Mhc- Managing Human Capital Assignment

Mhc- Managing Human Capital Assignment Words: 4509

LSC London School of Commerce MANAGING HUMAN CAPITAL ASSIGNMENT Lecturer: Dr Kumar MBA1 – Rajendra Kumar Date: 23rd August 2010 Student: Jesiquenia Ferracini de Lima Regiori – L0412PRPR0610 Table of Contents Part A3 1. 0INTRODUCTION3 2. 0External Environment Changes and Role of HR Management4 2. 1HR Managers Roles4 2. 2Human Resources Management are responsible for:4 3. 0External Environment Analyse5 3. 1PEST5 4. 0ROLE OF MANAGEMENT WHEN CHANGES HAPPEN7 5. 0Gaining Competitive advantage through HR practices8 6. 0Conclusion9 PART B10 1. INTRODUCTION10 2. 0Compensation Package Explained11 3. 0Collective Bargaining Agreement12 4. 0CONCLUSION16 Reference:17 Bibliography20 Part A 1. 0INTRODUCTION The success of an organization depends on various factors, so it is important to know how to manage them. Evaluating the external environment of a company, choosing the right people for the right job and train them to do their best are extremely important steps that HRM have as functions to achieve success. (ABE, 2008) Organisations Differ from each other and each organization is unique.

Some are Big and others have few employees, some are very sophisticated technologically, while other have specific ways of doing things. These are factors that affect the way of managing the organization. (ABE, 2008) All organisations operate in a specific environment and are affected by what happens around them. The outside factors that effect the way how organization manage people are called External Environment Factors, which are: Political Environment Economic environment Social Environment and Technological Environment

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With increasing competitive pressures from global economy, talented human resources have become critical for achieving competitive advantage in the past decades. Therefore the role of HR managers changed and added value to organizations to achieve business goals. (ABE, 2008) In this study is necessary to take in consideration the roles of HR managers when changes occur in the external environment and how can management be more efficient. And how can HR managers help the organization to achieve competitive advantage. (Dr. Kumar, 2010) 2. External Environment Changes and Role of HR Management 2. 1HR Managers Roles “Companies now are finding that the HR issues are, in fact, centre stage to business competitiveness. The intellectual capital, core competencies and organizational capabilities are all the pieces that are central to success. ” (HARVARD PRESS, 1997) To meet pressures the HR profession has begun to work in new ways of creating value through the function. In the recent years a new model has appeared to provide HR managers with the platform on which to deliver its promise.

The new model requires HR to position itself to engage with the business at the right levels, in the right ways. (Hunter, 2004) Hr Managers need to have direct relationship with subordinates. In doing so it has fulfilled a gap in the business – the voice or advocate of the employee. It has achieved the role of facilitator and executor of all people related processes, regardless of whether these were necessary or HR was the most appropriate method of delivery. (Hunter, 2004) 2. 2Human Resources Management are responsible for: -Sizing the workforce -Evaluating the available skills Cost of Labour and the return they produce -Labour turnover rates -Industrial relations -Structuring the organisation – hierarchical -Managing the Time’s sizes -Managing the style of structure to follow -Training and development. 3. 0External Environment Analyse 3. 1PEST 3. 2Political Governments, legislative powers, the legal and regulatory framework applying to business and the public sector. Also give direction to a country through the way in which they exert control over the economy. Political environment operates in national level but it is influenced by international relations.

Organisations must operate within the regulatory environment applicable to the country of origin. (ABE, 2008) 3. 3Economic It is the evaluation of Land, Labour and Capital. It is reflected in form of wages, interest rates, taxations, prices, competitors and level of demand. When an economy is growing, funds tend to be widely available, interest rates will be low and demand Organisations need to understand both the trends in the economic indicators and what these mean for the enterprise in which they are involved. The changes will normally occurs in interest and exchange rates through inflations. ABE, 2008) 3. 4Social Social change involves changes in the nature and norms of society. In particular, Organisations need to understand the trends in demographics and the cultural environment. (ABE, 2008) Demographic Change Demography is the evaluation of population dynamics, which has wide implications for both the nature of the workforce and the markets for goods and services. Overall, the size of populations does not change rapidly, but there can be big fluctuations in its Composition over relatively short periods of time, particularly at a local level. ABE, 2008) Cultural Environment The concept of culture can be difficult to define, but generally it incorporates aspects of peoples’ beliefs and values, behaviour and thought patterns. Sometimes there are Visible signs of culture, such as a style of dress, the adoption of rituals, ceremonies, Etc, the predominance of a particular religion, for example. Cultural influences are not just at a national level but can also be reflected within regions, ethnic background, class, age or sex. (ABE, 2008) 3. 5Technological Environment and Technological Change

