Business
Human Resources and Worker Efficiency
Many things going into the making of a successful company: shared attitudes toward success, good relations between employers and employees, and adequate rewards and compensation, among others. Human resources professionals must learn to observe an organization from all angles, considering what works and what does not, what is important, and what is not. A business consists first of a set of goals that define the purpose, or mission, of the firm. A company that manufactures computers, for example, must concern itself with everything that will further the sale of its product. Issues that might concern the organization would be the quality of the product, the satisfaction of its customer base, the increasing of its customer base – in fact, anything related to increased sales. A company cannot produce a product that sells if that product does not meet the standards required by the market. Those standards cannot be met if the firm’s employees are incompetent or dissatisfied, or simply unaware of what is required of them. It is the job of human resources to ensure that all the members of an organization are fully aware of the aims of that organization and are adequately prepared to fulfill those aims. Employee contributions to company success must be recognized and rewarded. Grievances must be dealt with, and any problems that arise must be settled amicably and in away that satisfies all concerned. For their part, employees must realize that they are serving an external market, as well as meeting the expectations of their employers. Internal employee relations can positively, or adversely, affect relations with customers. Dissatisfied, or ill-trained, employees can negatively affect clients’ impressions of an organization. Good human resource management is essential to the success of any concern.
A company defines itself by its mission statement. This mission is quintessentially one of human propensities and values.
By setting forth its goals, a firm is defining how it sees its employees, their capacities and aims. Google’s mission is “to organize the world’s information and make it universally accessible and useful.”
In short, the Google Corporation is setting itself the goal of creating a corporate atmosphere that is conducive to the achievement of a goal of making information useful and accessible; a requirement that implies a priori that Google’s employees must be the kinds of individuals who are capable of implementing these goals. Presumably, the ideal Google employee is open-minded and concerned about the world around himself or herself. As well, this ideal employee must be a helpful sort of person, the sort of man or woman who takes the time to help other individuals comprehend difficult situations and overcome problems. The ideal Google worker is also someone to whom information i.e. facts matter. These facts are somehow important in our world, as is free access to them. The Google mission statement describes the Google employee as much as it describes the company’s goals. The same is true at IBM. The computer giant’s mission; however, is somewhat different, focusing instead on the physical products produced by the company:
At IBM, we strive to lead in the invention, development and manufacture of the industry’s most advanced information technologies, including computer systems, software, storage systems and microelectronics.
We translate these advanced technologies into value for our customers through our professional solutions, services and consulting businesses worldwide.
Nonetheless, the apparent focus on product over personnel should not be taken too far. In emphasizing the innovativeness of IBM products, and their helpfulness to the industry in general, IBM, too, is eliciting a certain kind of employee. The corporation is demanding that its employees be creative, and technically-savvy, individuals who share its goals of generating new product ideas, and better versions of existing product lines. IBM’s workers need to see themselves as sources of inspiration, their hard work the foundation of bold new concepts in computer technology. Additionally, the IBM employee must view himself or herself as part of a dominant organization, one that leads in its field both in terms of new development and in sheer size and volume of production, in other words, in terms of market share. In each of these cases, the mission statement defines the company in terms of the goals and values of those that work at the company; goals and values that define and describe the organization itself.
The service or product offered by a business is thus, in some measure, the image it presents to the world; to its customers. Google provides the service of an Internet search engine, the purpose of which is to enable end-users, that is Google’s clients, to find and use information. Google’s commitment to providing free information is revealed by its business strategy which, above all, emphasizes users’ unfettered access to a wide variety of information, including copyrighted, and otherwise protected, materials:
The most remarkable thing about the social phenomenon of Google is that Google does not charge per copy or per use, and neither do the abundance of websites, discussion lists, and information sources that Google indexes. In other words, works (web pages) that fall within the ambit of copyright are being provided to hundreds of millions of people through Google, and the authors of these works are not doing much to limit wide public access to their information property.
The service provided by Google is therefore a direct extension of the values and beliefs espoused by its workforce. The company that hold that information must be available to all has helped to create and foster a climate in which these very ideas are not only acceptable, but good business practice. By accepting Google’s seeming infringement on their exclusive property rights, the owners of these materials are endorsing the viewpoint of Google and its employees. They are also helping to establish an entirely different attitude toward information. In a similar fashion, IBM strives, through its products, to reflect its employees’ views and values. IBM was one of the first in its field, perhaps the first, major manufacturer of computers. The IBM Corporation has always prided itself on being an innovator, on being the one to break new ground and open new areas of interest and discovery. In keeping with the innovative spirit that drives its business strategy, twenty years ago, IBM became one of the first companies to implement a coherent human resources strategy that linked human resources policies with business goals.
