for dealing with uncertainty.
b. Rotating workers gives them a system-wide perspective that may motivate workers or enable them to redesign the process.
c. Shorter queues may improve the ability to determine what caused problems. (If the time between creation and detection of a defect is long, people may forget factors important to determining the underlying cause of the problem).
How Operations Management Can Inform Human Resources Management.
The main way in which OM can inform HRM is by providing greater completeness and precision regarding work context. The effectiveness of initiatives at the interface of HRM and OM, such as cross-training, teams and group-based pay, depend on context. This is widely recognized in HRM research, but better understanding and use of OM principles can greatly enhance the contextual relevance and sophistication of HRM.
Attraction and Retention
Decades of research in HRM and I/O psychology suggests a connection between worker attitudes toward their job and their likelihood of leaving. Research on “great places to work” suggests that the opportunity for learning is a key factor in employee satisfaction and in attracting and retaining employees. Thus, it may be prudent to train workers broadly, as way to attract and retain them. However, OM models can show where the probability of any given worker actually using certain skills may be extremely low. Crosstraining on infrequently-used skills may engender more frustration than satisfaction.
HRM Optimization, Not Simply “Maximization”
A fundamental difference between the approach of OM and HRM is that OM typically strives to develop frameworks that suggest optimal solutions, while behavioral research typically develops frameworks to explain how to enhance or maximize it. For example, typical research on employee selection focuses on maximizing correlations between selection system scores and job performance. However, some approaches identify optimum combinations of test validity, applicant pool size and other factors, designed to produce a desired number or level of qualifications among new hires. Undoubtedly, there is great potential for considering optimization in other areas of the HRM field. These new HRM outputs would provide OM managers with data to deal explicitly with formerly hidden issues such as the cost function for worker fungibility, process design tradeoffs in facilitating handoffs, process designs that allow workers to link their behaviors to the ultimate objective, process designs that allow workers to translate customer pacing information into good decisions, and the cost-productivity tradeoffs that are associated with all of these design elements.
OM and HRM managers would consider together the cost function involved in building optimal levels of fungibility, including not only skills but also any changes in reward systems, communications and process design needed to affect Capability, Opportunity, Motivation and Understanding. Integrating these costs into standard OM models will enhance the ability to find an optimum design, and more clearly accounts for the talent issues.
A complementary set of questions reflects how attention to OM principles can inform HRM research, as we have noted.
• What specific behavioral issues make the most difference to key organizational processes?
What are the “mental models” that workers and their supervisors use to make decisions about where to direct their efforts? Do those mental models reflect the OM principles that actually describe process optimization? How are they affected by HRM practices such as training, performance assessment and rewards?
• Is “more is better” always true when it comes to HRM investments, or are there optimal levels of those investments that reflect the operational context?
- • OM and HRM are intimately dependent on one another as management functions in practice.
- • Traditional OM research has omitted and/or simplified human behavior, sometimes to the point where it has caused the resulting models to yield results that are not only quantitatively inaccurate, but are also qualitatively misleading.
- • Traditional HRM research has often focused on important behavioral issues, such as motivation, teamwork and learning, in isolation from the specific operations context in which people work. This undermines the predictive value of the paradigms and makes the results from such research difficult to incorporate into OM models and work processes.
- • To achieve an integrated OR/HRM framework, with which to evaluate policies in both fields, research is needed in the following areas:
1. Improved representation of human behavior in quantitative OM models,
2. Incorporation of operations contexts into HRM frameworks and research,
3. Behavioral research into understanding behavior of human beings in specific operating systems
4. Empirical research of the impacts and effectiveness of OM and HRM policies
Researchers are just beginning to address these issues. We take this as a very hopeful sign that we are on the verge of a new era of OM/HRM integration. However, as we have noted here, there are a great many research challenges that need to be addressed before the synergies of these fields, in research and practice, are realized.
Ultimately, HR practitioners must begin to move from backroom to boardroom. With the heightened need for knowledge workers, HR is being propelled to the forefront of business strategy. Much is being asked of HR practitioners today — versatility in business functions, propensity for innovation, diagnostic insight, and a broadened knowledge of business processes. But all these may be worth HR’s efforts if practitioners can say that their broadened competencies have enabled their companies to improve performance and deliver excellent service to their customers.
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