Human Resource Development

Juani Swart, Clare Mann, Steve Brown, Alan Price

• Publisher: Routledge
• Year: 2012
• eBook ISBN: 9781136397301
• Topic: Business
• Subtopic: Human Resource Management
• Index: Business

Each chapter in Human Resource Development provides the reader with commentary, activities and review sections in an integrated approach. The action-oriented approach is vital for practicing managers but increasingly for postgraduate and final year undergraduates who have work experience. It is this aspect of the book that fills a gap that currently exists in the market. This text reflects organizational realities and balances and integrates the coverage of individuals, teams and organizational learning.The book is written in a straightforward manner and explains concepts and key issues in a lucid style. The activities are focused and are better suited to encouraging readers to learn.

Chapter 1

The Strategic Importance of Human Resource Development

Introduction

We start this chapter by examining the reasons why human resource development has become a critical part of an organization’s competitive capabilities, and explaining why people are important in organizations. We will also discuss how human resource development has changed over time, and why it is important in the modern competitive arena.

The next section explores how human resource management has been modified to reflect the step changes in markets and production requirements over time. We will describe the nature of the changes to major business eras, leading to an appreciation of how skills requirements have reflected these major changes.

After explaining what is meant by strategy, the third section develops key strategic issues in human resource development. We will also investigate how human resources can play a profoundly important part in developing and implementing strategy within an organization.

Next, the emergence of human resources as a strategic issue is explored in greater depth. This section explains the critical differences between many Western firms’ and Japanese approaches to human resource development. We will show that human resource development needs to be in place alongside other important human resource issues, including industrial relations, and describe how human resources can become part of the core competence of an organization.

The final section looks at how some firms have developed a set of best practices, thus enabling reconfiguration in order to improve performance in innovation, quality and other important competitive variables. We will explain some of the key requirements in developing best practice in human resource development, and how firms have had to reconfigure themselves – which can only be done as part of wider human resource development.

Objectives

By the end of this chapter you will be able to:

• Appreciate why human resource development is of strategic importance in the current business world

• Realize how human resource development has changed over time

• Understand why some firms have problems in viewing human resources in a strategic manner

• Have a basic insight in the key areas that will then be explored further in subsequent chapters.

The Strategic Importance of Human Resource Development

Why People are Important in Organizations

It should be self-evident: organizations consist of people, and so the development of these people should be a key task for organizations. If you were to speak to senior-level managers within firms they would, typically, state how important their staff are. Sadly, however, these same senior-level managers will often concentrate on slashing budgets related to human resource development. They may also have no qualms about downsizing the number of employees at the same time. What is sometimes not clear, though, is that people really do matter in organizations. People matter because in the highly competitive environment which firms now face, human capital has become a precious commodity in gaining any sort of advantage over other firms. The following states it succinctly:

A culture that values curiosity is inventive and exciting. Walk into the headquarters of USA in San Antonio, Texas, 3M in St Paul, Minnesota, or Lockheed Martin in Fort Worth, Texas, and you can feel the heat of originality cooking in the organizational oven. What you later learn is that you’re in a place with an everlasting focus on perpetual growth. The popular label for such an environment is a learning organization. A more accurate description is a discovering organization. The term learning can imply the act of adding to or increasing what’s already there; discovering means uncovering or finding. Learning can happen through osmosis, in which you’re passively the recipient of growth, without much effort. Discovering suggests an active search and a deliberate exploration.

(Bell and Bell, 2003: 57)

Human Resource Development is a vital area for firms because ideas for innovation, quality and continuous improvement, as well as other critically important inputs needed to compete in the modern, highly competitive business world, come from people and not from machines. The extent to which people will provide suggestions for improvements – in all forms – will depend, to a large extent, on human resource development strategies within firms. The need to develop human resources on an ongoing basis has not always been so prominent. For example, the eminent management writer, Peter Drucker described how ‘My ancestors were printers in Amsterdam from 1510 or so until 1750 … and during that entire time they didn’t have to learn anything new’ (Business 2.0, 22 August 2000).

Drucker is not being critical of his ancestors, nor is he accusing them of not caring about their employers or stating that such an approach was ‘wrong’. Indeed, it might well be argued that in previous times such an approach would have been entirely appropriate. The issue is: in today’s competitive arena it is not appropriate.

The need for both the employer and employee to understand the role of human resource development is important. For the employer, the following is pertinent:

‘Survival isn’t just a matter of smart machines. Workers have to get smarter as well, and show a willingness to learn new technologies’, says John A. McFarland, CEO of Baldor Electric Co., the largest maker of industrial electric motors in the US. A versatile corps of workers has helped Baldor ride out the manufacturing recession without a layoff.