In a rapidly changing world, IBM stuck to its original goals of retaining and promoting a talented workforce, even reallocating human resources, as necessary, despite economic downturns and the challenges presented by external forces.
Until quite recently in its corporate history, IBM had been virtually a model of the company that provided for its employees cradle-to-grave. Talented and loyal IBM personnel could expect a lifelong career with the firm along with full retirement benefits and insurance. The deal was simple: you be true to IBM’s mission and business strategy and IBM will be true to you.
Globalization and its antecedents dramatically changed the outlook for companies like IBM. Suddenly, large, secure enterprises were faced with competition from less expensive, but still highly-skilled, labor in other parts of the world. IBM’s mission had always been to maintain a reputation for high-quality and innovation, and to dominate its market. Concomitantly, the computer pioneer also saw itself as employing only the very best available personnel. At one time, this had been tantamount to employing mostly Americans in what, after all, was an American company. Yet, the changing dynamics of globalization forced IBM to re-think the specific thrust of its business strategy while still maintaining its core values and mission. IBM serves as an example of the multitude of companies that have been forced to take similar action. IBM continues to dominate the global market in the production and sale of mainframe computers. From 2002 to 2003, IBM’s market share increased by ten percent, as compared to an industry-wide average increase of only five percent. With this increase, IBM now holds a solid 32% piece of the forty-six billion dollar global mainframe industry. Together, IBM and its three largest competitors – HP, Sun, and Dell – control nearly seventy-three percent of this market. IBM is a world leader in other fields as well. It shares the top five spots in computer notebooks with HP, Dell, Toshiba, and Acer. IBM lags only two-tenths of a percentage point behind Hewlett Packard in terms of it storage revenue; the two companies together managing a hefty fifty-one percent share of the entire storage market. As a leading it player, IBM and its few leading competitors thus have almost a stranglehold on the global industry.
As for IBM’s operations, the company employed 319,273 employees around the world in 2003. Though founded and headquartered in the United States, IBM has a large number of international facilities – and the number of staffers overseas is growing. According to Linda Guyer, an IBM employee, can tell you what we’ve been told by a very good source. I cannot name the source nor prove it is true, so with that IGS plans to move 30,000 U.S. jobs, or approx. 25% of its employees, overseas by end of 2004. The plan is to ultimately move EVERY job that supports an internal account. I also hear they are behind schedule at the moment.
Certainly, this is a very significant proportion of the computer giant’s American workforce. Yet, IBM’s management justifies such drastic demographic changes by appealing to the humanitarian side of the globalization debate.
It’s not about one shore or another shore,” an I.B.M. spokeswoman, Kendra R. Collins, said. “It’s about investing around the world, including the United States, to build capability and deliver value as defined by our customers.
And to further emphasize their socially-redeeming values,
Executives at I.B.M. And many other companies argue that creating more jobs in lower cost locations overseas keeps their industries competitive, holds costs down for American consumers, helps to develop poorer nations while supporting overall employment in the United States by improving productivity and the nation’s global reach.
To be sure, the above statements represent the corporate party line when it comes to globalization and staff restructuring. But do these same assumptions promote the greater happiness of those already employed, or yet to be employed?
As previously stated, the proper rewarding and compensating of employees is essential to maintaining a profitable organization. Employees who feel they have no job security, fear for loss of benefits such as retirement packages and medical insurance, or who in other ways are dissatisfied with the potential for change, will not be fully productive members of the organization. These issues bring to the fore the potential conflicts between corporate mission statements and business strategies, on the one hand, and the genuine needs and concerns of personnel, on the other. Compensation, taken in terms of salary and non-monetary incentives, is a powerful tool in encouraging worker loyalty and productivity. A study by Stevens and Hill (2001) focused on executive compensation in large organizations. According to the research,
They found that low performing firms use higher fixed salaries and fewer incentives while high performing firms use lower fixed salaries and a greater percent of overall compensation is incentive pay. This would suggest that are using various forms of incentive compensation such as cash incentives, noncash incentives, and benefits and perks more than low performing firms.
