HUMAN RESOURNCE STRATEGY

Human performance is crucial to an organization. An organization does not function without

competent people; it does not function well without motivated people. How the managers
facilitate the human resources strategy determines the talents available to operations. Human
resource are expensive. Because of the importance of personnel and their cost, early
consideration of human resource strategy is necessary.
Objectives of the Human Resource Strategy:
The objective is to manage labor and design jobs so that human resources:
1. Are efficiently utilized within the constraints of other strategic operations management
decisions.
2. Have a reasonably quality of work life in an atmosphere of mutual commitment and
trust.
Quality of Work life:
It means a job not only reasonably safe and for which the pay is equitable, but also that
achieve an appropriate level of both physical and psychological requirements.
Mutual commitment:
it means both management and employees strive to meet common objectives.
Mutual Trust:
It means reasonable, documented employment policies that are honestly and equitably
implemented to the satisfaction of both management and employees. When a management
has genuine respect for its employees and their contribution to the firm, establishing a
reasonable quality of work life and mutual trust is not particularly difficult.
Human Resource Strategy Constraints:
Many decisions that are made about human resources are constraints by other strategic
decisions. There are FOUR constraints.
1. The product mix may determine seasonality and stability of employment.
2. Technology, equipment and processes may have implications for safety and job content.
3. The location decision may have an impact on the ambient environment in which the
employees work.
4. Decisions regarding layout may dictate, in large part, job content.

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The Three Dimensions of Human Resource Strategy:
1. Labor planning:
It determines staffing policies that deal with:
a) Employment Stability
b) Work Schedules.

2. Job design:
It specifies the tasks that continue a job for an individual or a group. A job consists of
variety of tasks; a task consists of a number of elements and an element consists of
micro motions. Job design has four components;
a) Job specification and enrichment
b) Psychological components
c) Ergonomics and work methods
d) Motivation and incentive systems.

3. Labor Standards:
These help specify the labor required for given levels of production once jobs have been
defined. Labor standards can be established via:
a) Historical data
b) Work sampling
c) Method line measurement
d) Stopwatch standards.

Labor planning:
a) Employment statement policies
1. Follow demand exactly:
It means that change the capacity of the firms by keeping the demand of the
products and services constant. It has the advantage of keeping labor costs tied
closely to production but incurs other costs. These other costs include:
i) Hiring and termination cost
ii) Unemployment insurance
iii) Perhaps a labor wage premium to entice personnel to accept unstable
employment. Such a policy trends to treat labor as variable cost.
2. Hold employment constant:
Holding employment constant has an advantage of maintaining a trained work force
and keeping the hiring, termination and unemployment cost to minimum.

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 The disadvantage is that employees may not be utilized fully when demand is low,
and the firm may find meeting demand difficult when demand is high. Such a policy
treat labor as a fixed cost.

Maintaining a stable work force may yield a wage rate lower than that paid firms
that do not. This may provide a competitive advantage. However, managers who
choose a strategy resulting in fluctuating work force may also be choosing the most
efficient option available to them.

Firms must make decisions as to the employment stability.

b) Work schedules:
i) Standard work schedules are usually eight hours a day, variations do exist
ii) Flextime it allows employees within limits, to determine their own schedules.
Examples: professors in university may have evening and weekend classes and
they are allowed to fic their own schedules. They make come at 12 mid-days and
can have any week days off as they may be taking weekend classes.

This allows more autonomy and independence on part of the employee. Some
firms find flextime a low cost fringe benefit that enhance job satisfaction. In
some manufacturing firms where all staff must be present at the time of
production such steel mills, glass factories may not be feasible option of flextime.
A machine that requires three people cannot run at all if only two show up.
Having a waiter to serve lunch at 1:30 PM rather than 1:30 AM is not much help
either.

Some industries find that their process strategy has severely constrained their
human resource scheduling option. For instance, paper manufacturing,
petroleum refining and power stations must be staffed around the clock except
for maintenance and repair shutdown.
iii) Flexible work week; this often manifests itself in four 10 hour days, provided
customers and suppliers can be accommodated. Firms that have high process
start up times find longer work day options particularly appealing. For instance,
get a boiler up to operating temperature or a plastic modeling machine running
properly.
iv) Part time status: This option is to have shorter days than longer days. This is very
attractive in service industries and for those people who need some extra money
with their regular jobs or students to meet their both ends,

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 2.JOB DESIGN
a) Job specification and enrichment
Job design importance as a management variable is credited to the Adam Smith, he
suggested that division of labor is also known as labor specification. Labor cost can be
reduced in several ways:
1. Development of dexterity and faster learning by the employee because of repetition.
2. Less loss of time because the employee would not be changing jobs or tools.
3. Development of specified tools and the reduction of investment each employee has
only few tools needed for a particular task.

A classic example of labor specification is the assembly line. Such systems are often
very efficient, although they may require employees to do repetitive, mind –
numbing jobs. The wage rate for many of these jobs however, is very good.

Job enrichment is one in which we group variety of tasks about the same skill. It
allows the employees to do number of things.
Job rotation is version of job enragement, where the job person is not enraged, but
rather the employee is allowed to move from one specialized job to another. An
enriched job is one that includes some of the planning and control necessary for job
accomplishment. An enriched job is sometimes called vertical enlargement and job
enlargement is also called horizontal enlargement.

