Strategic Planning in Human Resource Management

1 Human Resource Management Introduction One of the main sources of competitive advantage that an organization can tap skill from and effectively use to build the organization on is the human resource. The personnel, like other vital resources such as finances and raw materials need to be acquired competitively, planned appropriately, budgeted for, trained and developed, and maintained properly until such time when they get separated from the organization. The benefit that an organization reaps from its workforce often depends on the amount of direct investment that the organization undertakes on its very workforce. In contemporary human resource management, organizations undertake to effectively manage their highly talented and skilled staff particularly at such times when business performance appears to be at its lowest. This strategic planning of the personnel aims at affording the organization the much needed potential to resuscitate the organization back into high profitability and better business performance. This paper will delve deeply into the area of managing highly skilled and talented people-resource and explain in detail why the practice is healthy for organizations especially at a time when they are experiencing economic difficulties and slow growth.

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2 Reasons why organizations effectively manage talent during economic downturns High potential and skill is often in short supply among potential and qualified workers.

These individuals are always in high demand because every business entity chases the ultimate goal of maximizing on profits and general performance using the most efficient means and resources. Amassing high skills and great potential in the name of human resource implies that the organization’s chances of achieving its goals and objectives are high. During economic hard times, it would appear more appropriate for an organization to cut down on costs completely and only retain few workers who the organization might still require in the immediate short time period until such time when the economic situation will improve (Park, Gardener & Wright, 2004).

However, such a strategy would be detrimental for the overall performance of the organization because of several reasons: Firstly, hiring of the most polished and talented skill in the workforce market is difficult. Since every organization is looking for the best and most effective way to carry out its business, they all search for the best skill during their job hunting missions in order to make their planned objective a reality. It would therefore become difficult and very costly for an organization which lays-off its top talent and skill during stunted growth periods to rehire them when the fortunes improve. Their highly rated skill will attract other competitors in the industry and they will quickly take up the opportunity of hiring them to improve on their very own capabilities. These workers also attract high compensation and rewards because of their competitive skill advantage and therefore it becomes difficult for another organization to lure them out of their positions (Barringer & Milkovich, 1998).

An organization also plays an important role in building on the skills of its workers. The process of employing a worker is resource-intensive to any firm and consumes a lot of time. The

3 exercise begins with a hiring process which includes placing vacancy advertisements on the media and other strategic locations where potential workers can easily spot them. Most firms also outsource human resource services from professional firms which conduct interviews and the hiring process on behalf of their client organization. The company moves in to asses the level of skill which the hired workers posses and plans on skill improvement and development in order to further improve on the performance of these workers. The company supports these trainings financially out of its own resources until when the workers gain the desired skill. As the worker is finally placed on his or her working position, the company continues to carry out on-job training on the worker so as to keep at par with the highly dynamic requirement of the business world (Martin, 2009).

The company endeavors to undertake all this trouble because it intends to build on the worker’s skills and improve on his or her competitive advantage to the organization. Thus, the company spends a lot of its financial fortune on its entire workforce to mould them into being very competent resources to the organization. During economic hard times when there is little business and the company is forced to cut down considerably on its expenditure, the management weighs on the options of laying-off a resource they have invested heavily on and the benefit of reducing operation costs. Loosing such a worker means the company will still undergo the same procedure and incur additional expenses to hire a new workforce. It will mean the company spends almost its entire profits on hiring and re-hiring workers thus hampering its competitive position in the market. Other rival firms will by far perform better in the market in terms of lean and efficient performance (Schuler, 1990).

Managing highly talented skill in times of low business and poor economic performance is a strategic plan that targets on the long term future of the company. In business, everyone

4 anticipates bad and better times and it is upon any competent management team to lay down a formidable strategy that will ensure the company re-emerges from its worst performance. Part of the re-emergence strategy involves retaining and effectively maintaining all the competent skills that the company had prior to the economic downtown. When the economy is negatively affected by macro economic factors which companies have no control over, the whole industry and the entire economy at large is affected. Companies record negative growth during such times and businesses generally suffer from underperformance. However, it is the management’s planning during these hard times that will enable the organization pick up strongly once the situation improves take market leadership.