The technological environment Changes in production or working methods: for example, machines, computers and production. Changes in technology will effect the staff by minimizing the work force by implementing innovative equipment that can provide the same job with more efficiency and less time, but at the same time more staff in IT departments are required. Improvements in communications: for example, networking of PCs, videoconferencing, and mobile phones all allow more people to work at home and reduce the need for large central offices.

It can improve communication by videoconferencing, mobile phones, intranet, etc. (ABE, 2008) Example 1- Swiss watch manufacturer ETA, which by the later 1970s was facing big losses in its market share at the lower and middle levels to manufacturers of electronic watches abroad. At this time, Swiss watch production was still characterised by individual craftsmen producing the many different parts of a watch for central assembly. Although quality standards were the main aim of the organisation, the structure was not able o adopt the new electronics technology. Through careful analysis of the external environment, ETA spotted a gap in the market for well-designed, but inexpensive, watches, which young people would buy as fashion accessories. To keep costs down, it was essential that the new watches should with few components. As a result, the Swatch was developed; in no time the company started making fortunes. (ABE, 2008) That brought us as a result a increasing of young people spending by only introducing change from analogue to electronic watches. ABE, 2008) 4. 0ROLE OF MANAGEMENT WHEN CHANGES HAPPEN According to Charles Handy, in an age of uncertainty, and managing that uncertainty therefore becomes a key part of any manager ‘s role. The manager: -May be involved to decide what changes are necessary and what that change should be. -Will plan and implement changes -Will be responsible for the people aspects of change, minimising the problems, smoothing the transition towards change and prepare the work force so they will be able to cope with change.

Managers are subject to the personal fears and uncertainties, which lead to resistance to change and their own needs, must be recognised and addressed by their own managers. (Handy, 1995) Two further aspects are important to consider: 1- the role of the manager in providing the vision and leadership within his or her group to support change. 2-Managing conflicts that will occurs when changes take place. (Handy, 1995) Successful change comes through a process of involvement and participation such that staff feels their needs and interests are being appropriately addressed.

Concern for the task will be expressed through a vision of the outcomes of change for the efficient and effective functioning of the organisation, and a focus on the imperatives of change and the development of effective strategies for achieving new objectives. (ABE, 2008) Concern for the group and individual goals of staff will be expressed through involvement and participation in the process by which strategies are developed and the incorporation into them of the needs of staff, in respect of both the outcomes and the process. (ABE, 2008) 5. 0Gaining Competitive advantage through HR practices

The Main HRM practices include: • Planning the Human Resource • Recruitment, Selection • Appraisal • Compensation • Training and development • Management relationship. If HRM provides an effective managing system, it will result in a high ability to attract and retain high-qualified employees to the organization, and they will be motivated to a very high performance. (Schuler, 1984) HRM practices being taken in consideration will result in low staff turnover, and greater profitability that will result in high quality products, low production cost and successful competitive advantage over the competitors. Schuler, 1984) Example 1– According to Glenn Bailey, chairman of Bairnco Corporation, have tied up compensation as a form of performing management in a powerful way that will overtake competitors. Under a system where offices have a salary of $1000. 000 a year they can make that much again in bonus according to the performance. (Schuler, 1984) Example 2 – Lincoln Eletronic leader in small motor has a compensation system linked to the profit that the company makes. This system makes the employee to work harders to achieve better profitability and they are highly motivated by it. Schuler, 1984) The practices of HR managers to achieve competitive advantage are well chosen by the organization. It will enable company to gain competitive advantage by helping themselves and helping others. These practices such as staffing and compensation are actually taken in consideration with the main goal of gaining competitive advantage. Selecting the right staff and designing the job is essential to practices as well. Also the company can gain advantage in helping the customers, suppliers, and distributors by providing a successful HR practices. (MacMillan, 1983)

Example 3 – America Airline and Honda assist their suppliers to ensure lower wages quality and Mercedes train the staff to provide 24 hours services guaranteed and it is used when the cars are being sold as a form of getting more and more people to obtain the products. (MacMillan, 1983) 6. 0Conclusion To summarise, the HR managers have to be up-to-dated with every change happening in the environment around and where the organisation is established. Management have as a main task implement changes whenever necessary and make sure everyone in the company can cope with new task.