Enriched jobs allow the employees to accept more responsibility. For employees who
accept this responsibility, we may well expect some enhancement in productivity and
product quality. Among the positive aspects of job enrichment are:

1. Reduced turnover
2. Reduced tardiness and absenteeism
3. Improved quality
4. Improved productivity
Managers who enrich who enrich jobs and build communication systems that elicit suggestions
from employees have an added efficiency potential.

Limitations to job enragement / job enrichment

1. Higher capital cost. Job enlargement and job enrichment require facilities that cost more
than conventional layout. The extra expenditures must be generated through saving or
through higher prices.
2. Many individuals prefer simple jobs. Some studies indicate that many employees, a
majority in some cases, opt for less complex jobs. It seems appropriate that we do not
forget the importance of individual differences. These differences provide latitude for the
resourceful operation managers when designing jobs.
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3. Higher wage rates are required. People often receive wages for their highest skills, not
their lowest. So enlarged and enriched jobs may well require a higher average wage than
jobs that are not.
4. Smaller labor poor exists. Because enlarge and enriched job require more skills and
acceptance of more responsibility, the job requirements have increased. Depending upon
the availability of labor, this may be constraint.
5. Increase accidents rates may occur. Enlarged and enriched jobs may contribute to higher
rate of accident rate. This indirectly increases wages, insurance costs, and workmen’s
compensation.
6. Current technology may not lend itself enlargement and enrichment. The disassembly
jobs at the slaughter house, the computer assembly jobs at the modern office park, and
the tool booth operator jobs are that way the alternative technologies (if any) are to be
unacceptable.

b) Psychological components
An effective human resource strategy also requires consideration of psychological
components of job design. These components focus on how to improve the quality of work
life, job satisfaction and motivation by the designing jobs that meet some minimum
psychological requirements. Three types:
1. Hawthorne Studies:
These were conducted in the late 1920s at the General Electric plant. Publications of the
findings in 1939 demonstrated conclusively that there is dynamic social system at the
workplace. Ironically, these studies were initiated to determine the impact of lighting on
the productivity. Instead they found the social system and distinct roles played by
employees to be more important than the intensity of the lighting. They also found that
individual differences may be dominant in what an employee expects from the job and
what the employee thinks his contribution to the job should be.

2. Maslow Hierarchy of Needs.

It suggests that well designed jobs should allow employees to address both psychological
and physiological needs. It further suggests that once employees have satisfied lower
level needs, they seek to satisfy those needs at the next higher level. Ideally, jobs should
contain ingredients that allow people to satisfy needs at all levels.

Students practice making five types of needs in a pyramid.

3. Hertzberg Motivation / Hygiene Factors

Frederick Hertzberg, in his dual factor theory, suggests that jobs can contain hygiene
elements and motivators.

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 If we make the assumptions that virtually any job in the world can and should provide
Maslow’ lower level of needs and Hertzberg elements, then good job design can be
achieved.

Per H. Engelstad addresses six guidelines to the psychological components.

1. The need for the content of the job to be reasonably demanding for the individuals in
terms of providing them some variety.
2. The need for an opportunity to learn on the job and to go on learning.
3. The need for some minimal degree of social support and recognition at the workplace.
4. The need for some minimal area of decision making that the individual can call his own.
5. The need to be able to relate what individuals do and what they produce to their social
life.
6. The need to feel that the job leads to some sort of desirable future.

C. Ergonomics and work methods

The operation manager is interested in building a good interface between human and machine.
Studies of this interface is known as ergonomics. Ergonomics means study of work which
derives from Greek Word Ergo means work.
Work methods / work environment.
The physical environment in which employees work affects their performance, safety and quality
of work life. Illumination, noise, vibration, temperature, humidity and air quality are work
environment factors under the control of the organization and the operations managers.
Illumination is necessary, but the proper level depends upon the work being performed.
However, other factors of lighting are important.
Noise of some form is usually present in the work area, and many employees seen to adjust well.
However, high levels of sound generated by various activities. Therefore, most managers must
make substantial efforts to reduce noise and vibration through good machine design, enclosures,
or segregation of source of noise and vibration.
Temperature and humidity parameters have been well established. Managers with activities
outside of the established comfort zone should expect some adverse effect on performance.

D) Motivation and incentive systems

Money often serves as a psychological as well as a financial motivator.
Bonus. It is typically in cash or stock options, are often used at executive levels to reward
management.

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Gain Sharing. It rewards employees for improvement made in organization’s performance.
Incentive Systems. These are based on individuals or group productivity. These are based on the
employee or crew achieving production above a predetermine standard. The standard can be
based on standard time per task or number of pieces made.
Measured Day Work. Standard time systems are sometimes called measured day work, where
employees are paid based on the amount of standard time accomplished.
Piece Rate System. It assigns a standard time for each piece and the employee is paid based on
the number pieces made.

E. Labor Standards
Labor plans require knowledge of the human resources, therefor the labor standards are
established. Labor standards are the amount of time required to perform a job or part of a job.
Every firm has labor standards, although they may vary from those established via informal
method to those established by professionals. Only when accurate labor standards exist can
management know what its labor requirements are, what its costs should be, and what
contributes a fair’s day work.

END OF CHAPTER

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