Human Resource Management, Wages and Salaries

Introduction Human Resource Management is a distinctive approach to employment management which seeks to achieve competitive advantage through the strategic deployment of a highly committed and capable workforce, using an integrated array of cultural, structural and personnel techniques. Extensive training and culture management programs, individualized reward management systems, as well as a range of employee involvement mechanisms, all operate towards achieving enhanced employee contribution.

It is a whole range of notions on management theory, style and practice. Perhaps most usefully considered as a generic term that covers the entirety of work organization, working terms and conditions and representational systems, HRM can be depicted as being concerned with all those activities associated with the management of people in organizations (Boyd 2003).

Businesses rely on effective human resource management (HRM) to ensure that they hire and keep good employees and that they are able to respond to conflicts between workers and management.

HRM specialists initially determine the number and type of employees that a business will need over its first few years of operation.

They are then responsible for recruiting new employees to replace those who leave and for filling newly created positions. A business’s HRM division also trains or arranges for the training of its staff to encourage worker productivity, efficiency, and satisfaction, and to promote the overall success of the business.

Finally, human resource managers create workers’ compensation plans and benefit packages for employees. Personnel Management is the development of a set of values that regards individual employees as important productive entities; the conscious utilization of these value judgments in making decisions affecting those individuals; and the acquisition of a pattern of thinking, or rational analysis, which attempts to achieve the most effective and satisfactory utilization of human talents (Megginson 1972).

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Personnel Management unlike Human Resource Management is not limited to the techniques and paper work associated with routine activities of selecting, training, and compensating employees; nor does the term refer exclusively to the methods, procedures, techniques, and tools of personnel selection, training and development, direction, and other related activities. Businesses rely on effective human resource management (HRM) to ensure that they hire and keep good employees and that they are able to respond to conflicts between workers and management.

HRM specialists initially determine the number and type of employees that a business will need over its first few years of operation. They are then responsible for recruiting new employees to replace those who leave and for filling newly created positions. A business’s HRM division also trains or arranges for the training of its staff to encourage worker productivity, efficiency, and satisfaction, and to promote the overall success of the business. Finally, human resource managers create workers’ compensation plans and benefit packages for employees (Gratton et al. 1999).

The essay intends to consider how wages and salaries are set in organizations. If compensation is not tied directly to performance, what can and should it be tired to. The essay intends to discuss about psychological contract; turnover and the forms of turnover; training and some of its concepts; and remuneration system. Through the information that will be gathered every thought that is necessary will be put together so that a proper conclusion will be formulated. Psychological Contract The psychological contract refers to employees’ beliefs about the mutual obligations between the employee and his or her organization.

These beliefs are based on the perception that employer promises have been made about such matters as competitive wages, promotional opportunities, and job training in exchange for certain employee obligations, such as the giving of their energy, time, and skills (De Meuse & Marks 2003). Earlier reviews argue that the psychological contract is conceptually different from a formal contract in that it considers an individual’s beliefs of the terms and conditions of an agreement between the individual and the employer.

This concept of the relationship between an employee and the organization has been accepted and noted in many different forums, including academic journals; practitioner journals; and management textbooks (De Meuse & Marks 2003). While an employee’s formal employment contract always is based on a written document, the types of promises contained in an employee’s psychological contract typically are communicated in ways that do not involve written documentation.

For example, an employee’s understanding of the psychological contract may be influenced by oral discussions with managers, recruiters, or other organizational representatives and construed from specific organizational practices and procedures. Because of the pervasive norms of reciprocity that are part of any exchange agreement between an individual and his or her organization, an individual often expects, seeks out, and creates a psychological contract as a means for understanding and representing the employment relationship with the employer (De Meuse & Marks 2003).

Organizations can respond to an employee’s psychological contract to varying degrees, including going beyond the conditions of the contract, thereby honoring the intent rather than the letter of the contract; complying with the contract and fulfilling all of the conditions and terms; and breaching or violating the agreement between the employee and the organization. When organizations uphold their side of the psychological contract with their employees, it is more likely that employees will attempt to fulfill their own contractual obligations to the organization (De Meuse & Marks 2003)

Two sorts of contract can be distinguished namely transactional contracts and relational contract. Transactional contracts are fairly specific and economic in nature, and basically to do with rewards for hard work. Relational contracts are both economic and social/emotional in nature. (Herriot 2001). These are less clearly specified and to a degree open-ended. In a successful contractual relationship, it is possible that people come to trust the other party’s reliability because they regularly fulfill a transactional contract.