The company ought to be aware of what level of skill they hold and estimate appropriately on what they can achieve with their competent skill. Involving these workers directly during such planning gives the company an edge over its competition because the workers become much aware of what their respective roles will be. They will have ample time to prepare during the period of economic lull then fully execute their competencies once the economy recovers. The advantage of this strategy is that the organization will take the shortest amount of time possible to recover from its losses and regain market leadership. As the rest of the rival firms will be grappling with the after effects of the economic crunch, the organization which retained its key skills and competencies will benefit from an early growth rate which will be crucial in recovering its lost ground. The company will also woo the market easily because of fare prices and quality performance because it took a short period of time to break even after the economic crisis (Dokko, Wilk & Rothbard, 2009).

Retaining best performers and managing them effectively at all times regardless of the economic times is important on building employee motivation and overall morale. Individuals

5 can have the most sophisticated skill in the market but it might not benefit the organization if they suffer from low morale. Human beings need to be recognized at all times and showed how important their contributions to an organization are in order to urge them on. If workers feel that their managers and indeed the organization value their output in improving the overall organizational performance, they get psyched up and perform even better in their roles and responsibilities. Such realization affords the worker full concentration and focus thus giving him the much needed energy and steam to perform his duties (Armstrong, 1992).

All workers get worried of possible job losses whenever their employer gets into economic hard times. The concerns often distract their attention from their roles and duties and negatively affect their performance. At such a time when the company is already experiencing difficulties, it becomes even worse when the company cannot reap maximum benefit from its workers’ performance. However, workers who are assured of continuity even in the face of the hardest economic situation do not lose their concentration. Instead, their heightened morale and motivation benefits the organization in the sense that they involve themselves fully in seeking answers to the complex situation. They view themselves as the company and therefore work at their maximum to salvage the situation and see to it that the organization returns to its profitable ways (Mirvis, 1997).

Ways through which organizations manage their highly talented and potential staff Organizations use various means and strategies to retain their highly skilled and potential human resources during economic recession times. One way is through constant reassuring of the workers that the organization values even more their numerous contribution. This communication from the management to the workers is very important because workers also realize and understand whenever their firm is facing harsh times and they often get worried about

6 what the probable course of action on them could be. Thus, by the management constantly reassuring these workers that their value is of importance and that the organization is not about to lay them off, they gain confidence and motivation. None of them will engage in activities of seeking alternative employment elsewhere because such a threat does not even exist in the first place (Stevens & Campion, 1994).

Such highly rated potential skills and resources can also be managed effectively during economic recession times through rigorous employee training and development. Although these workers already have competent skills that makes the organization retain them even during such hard times, continuously training them in order to add more skill further makes them highly competent. During such poor economic times, organizations will give such workers new responsibilities in different areas to build their competency. They may be sent on international or overseas missions where they will be subjected to new experiences thus horning their skills even more. These training and development makes the workers more attached to the company and nurtures a feeling in them that they are part of the organization. It makes them feel they have an obligation to accomplish in order to help the company move to the next level. In other words, it boosts their morale and motivation and integrates them into the organization’s values, culture and practices (Lado & Wilson, 1994).

Some organizations use a different strategy of retaining and maintaining their most competent and talented skill through allowing them direct access to the company executives. The executives literally run any organization and are the ones who often make announcements on the course of action that the company will be taking in due time. By allowing such skilled and highly potential workers easy and direct access to the senior executives, they become more reassured of their positions and roles. This is also a perfect strategy of enabling them to learn directly from

7 the company heads what is expected of them. It builds their commitment to the firm and makes them believe and understand that the company values their contributions so much. Since such skills are rare and hard to come by, the company executives can take up the opportunity to start nurturing them into becoming the company’s future executives. They can be placed on sensitive projects and the executives monitor their performance directly, supervising and guiding them on how to execute their duties appropriately (Bolino, 2007).