In the world where changes happen constantly as technology is advancing daily, is vital for HR managers to be able to organise the structure of the company to meet pressures from the external environment. They have to be able to implement taxations, government interventions and provide the company with adequate training to achieve a competitive advantage in the environment. HR managers face a high pressure from the Top management once they are responsible to get the workforce organised to achieve the goals of the organisations and produce the production expected with efficiency.

Therefore HR professional are instructed to be updated with the changes taking places around the organisation and evaluate the strength of these changes so they can provide good performance and achieve the main goals of the organisation. PART B 1. 0INTRODUCTION In this study will be analised the importance of Compensation Packages negotiated through Collective Bargaining has always been heavily influenced by the nature of the market in which it occurs. The labour market is as important as the bargaining strength of labour.

For a particular occupation within a given labour market, an increase in demand for that occupation will tend to increase its bargaining strength. (Dr Kumar, 2010) By organising the workers companies facing relatively light competition, unions seek to win a share of rents. Such a share may, for example, be in the form of more pay or more control over manning levels of conducting the work. When competition is tougher it is a challenge to collective bargaining. Without rents to bargain over, or without the organisational capacity to force the employer to concede a share, the union is denied the main economic basis of collective bargaining. Dr. Kumar, 2010) Competition from abroad have being a challenge to successive British industries over the years – textiles, ship-building, coal-mining, footwear, and steel-making are just some of the great industries it has almost wiped out. During the post-War years of trade union prosperity, those industries that were organised by unions mostly declined with their collective bargaining institutions intact, if ultimately ineffective. International competition has significantly increased during our twenty-five year period.

Furthermore, there was no evidence that international competition was more detrimental to the presence of collective bargaining than either regional or national competition. Compensations Packages negotiated through Collective Bargaining s making overseas competition tougher in some point of view, but it that correct? Whether or not the adjustments has adopted this point of view, better work availability will be in the work market, and more knowledge people will be interested in getting so they can compete in the international market for a brighter future. (Dr.

Kumar, 2010) 2. 0Compensation Package Explained It is the combination of salary, retirement fund contributions, payment for continuing medical education activities, books, journals, bonuses, licensing fees, health insurance and hospitalization, and other components with monetary value–like car leasing, memberships, clubs, and others, that comprise the financial arrangement offered to a physician or other professional, for providing services to any organization. (The McGraw-Hill, 2002) Example 1- STORY of TOOLS-PORTLAND, ORE. The Chief Executive of ConAgra Foods Inc. aw the value of his compensation package fall 25 percent for the food company’s 2010 fiscal year, according to Associated Press calculations of data filed with regulators. President and CEO Gary Rodkin received compensation valued at nearly $7. 6 million for the year ended in June, down from $10. 1 million in the prior year. That includes a $1 million salary, in line with what he received in the prior year. By SARAH SKIDMORE. (Business week, 2010) Example 2- Struck Speechless by Bell. This weekend the Times continued its focus on the Bell scandal with a new report that Rizzo’s compensation package topped $1. million when all benefits were calculated. The Times disclosed that on top of his nearly $800,000 a year salary, Rizzo enjoyed retirement, medical benefits, insurance, vacation, sick leave, and expense reimbursements that approximately doubled his compensation package. By Joel Fox. (Fox, 2010) Example 3- Nike CEO compensation soars in fiscal 2010. Nike boosted its CEO’s compensation more than 84 percent in its most recent fiscal year. Recent regulatory filing finds that Mark Parker was given a compensation package worth $13. 1 million, up from $7. 1 million in the prior year.

The biggest driver was a $4. 4 million cash performance bonus. The Associated Press formula is designed to isolate the value the company’s board placed on the executive’s total compensation package but may vary from the total companies report to regulators. (The associated press, 2010) 3. 0Collective Bargaining Agreement It is a process of decision-making between parties representing employer and employee interests. Its purpose is the negotiation and continuous application of an agreed set of rules procedural terms of the employment relationship. (Windmuller, 1987)

Written, legally enforceable contract for a specified period (usually one year), between the management of any organization and employees represented by an independent trade union. It sets down and defines conditions of (wages, work conditions, holiday, salary and procedures for dispute resolution. Also called labour agreement, union agreement or union contract. (Business dictionary, 2010) One of the driving forces behind the current interest in labor standards around the world is the expansion of international trade and the liberalization of financial markets known as globalization.