Companies that try to cut corners, or to cut back on salary and other incentives, as a way of showing that costs are just to high in their usual place of business may be creating the very conditions they claim to be trying to avoid. Since the onset of globalization, a common complaint has been the lack of skilled workers in many developed countries, and their corresponding availability, and low-cost, in developing nations. Yet, by cutting back on benefits packages, and holding down salaries, many large businesses in the developed world are also undercutting their employees’ performance. A working who is not regularly receiving decent raises as a reward for work well done, or who sees his or her other benefits being cut away is not likely to be the model loyal employee. Nor is that same individual likely to go the extra mile toward serving the corporate mission and business strategy. The less well employees are compensated the more likely are they to be unproductive; to participate in the creation of the very situation that employers’ claim drives them to eliminate these incentives and seek qualified help elsewhere.
Another major problem in terms of employee compensation concerns employee perception of how compensation is awarded; whether that compensation is awarded fairly or in accordance with a clear plan or strategy. To listen to the mission statement of an IBM, one would get the clear impression that business strategy is focused on rewarding outstanding service to the company and its goals. Recent years have witnessed a considerable outcry regarding companies that have offered their executives enormous compensations packages while at the same time denying similar, though scaled, rewards to employees. In many cases, companies have actually laid-off thousands of workers, or cut their benefits, while giving multimillion dollar awards to high-ranking executives. Furthermore, executives have at times been granted huge compensation packages despite verifiably poor performance. They have even received these compensation packages even in cases where they have actually been dismissed on grounds of poor performance. According to one theory, an individual’s compensation correlates directly to set spending patterns that are relatively constant during the course of an individual’s life:
That is, while actual income levels vary considerably throughout a person’s lifetime, consumption is a smoother function because it is based on average expected, rather than actual current, income. To illustrate, receiving a $500 windfall gain will not entice an individual to immediately purchase a $500 consumption good. Rather, after receipt the individual’s annual spending is predicted to increase by a fixed proportion of the long-term value of $500, such that the value will be completely consumed by the time of death. The actual immediate consumption of any given windfall will be limited and would differ depending on the age of the individual.
Companies believe that, by paying executives at exorbitant rates, they are somehow contributing both to the good of the company and to the greater good of society. The idea is part of a kind of trickle down theory of economics in which, in the particular case of corporate consumption and compensation, could be seen as setting a model of performance for lower-level employees. Apparently, ordinary employees are supposed to take from all this, the lesson that, if they perform well enough, they too will rise to the level of the executives, and that they too will be rewarded with compensation out of all proportion to their value to the company. Nonetheless, the above ideas show that enormous increases in compensation will not lead directly to enormous increase in productivity, or net worth. The executive who receives compensation far out of proportion to his performance does not give it back to the company by performing better, he or she merely keeps the extra money and goes on performing like before. Compensation is an incentive. In the general marketplace, it is an incentive to buy goods or services, whereas in the realm of human resources it is an incentive to remain loyal to the company’s mission and business strategies and to continue to be productive… And if possible, more productive than before. The message sent to ordinary employees by outsized executive compensation packages is that poor performance is rewarded, while steady, even exemplary effort, is at best, compensated at far-reduced rates.
As shown also by the above theory on the correlation between compensation and consumption, pay rates must also correspond to actual needs and expected expenses. Many employees are no longer receiving compensation at rates that keep up with cost of living increases. The amount a typical employee expects to spend must correlate somehow with the amount she or he expects to receive, yet the compensation of many of these employees does not permit even an even rate of consumption over time. Corporate executives on the other hand are frequently awarded in creases in compensation that are out of all proportion to any increase in the cost of living – even at their accustomed standards of living. A more sensible approach for both employees, and management, would consist in linking compensation to various specific goals; goals that encourage the goals of employee loyalty and performance. One example of an employee compensation package that takes into account all areas of concern to both the employee and the firm is to be found at Meyners and Co.
The new compensation program includes a yearly salary increase that reflects a cost-of-living adjustment (COLA) and three bonus pools. It calls for the firm to evaluate employee performance in three areas: core values (workplace behavior), core competencies (business skills) and meeting goals (). Early indications are that the individualized evaluation process is motivating employees. Janet McHard, CPA and manager in the litigation and business valuation services department, says the new system helps underscore what the firm values. If you contribute, not only will your efforts be recognized, but “you’ll be compensated for having worked hard to meet those goals,” says McHard.