As a result, a more relational contract develops, whereby parties are willing to go beyond the contract trusting that the other will do the same for them when the need arise (Herriot 2001). Relatively short-term and specific transactional contracts can meet the need for flexibility and reliable performance. Longer-term and open-ended relational contracts may help organizations which need loyalty and good citizenship from their employees. Specific but longer and potentially renegotiable contracts combine some of the advantages of the previous two.

As organizations diversify the range of contracts which they offer, the existence and use of these alternatives becomes increasingly attractive (Herriot 2001). Relational contracts usually have a legal heart, but they also are used when the commercial reality is different. In a relational contract, the parties have expectations of each other that go beyond or perhaps far beyond the terms of the contract (Kay 1995). Employment contracts are best made as relational contracts because they suffer rather than benefit from too precise a specification of their obligations.

Each party must be encouraged to respond to events. Both parties must invest in teaching and learning that is specific to the particular business environment. Actions may often have consequences that emerge only much later. Each of these factors that includes response, information, and learning tends to become more important at higher levels of seniority in the organization. A firm may hire a cleaner through a spot contract wherein the job is well defined, the performance is easily monitored but it needs a relational contract with its management.

The range of jobs for which spot contracting is suitable is steadily diminishing (Kay 1995). Forms of turnover Labor turnover, like absence, is an important element of labor costs. The turnover of employees leads to direct costs for recruitment and for training new employees. It also leads to indirect costs which may be substantial, for example through disruption of work while new people are being recruited. Organizations with high levels of labor turnover may need to carry surplus labor, or hire temporary workers, in order to maintain production or levels of service.

It has been suggested by industrial sociologists that greater organizational commitment contributes to greater employee identification with the goals and values of the organization and that this reduces the likelihood of voluntary job turnover . A main argument for adopting a commitment-oriented management approach has been to reduce the costs of turnover by eliciting employee commitment. (Cheng et al. 1998) A model to explain individual job turnover naturally has many similarities to the preceding models of absence and job performance.

Motivation to stay, in the form of commitment to the organization, is again likely to be of interest, as are the various task and organizational characteristics which make an organization relatively attractive or unattractive. However, one might expect that economic factors loom larger in the decision to stay or leave. These would include satisfaction with present remuneration, and perceptions of how easy or difficult it will be to find an equally good job. Family and life-cycle characteristics have also often been assumed important in relation to job turnover, as in the case of young workers (Cheng et al. 998). Turnover can be done in two ways. Turnover can be voluntary and involuntary. Voluntary turnover can be caused by many things that include personal problems, better opportunities in other companies, discontentment, and migration to other countries. Employees undergo voluntary turnover due to the personal problems they have. These employees believe that such problems can affect their work performance and they should first find solutions to their problem before being in any company.

Employees undergo voluntary turnover due to the discontentment in the company. These employees believe that their stay in the company has not given them any benefits and the wages and compensation they receive from the company is not enough. Employees undergo voluntary turnover due to better opportunities in other companies. These employees think that other companies might offer them better treatment, better salaries, and lesser problems. Employees undergo voluntary turnover due to migration to other countries.

Employees leave the company due to instances wherein they wish to leave the country and try their luck in other countries. On the other hand involuntary turnover can be caused by many things that include poor work performance, insubordination, and negative relationship with co workers. Employees undergo involuntary turnover due to poor work performance. When employees do their job poorly the tendency is for the company to give them warnings and reminders, if nothing happens the company has no choice but to break its relationship with these workers.

Employees undergo involuntary turnover due to insubordination or engaging in scuffles and disobeying high ranking officials in the company Employees undergo involuntary turnover due to negative relationship with co employees. Some employees can be always in contrast with other employees and this leads to problems between the employees thus to prevent things to grow worse the company has to remove these uncooperative employees. Training Organizations are still focusing on reinvention and reengineering as they continue to place greater emphasis upon improving customer service.

This increased attention to customer service is expected despite downsizing and delaying efforts in the organization. The strength of these trends is likely to continue even if the names change from time to time, for the changes emerge from a growing realization that traditional ways of doing business and being organized prevents an organization from moving fast enough, with high enough quality, or at low enough cost to meet the growing demands and competitive pressures placed on it. The next decade will continue to witness major changes in organizations (Sims 1998).

Organizations will continue to get flatter, and power will be more dispersed among employees who are knowledge workers and have the technology to make decisions previously reserved for management. If information is power, then dispersed information is dispersed power, and that dispersement is what knowledge and technology does. There will also continue to be an increased emphasis upon the use of cross-functional and multi-skilled teams, which are essential in taking advantage of advanced technologies, and these developments should free the smaller number of managers to focus on higher level strategic issues (Sims 1998).