As it proceeds, differences in labor standards between countries and regions become more important than they used to be. This is not because such differences might give a cost advantage in internationally traded goods to countries with low standards. (Aidt, 2002) Example 1: a number of data entry procedures are performed in the Caribbean for U. S. based companies and are transmitted to them electronically. (Aidt, 2002) Example 2: the work carried out by skilled Indian engineers who receive initial drawings from American companies by satellite and send the final products back to the United States in the same way. Aidt, 2002) The need for international engagement is also highlighted by the fact that countries often have very different views on what constitute proper labor standards and what the consequences of adopting them might be. One view holds that labor regulation reduces economic efficiency and growth, and as this is more important for countries with a high incidence of poverty. (Herzenberg, 2002). The International Labour Organisation (ILO) defines five core labor standards: (a) The prohibition of slavery and compulsory labor, (b) The elimination of discrimination, (c) the prohibition of exploitative child labor, d) Freedom of association (the right of workers to form unions of their own choice and of employers to form employers’ organizations) (e) The right to collective bargaining (Aidt, 2002) A recent OECD study has revealed significant differences in the extent to which these two standards are “guaranteed by law and practice” across a large sample of developing and industrial countries. The study divides countries into four groups. Group 1, are those that permit freedom of association and collective bargaining. Groups 2 and 3 place some restrictions on workers’ rights, Group 4, suppress these rights. OECD, 1996) The consequences of collective bargaining are context– specific, and although unions in both industrial and developing countries are successful in securing a wage markup for their members and other workers by collective agreements, no general conclusions about the net costs of the human rights argument in support of workers’ rights is compelling. Collective bargaining is a useful institution that contributes to the achievement of wanted economic outcomes at the organistion and sector level, and it is not a market distortion that prevents the market from doing its job. Aidt, 2002) Collective bargaining has the advantage of being settled through a friendly agreement rather than through conflict and confrontation. The solution is based on a decision of a third party, while arrangements resulting from collective bargaining usually represent the choice or compromise of the parties themselves. (Cir, 1989) Changes During the time a collective bargaining agreement is an effect, the employer may not change a working condition that is a mandatory subject of bargaining, without bargaining with the union.

Even after the collective bargaining agreement expires, the employer must maintain the status and may not unilaterally change mandatory subjects, until the parties have reached an impasse. Moreover, even if an employer exercises a certain amount of discretion in determining wage increase, such as an annual increase to cover the costs of living, this fact does not prevent the wage increase from becoming a mandatory subject. Once the parties have reached an impasse, the employer may implement unilateral changes to mandatory bargaining subjects as long as it has previously proposed those changes to the union. Cir, 1989) Example1- Union moves to represent airport screeners before government OKs collective bargaining rights. The nation’s largest federal employee union pushed ahead Monday with efforts to represent about 40,000 airport screeners even though the government has not given them collective bargaining rights. John Gage, president of the Employees, wants to begin contract negotiations as soon as bargaining rights are granted. The move could pressure the White House to more quickly name an administrator to head the Transportation security Administration. That official could make the changes.

Workers at the agency have tried for years to win union rights similar to those of other federal employees, such as basic protections from overwork, dangerous conditions and retaliation if they report security breaches. (Hr-topics, 2010) Example 2 – Canadian Auto Workers union head Ken Lewenza slammed reported threats by Fiat that it may walk away from a tie-up with us giant Chrysler unless unions agreed to lower wage deals. He would scrap the merger unless Chrysler unions agreed to match the lower costs of Japanese and German-owned plants in Canada and the US.