The new system imparts to workers the sense that they are individuals working together as a team toward specific goals. Productivity is enhanced because each worker knows that he or she is being evaluated in the same way as any other, and that concrete benefits are the reward of good performance. Annual cost of living increases guarantee that workers will be able to maintain their living standards – that is, their consumption patterns – regardless of inflation or other increases in the price of necessary goods and services. Unlike corporate executive packages that often neglect regular workers’ needs, this plan provides for those employees and establishes the sense that the firm cares for them and about them. Equally important, the three values measures of workplace behavior, business skills, and performance measures win-win agreements correspond to the exigencies of a company’s business strategy and mission. Workplace behavior must be in accord with the standards of the company in order to be rewarded. The employee who follows proper procedures and conducts himself or herself well with other employees and management will be rewarded with a secure future and an adequately remunerated present. As well, the business skills aspect of the paradigm serves both worker and firm. If an employee knows the acquisition of new and useful skills, or the perfecting of existing one is to be rewarded in a manner that is conducive to his or her needs, he or she will strive to perfect or increase those skills. Performance measures speak to the desire of the organization for both preserving its existing customer base and for continued growth and development. Performance is measured according to the goals of the business as laid out in its business strategy. In the case of an IBM, good performance might be measured by activity on the part of the employee that tends to increase the number of computers sold, or that which leads to the development of new computer products that increase IBM’s customer base. In Google’s case, the employee who devises a new and faster way of searching the Internet might have accomplished a cherished goal of the organization. By the same token, an employee would be serving Google by maintaining an excellent level of customer service, thus increasing consumer loyalty and trust. Compensating employees in relation to their own individual performance is a win-win situation that encourages productivity on the part of the employee and generates and established a pleasant working relationship between employer and employed. Work becomes more of a partnership than a situation wherein one individual or group is absolutely superior to the other. Each has its needs, and will respond with enthusiasm if those needs are adequately and decently met.
Many difficulties can be avoided simply through the proper training of employees. Training involves not merely the imparting of specific job skills to an employee but also making sure that company goals and values are clear to that employee. The company mission and business strategy are important components of any worker’s knowledge of his or her job. Training should be carefully balanced to reflect the real needs of the organization. There is no need to spend too much time on purely theoretical concerns that will never be of use to a particular employee, nor is there any need to train employees for work which they already know how to perform. Training must take place within organizational constraints.
The goals of any training program should be clearly stated. These objectives should consist three components: what an employee is expected to do, or performance, what level of quality is to be maintained, and the conditions under which tasks are to be performed.
Each of these corresponds again to the ideas of company mission and business strategy. An employee who understands what he or she is supposed to do will understand the goals of the company, particularly if acceptable performance levels are explained, and work conditions fully described. For example, a worker at Google, should know and comprehend the company’s mission to provide free and full access to information. This will prevent that employee from developing systems that are not usable within this sort of environment i.e. those that depend on obtaining specific copyright permissions. The same employee should also understand that this is how end users view Google’s service, and that it is what they expect in their dealings with the company. Proper training in terms of responsibilities and standards also avoid potential problems between management and employees. Workers who understand their jobs are far less likely to balk at the performance of required tasks. They will also perform better if they are working toward clearly defined goals and within obvious parameters. When employees know and understand what is expected of them they feel that they are being treated fairly and will remain loyal and engaged.
Worker efficiency depends on good human resources management and on the understanding that the proper use of human resources consists in the merging of employees’ needs and goals with those of the company. Company goals are enshrined in the mission statement and business strategy of the firm. These reflect the ultimate values and aims of the organization; concepts that must be understood and endorsed by all workers. Workers must know what they are working toward and for, and they must feel that their talents are recognized and their services rewarded. Gross discrepancies between executive and employee compensation can cause bad feelings between management and employees and can also send the wrong message about the real purpose and meaning of salaries, benefits, and other incentives. Employees should be evaluated and compensated as individuals, in accordance with goals that apply to across the board, without special favor being given to management or other preferred staff. Goals that management sets for employees must be obvious and consistent. Training must be adequate to create proper levels of understanding among employees, and to make it possible for employees to do their jobs as they should be doing them. A well-run organization is a productive organization. An organization that maintains cordial relations between employers and employees will be prosperous and successful.
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