The boundaries that have traditionally defined organizations will continue to blur as a result of new organizational forms and leadership methods and demands. The lines between functions and even between organizations will continue to become less rigid in the drive to be more customer focused, to decrease response and work process cycle times, and improve competitive advantage. The distinction between types of organizations particularly large ersus small, regional versus national versus global will also begin to blur more as customers show less interest in where their products and services come from as long as they receive them when and at the standards of quality they deem acceptable (Sims 1998). People can best anticipate and respond to the need for further change in training by remembering that training historically has been looked at as a case-by-case, individual perspective, much like the way a doctor looks at a patient.

You do a diagnosis of an individual, find a weakness, and then apply the training solution so that individual is stronger or better than he or she was before. What training must be in today’s and tomorrow’s organizations is a process that is more holistic, and consistent with an organization’s strategy, so that the strategy is executed better than it would be without the training. One strategy is individual, which will have no impact on an organization, and the other is corporate, which will have a mammoth impact.

The important thing for training personnel to conceptually understand is that training must have an impact on the organization rather than on the individual. The point is to make the organization more whole than it was before, and training should be a major part of what causes that to happen. However, that will never happen if training personnel are doing training by picking up people and putting band-aids on cuts. It will only do it if there is a vision and a strategy, and training is part of a process of executing that vision and strategy for everyone (Sims 1998).

Remuneration system Remuneration system or salary is often expressed in annual terms, usually of non-manual workers. For example, a teacher’s salary might be $15,000 per year. Salaried workers are most unlikely to receive overtime payments, though they may receive bonuses. Although they are contracted to work for a specific number of hours per week, they are usually expected to work the number of hours sufficient to do the job to a satisfactory standard (Skoldberg 2002).

Salaries are set in organizations according to the tenure of the employee in the organization, the performance rating of the employee, the status of the company and the external problems the company has. Salaries are based on how long the employee had served the company. The longer an employee served the company the higher salary that employee gets. In relation to that an employee’s salary can be based on succession planning or the ranking of employees. In succession planning the position of an employee is being given more focus.

Employees who have higher position are first given salary increases. Salaries are also based on how well or how bad the employee does his/her job. Those who perform well and bring benefits to the company are given higher salaries and additional incentives. Moreover the status of the company is used as a basis for the salaries of employees. To know the status of the company different things are put into consideration like its profitability, its expenses, market conditions and others.

Once the company is not selling well and has oversupply market condition it means no increase in the salaries should be made. When a company is experiencing oversupply market condition it is not selling well and its marketing strategies are not that effective thus the company has reason not to increate the salaries. Lastly the external problem the company has is used as a basis for salaries. If the economy is having difficulty, there is unrest in the country, and the competitor has gained advantage over the company the tendency is for the company not to create increase in wages.

Conclusion Businesses rely on effective human resource management (HRM) to ensure that they hire and keep good employees and that they are able to respond to conflicts between workers and management. Human Resource Management is a distinctive approach to employment management which seeks to achieve competitive advantage through the strategic deployment of a highly committed and capable workforce, using an integrated array of cultural, structural and personnel techniques. In HRM many things are put into consideration.

This includes the hiring and training of employees, performance of the employees, how the employees are remunerated, and what instances may lead an employee to be removed from the company. Aside from the company’s strategy regarding marketing, management, and competitors, organizations’ are wary of the strategy they use in terms of giving salary to their employees. Companies have to make sure that the right person receives the right wage and that the salary they give will not cause financial problems to the company.

Through the different basis of salary discussed companies make sure that salaries are distributed accordingly to rightful persons and as demanded by the situation. Through proper distribution of salary companies will not encounter financial problems like high expenditures, bankruptcy by the company, tight spending and others. Through proper distribution of salary companies will not have to face arguments and disagreements with the employees. References Boyd, C 2003, Human resource management and occupational ealth and safety, Routledge, New York. Cheng, Y, Gallie, D, Tomlinson, M & White, M 1998, Restructuring the employment relationship, Clarendon Press, Oxford. De Meuse, KP & Marks, ML (eds. ) 2003, Resizing the organization: managing layoffs, divestitures, and closings maximizing gain while minimizing pain, Jossey-Bass, San Francisco. Gratton, L, Hailey, VH, Stiles, P & Truss, C 1999 Strategic human resource management: corporate rhetoric and human reality, Oxford University Press, Oxford.

Herriot, P 2001, The employment relationship: a psychological perspective, Routledge, New York. Kay, J 1995 Why firms succeed, Oxford University Press, New York. Megginson, LC 1972, Personnel: a behavioral approach to administration, Richard D. Irwin, Homewood, IL. Sims, RR 1998, Reinventing training and development, Quorum Books, Westport, CT. Skoldberg, K 2002, The poetic logic of administration: styles and changes of style in the art of organizing, Routledge, London.