Because of the lack of progress on labor negotiations, especially on the Canadian side, there was only a 50-50 chance the partnership would be formed. Lewenza accused Fiat of trying to exploit the weakness in the union’s collective bargaining position, which he said amount to less than seven percent of the cost of manufacturing a vehicle. (Hr-topics, 2010) Example 3 – Whirlpool Corp. is seeking to cut the medical benefits of thousands of retired Maytag workers. Benton Harbor, Mich. based Whirlpool said it provides benefits to about 3,000 retired Maytag workers, surviving spouses and dependents. Whirlpool bought rival Maytag in 2006 for $1. billion and assumed the negotiated union contracts and related benefit plans. Whirlpool said it plans to change the retiree medical benefits on Jan. 1, 2009, to bring the benefits in line with the same plan that more than 10,000 current employees, retirees and their dependents have. Company spokeswoman Monica Teague said Tuesday the company will not discuss benefit changes until the workers are first informed. It proposed modifying retirees’ medical benefits and the union refused to discuss the issue. The union claimed the company could not modify the retirees’ medical benefits, the lawsuit said. informbusinessnetwork. com, 2010) 4. 0CONCLUSION This has been the story of the decline of the principal means of protecting labour standards in Britain. Collective bargaining developed over the twentieth century as a result of employers’ being able to compromise with organised labour. Compensation packages negotiated through collective bargaining became more developed in the twenty-century, as a result of employers and employees trying to get at a point of agreement between both parties and therefore achieve competitive advantage in the international market.

Explanations of pay rooted in the efficient working of the labours market, which dominated the economic context of competitive strategy over competition set their pay in a level which set an integration between product market and service market. Changes in the structure of collective bargaining and wage setting, permitted market to increase the wages and take measures of support to the employees in forms of compensations through performance appraisal. It is important to analyse the final interest on both parts employees and employers to consider the effect of collective bargaining in long term.

Reference: Books ABE, Association of business Executive Manual, Managing in Organisation, pg 42, last updated 2008. Aidt, Toke. Unions and Collective Bargaining: Economic Effects in a Global Environment. Washington, DC, USA: World Bank Publications, 2002. p 1, p 2, etc. Antila, Elina M. 1 [email protected] International Journal of Human Resource Management; Jun2006, Vol. 17 Issue 6, p999-1020, 22p,. Armstrong, Michael. Handbook of Management Techniques: A Comprehensive Guide to Achieving Managerial Excellence and Improved Decision Making (Revised 3rd Edition). London, GBR: Kogan Page, Limited, 2006. p 463.

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ABE, Association of business Executives Manual, Managing in Organisation, pg 42, last updated 2008. ABE, Association of Business Executives Manual, Corporate Strategies, Advanced Diploma, 2009. Aidt, Toke. Unions and Collective Bargaining: Economic Effects in a Global Environment. Washington, DC, USA: World Bank Publications, 2002. p 1, p 2, etc. site. ebrary. com/lib/westminsterintl/Doc? id=10038982&ppg=18 Antila, Elina M. 1 [email protected] International Journal of Human Resource Management; Jun2006, Vol. 17 Issue 6, p999-1020, 22p,. Armstrong, Michael. Handbook of Management Techniques: A Comprehensive Guide o Achieving Managerial Excellence and Improved Decision Making (Revised 3rd Edition). London, GBR: Kogan Page, Limited, 2006. p 463. site. ebrary. com/lib/westminsterintl/Doc? id=10158250&ppg=479 Barratt Michael and Mottershead andy, 2000, Business Studies, Published by Pearson Education Limited, Essex. Cir. 1995, 6th, NLRB v. Plainville Ready Mix Concrete Co. , 44 F. 3d 1320 ; NLRB v. Emsing’s Supermarket, 872 F. 2d 1279 [7th Cir. 1989]). Handy Charles, Gods of Management: The Changing Work of Organizations, , first published 1978 and second edition 1995, published by Oxford University Press, Inc. 995 Hartzenberg, T. (2002). Competition Policy in SADC. A paper prepared for Trade and Industrial Policy Strategies’ 2002 Annual Forum, Glenburn Lodge, Muldersdrift, South Africa Hunter, Ian. Future of HR and the Need for Change. London, GBR: Thorogood, 2004. p 6. site. ebrary. com/lib/westminsterintl/Doc? id=10088332&ppg=16 Kleynhans R. , Markham L. Meyer W. S van Aswegen, Human Resources Management Perspectives, Fresh Pearson Education South Africa (Pty) Ltd, First published 2006, Forest Drive, Pinelands, Cape Town Schuler, R. S. Organisation For Economic Co-operation and Development, Paris 1996.

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