The ANZ bank also continues with its bonus program for exemplary performers even during economic hard times as a strategy of maintaining its highly skilled and talented human resource. This encourages the workers to give their best in the hope that that their efforts will be rewarded by the management. Such programs build on individual’s value, morale and motivation. It makes them realize that the organization continues to value their exemplary performance even when faced with difficult times when business is low and growth is slow. The result of it all is that the organization also benefits in the long run because the workers are competing and each one of them is giving his or her best. Their total contribution speeds up the company’s recovery back to profitability and better performance (Cascio, 2002).

The Commonwealth Bank of Australia, CBA on its part maintains its highly skilled and talented workers by continuously holding talent discussions where the management delves deeply into the various ways and strategies through which they can improve on their human resource. This includes monitoring on a continuous basis what the staff requires and building on it at the opportune time. They also asses what skills will be necessary to enable them develop or move a notch higher and put plans in place to ensure their workers acquire these competent skills. The talent discussions are in particular very strategic because they focus on what the future expectations are and what the company needs in order to rightly position itself for the

8 challenge. Issues discussed include the career paths for individual workers as well as the training needs that the company will require in order to create the necessary skill among its workforce.

They also target to create work places that are more flexible such that they do not end up with workers who can only be useful in one area but instead have a resource that is all rounded. As the bank’s management continues with discussions and planning on future skill development and requirement, it also communicates the same to the employees in order to make them aware of what the future challenges look like. In so doing, the bank realizes the fact that the future economic situation is very much uncertain and the high unpredictability means workers must be highly adaptable and flexible. The workers will thus give their contributions in order to help the bank deliver as expected (Gilbert & Ivancevich, 2005).

The CBA further adopts a strategy of direct involvement of its staff in problem solving situations. The workers are engaged by being asked to formulate solutions that will help the bank maneuver well and acquire its short term needs without affecting its talent pool. The workers feel they are part of the organization and their presence is highly valued particularly if they give suggestions and witness them being implemented. At CBA for instance, the workers have seen such suggestions as extended leaves, career breaks, as well as nine-day fortnights being implemented directly by the management. When workers feel they have a direct say and contribution to an organization, they will be motivated to do even more in order to pull their organization out of such economic quagmires. They will be assured that with improved performance, they are at the forefront to benefit more because the management is reliable and recognize their contributions (Furuya, N. et al, 2007).

Although reward programs work towards motivating workers as well, CBA argues that its benefits are only short term. As such, the company is devising a system and mechanism where

9 talented staff will join and permanently remain within the organization until they retire. This argument is informed by the realization of the fact that talented workers are often interested with long term careers. Uncertainties on their employment terms often affect them psychologically and will easily cause them to seek alternative employment where they are assured of the future.

To this effect, CBA assures its talented and highly skilled staff that their employment is permanent and provides them with material needs and requirements so that they can be less worried and instead focus much of their attention towards achieving organizational goals (O'Shaughnessy, Levine & Cappelli, 2001).

KPMG on its part deals with the issue of retaining value and skill through a restructure program that enables workers to perform other duties and roles in different sections. Having an all-round molded staff that can comfortably perform in varied sections of the organization is often the dream plan of any organization. KPMG realizes this and has effectively organized a new structure that has seen other sections that have been worst hit by the recession merged or done away with altogether. Other sections that continue to witness better business performance have been staffed with more talent and skills and the result has been increased service and performance. To increase the chances of better performance, the management has further retrained the workers such that their skill and technical know-how is more aligned towards their new roles and responsibilities (Sheehan, Holland & De Cieri, 2006).

Evaluating the effectiveness of the measures undertaken to retain skill and talent Training and developing workers is an effective method through which organizations maintain and retain their talented workforce. The organizations incur costs in training these workers in order to develop their skills further. The workers are trained such that they become particularly well acquainted with the systems of the organization. Although the workers are

10 highly qualified and in possession of a competent skill, their continued stay in the organization will be more productive on their part than seeking alternative employment elsewhere. The ANZ bank for instance places their highly talented and skilled human resource on special projects where they are expected to learn specific skills and competencies. Such workers will find it less convincing to move to another bank because these projects that they have been trained on are unique in their own ways. Moving to a different bank or financial organization would mean that the worker spends more time on training so as to be acquainted with the specific systems of the new employer (Brown et al, 2009).