(Business Week, 5 May 2003)

For the employee, it has become eminently clear that the notion of a ‘job for life’ is now an outdated and unsustainable proposition. Thus the terms of engagement have to change when a new employee applies for a job opportunity, and this was captured by Davis and Meyer (2000: 12):

You must realize that how you invest your human capital matters as much as how you invest your financial capital. Its rate of return determines your future options. Take a job for what it teaches you, not for what it pays. Instead of a potential employer asking, ‘Where do you see yourself in 5 years?’ you’ll ask, ‘If I invest my mental assets with you for 5 years, how much will they appreciate? How much will my portfolio of career options grow?’

However, the overwhelming evidence seems to be that organizations do not fully understand the strategic importance of human resource development. Many firms are too quick to downsize or ‘rightsize’ in the pursuit of cost-cutting initiatives. Other strategic decisions, including mergers and acquisitions, may threaten the culture that had human resource development as part of its core capabilities:

Many of us Hewlett-Packard retirees and former employees agreed with Walter Hewlett when he opposed the acquisition of Compaq. He wisely anticipated the questionable value and performance described in Adam Lashinsky’s ‘Wall Street to Carly: Prove It!’ (First, Jan. 12). But of equal significance was the sad absence of Hewlett-Packard from the 100 Best Companies to Work For list in the same issue. We also remember when HP was at or near the top of that list because of our proud adherence to the culture called ‘the HP Way’. That culture, perhaps HP’s greatest invention, continues to thrive in Silicon Valley and beyond, but not, regrettably, at HP.

(Fortune, 9 February 2004)

There may well have been good reasons for the merger between HP and Compaq; what is important here, though, is that this threatened the very culture of the organization that had served HP in the past, and a key element of this was commitment to human resource development.

Academics, researchers and practitioners alike do not urge the need for human resource development strategies within firms because they think it is a ‘nice thing to do’. Rather, they advocate human resource development because they recognize the vital role that humans can play within organizations. For example, back in 1978 Peter Drucker, whom we cited earlier, wrote, prophetically: ‘To make knowledge work productive will be the great management task of this century, just as to make manual work productive was the great management task of the last century’.

Firms are becomingly increasingly dependent on their human resource capabilities. This is because much of the tacit, as well as coded, formal or documented, knowledge that a firm possesses centres on human resources. A firm can accumulate this knowledge and general know-how, related to processes, over time. However, such development does not come about by chance; instead it comes from having a strategy for such development. A motivated, highly trained, workforce must form the backbone of any would-be world-class firms. As Grindley (1991) observes:

The skills base is one of the firm’s main assets. It is hard for competitors to imitate … this calls for an attitude to encourage learning and to reward efforts which add to the firm’s knowledge. Skills go out of date and need constant replenishment. In the long term what is most important may not be the particular skills, but the ability to keep learning new ones.

The vital importance of human resources is indicated in a telling quotation from the Managing Director of British Chrome and Steel who, in 1998, stated: ‘There is no other source of competitive advantage! Others can copy our investment, technology and scale – but NOT the quality of our people …’ (in Brown et al., 2000).

Chief Executive Officers (CEOs) will often go on record stating how important their people are for the success of their firms. For example, General Electric’s former CEO, Jack Welch, mentioned in an interview in Fortune how: ‘We spend all our time on people … The day we screw up the people thing, this company is over’ (Fortune, 21 June 1999).

Clearly this is an over-simplification of what human resource development is about, but it does serve to illustrate how CEOs will go on record regarding the importance of their staff. A motivated, highly trained workforce must form the backbone of any would-be world-class company. The need for innovation, new idea generation, flexibility and inventiveness comes, essentially, via the human input, not via ‘machinery’ and, as Lazonick (1991: 78) observes: ‘… the enterprise must plan its human resource needs not only to facilitate the production and distribution of existing products, but also to generate new processes [and] … new products that will permit the long-term stability and growth of the enterprise’ (italics added).

The fact is that people matter. This apparently obvious statement underpins one of the key lessons that firms aspiring to be world-class learned in the latter part of the twentieth century, and are continuing to do so today. From a position in which people were seen simply as factors of production, as ‘hands’ to work in factories and offices, there has been a change to recognition of the enormous potential contribution that human resources can offer. Whether in systematic and widespread problem-solving (such as hel...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright
• Contents
• Chapter 1: The strategic importance of human resource development
• Chapter 2: Conceptual issues impacting on the contribution of human resource development at strategic and operational levels
• Chapter 3: Strategic human resource development
• Chapter 4: Managing the human resource development function
• Chapter 5: The role of learning in a human resource development context
• Chapter 6: Factors affecting learning
• Chapter 7: Training and learning needs assessment
• Chapter 8: Learning and development design
• Chapter 9: Learning and development methods, interventions and practices
• Chapter 10: The e-learning revolution
• Chapter 11: Evaluation of strategic human resource development
• Chapter 12: The changing role of the human resource development professional
• Index