Training and development strategies by companies often targets to build a worker such that he or she can study the internal systems of the organization so well to a level where they can be recruited as managers. The training and development is gradual and often takes considerable amount of time before the workers can fully be charged with the responsibilities of management.

In other words, the more a worker stays in the company and the more he continues to be trained, the easier and more likely it becomes for him or her to be elevated into the management role. It is the desire of every individual employee to advance through the ranks and attain the highest position in an organization. A worker who has been patient enough to undergo years of training and development will hardly see the need of quitting his employment at such a time when the prospects are very high. The period remaining before such a worker becomes a manager could be shorter than the duration of time already covered while on training. Joining another organization would most likely mean that the worker takes a longer period of time on training and development before he can be elevated into a managerial position. ANZ uses its senior executives as part of the strategy of maintaining and retaining the most potential skills within their human resources. The workers get direct influence as well as experience by relating closely

11 with the managers, and that inculcates a feeling of more attachment and a reality of becoming the managers sooner than expected (Payne, 2005).

The bonus schemes which workers are subjected to by employers are also an effective mechanism of retaining high potential and skill. The evaluation process is carried out and a periodic result given which indicates individual employee performance over the period of time they have been on employment at the firm. Highly skilled and talented workers are more interested in developing their careers and seeing to it that they attain the much needed competency. Although there is a token in form of money and other non-monetary awards for the best performers, workers pay much attention to their individual graphs drawn after every evaluation. They use it as a measure to improve on the areas where they have been performing below par. At any given time, such a worker can tell the level he is at and what he really needs for his growth and development in terms of competency. Thus, such a worker is more attached to the organization and can hardly leave for an alternative employer. A new employer would mean a new evaluation system which might not necessarily be keen with the skills the previous employer valued most. ANZ uses the mechanism on its workers and it has proved profitable.

Once the workers get acquainted with the organization’s systems, they get interested so much in scaling the heights, both in individual performance as well as recognition. A worker who outperforms the rest should be quickly recognized by management for his exemplary performance. This will urge him or her to seek even better and efficient ways of maintaining his performances (Mohapatra & Sharma, 2008).

CBA’s strategy of assessing possible skill requirement well in advance is yet another right move that effectively maintains and manages highly potential skill. Owing to the uncertain nature of economic climate, organizations can only be assured of better performance if they react

12 proactively and take the initiative to chat the way forward for their organization. By deciding on the appropriate future skills and training needs for the workers, the firm expresses its full commitment in retaining its workforce for longer periods. The workers will least be bothered with their future prospects in as far as their employment in that firm is concerned. The employer will invest heavily on career paths and training and the workers will enjoy an early opportunity of choosing and deciding which career to take. The workers also become more adaptable to the economic dynamics and this means the organization will need them throughout in its existence.

Their value will not be in one area but varied and even in the face of an economic crisis, they will still be relied upon to offer their services in one area or the other (Mukhopadhyay, Sil & Banerjea, 2011).

The National Australian Bank, NAB’s strategy of retaining workers with high competency is equally practicable and result oriented. By building staff collaboration, the workers become motivated even more and discouraged from looking for other employment opportunities. The cost of the bank’s investment in molding and improving employee capabilities makes them get attached to the bank. They are more likely to pay a heavy cost by deserting the bank at the last minute rather than remain within its employment ranks (Boselie & Koene, 2010).

Conclusion The contemporary practice in many organizations is witnessing a trend where employers seek to retain their most competent workforce even in the face of economic downturn. The organizations continue committing their strained resources in training and developing the workers so as to maintain them within the organization’s employment ranks. This strategy seeks to give the organization the much needed competency and edge over rival firms within the industry even in poor economic times. Various strategies are used to maintain and convince these

13 workers that their presence and value is well appreciated and much required. Other strategies employed include sustaining a bonus and reward system that aims at recognizing the best performers, as well as restructuring the organization such that workers can assume new roles and responsibilities in varied areas and departments. Skilled workers are often interested in furthering their professional careers and the best way employers can retain them for long is by reassuring them that the company has put all systems and mechanisms into place to have them for longer periods.

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