In the modern and changing global business environment, human resources management (HRM) has been linked to the heart of business success and high performance of organizations (Haslinda, 2007). High demand for innovation, customer satisfaction and increased sales volume in the search and internet industry and finance industry has forced organizations such as Google Inc and Absa to incorporate human resources practices in their business strategy. Various human resources practices has been adopted at Google Inc Company and ABSA Group Limited, which include recruitment and selection, training and development, compensation, just to mention a few (Google Inc, 2012 ;Best employers, 2011).
Despite sporadic arguments over the exact definition, human resources management is defined as a process of managing human talents in order to achieve organizational objectives and include processes of recruitment and selection, training and development, labour and industrial relations and also management of employees’ safety and health in organizations (Haslinda, 2007). In recent years, the main agenda of HRM is to integrate business strategy of organization with employee commitment, flexibility and quality which drives increased productivity and performance (Guest, 1987, as cited in Smith & Smith, 2007). This essay serves to evaluate the relevance of human resources management in meeting the objectives of Google Inc and Absa. 2. Background information and objectives of Google Inc and Absa
2.1. Google Inc
Google Inc is a global technology organization focused on innovation thus, improving the ways in which people connect with information whilst upholding the brand equity and reputation. The company recorded revenue of $10.58billion in 2011, employing 18 500 people in the U.S and a 33% job growth (Google Inc, 2011). It adapted a culture, whereby employees share ideas, built high trust, low on politics and workers having conversations with Googlers from different teams whilst having lunches on its cafes. The ultimate objective of Google Inc is becoming the greatest strategic partner to business operations and acquiring greatest investment returns in form of revenue and profits (Google Inc, 2011)
Absa is a leading financial institution in South Africa’s banking industry, it has got 36 770 employees, getting annual turnover of R23 340 000 000 (Best Employers, 2011). It is a subsidiary of global financial services provider Barclays Bank PLC, which has an equity interest of 55.5% in the Group (Best employers, 2011). The main objective of Absa is delivering enhanced value to customers, embracing diversity whilst caring for the communities (Best employers, 2011). Sustainable growth in target markets is one of their objectives. Absa aims on becoming the leading financial services group in South Africa while improving profitability and returns (Absa Group Limited, 2010). 3.Relevance of HR functions in meeting objectives of Google Inc and Absa
3.1. Recruitment and selection
Recruitment and selection is defined as organizational activities that influence numbers and types of job applicants (Hartel & Fujimoto, 2010). This human resource practice is designed to identify people with the right set of skills and knowledge, which can be linked to the organizational culture to culminate performance (Liu, Combs, Ketchen &Ireland, 2007). Hiring the best and right people is the main human resource philosophy at Google; recruitment is regarded as the main step in all human resources processes (Google Inc, 2011). Recruitment and selection is of relevance to Google Inc as it help the organization to attract, retain and motivate difficult crop of employees which brings in commitment hence improved financial performance, that is a 33% increase in annual revenue (Google Inc, 2011).
On the other hand, Absa use external recruitment and selection as a tool to attract top talents into the organization which in turn leads to R23 340 000 000 annual revenue turnover in 2011 (Best Employers, 2011). Ibraheem and Mohammad (2011) support the view that, the success of the company relies much on the ability to get the right people, in the right time. Othman (2009) also asserts that recruitment and selection is not about just filling the gaps but should focus in bringing the best skills and knowledge into the organization, which will contribute to the success of the organization. Contributing to this assertion, Boohene and Asuinura (2011) argued that, when the best are selected for the job, productivity and performance increases.
3.2. Training and development
Training and development remains the backbone of Google Inc and Absa as they help in meeting their objectivities. Training and development is “the process in which individuals changes their skills, knowledge, attitudes and or behavior” (Robbins & DeCenzo, 1998, as cited in Ibraheem & Mohammad, 2011). Dowling and Welch (2004) argued that training aims on improving current work skills and behavior whilst development aims at increasing abilities in relation to future position or job. Absa provides on-job-training to young undergraduate to enable flexibility in dynamic changing banking environments, which is profitable in the long run as they cut recruitment and selection costs (Datta, Guthree &Wright, (2005).
[email protected] was also introduced by the human resource management so as to facilitate employee understanding of the regulatory environment experience requirements (Best Employers, 2011). With an increase in Absa’s learnership programme up to 1870 learners in 2010, an increase in social performance was witnessed, so it can be concluded that training and skill attainment offered to employees brings in improved performance (Absa Group Limited, 2011). Google Inc also adopted training and development, an HR strategy in meeting their objectivity of innovation and creativity (Google Inc, 2011).
Training and development enables the attainment of knowledge and skills for innovation (Beatty & Schneider, 1997; Fajana, Oweyemi, Elegbede & Gbajumo-Sheriff, 2011). Acton and Golden (2002) argues that training increases employee’s job involvement, facilitates the updating of skills, leading to increased sense of belonging, well being, increase commitment towards the organization, thereby meeting organizational objectivities in Google Inc. In both companies training and development was linked to main organizational strategy thereby supporting the view that, there is a strong link between training and business strategy (Smith & Smith, 2007). One can point that, there is a link between training, skills, quality, job satisfaction and overall company objectives (Ibraheem & Mohammad, 2011).
Stone (2002) indicated that, compensation policies should emanate from the organization’s strategic business objectives because they determine the performance and behaviors to be motivated. Compensation can be defined as, what employees receive in return of their work and efforts in meeting organizational goals such as benefits and pay (Hartel & Fujimoto, 2010). Absa employed various compensation schemes, aligned to the main business strategy and objectives. The human resources management of Absa conducts annual benchmarking studies to ensure that salaries are in line with industry standards (Best employers, 2011). They pay employees on a fixed cost-to-company basis, which sees the total fixed compensation package set at market levels.
Best employers (2011) pictures out that, secondary benefits such as contributions to the group pension plan, group life insurance, a registered medical-aid scheme among others as well as the performance bonus which is awarded on merits (Absa Group Limited, 2011). All these rewards are strategically aligned to their objectives, as they ensure commitment and dedication to work which in turn culminate to all kinds of performance mainly financial performance (Absa Group Limited, 2011). Kazlaiskaite, Buciuniene and Tarauskas (2012) support the view that, compensation and job design bring in job satisfaction hence, influencing performance. Even though, Google Inc is regarded as the least paying employer in the industry, quite a number of rewards, benefits and compensation are offered to employees (Google Inc, 2011).
The Innovative Stock Option at Google ensures that all workers are competitively compensated, so as to reduce turnover and reward related job dissatisfaction (Google Inc, 2011). Google perks and benefits comprise of unlimited sick leave, 27 days of paid time off after one year of employment, on‐site medical and dental facilities, oil change and car wash, courier, fitness center, banking center, free breakfast, lunch and dinner on a daily basis, 18 weeks of additional paid time off post maternity leave (Google Inc, 2011). Google’s compensation and reward schemes influences much on extremely high annual performance and turnover in the organization, as employees are dedicated to their work and motivated to innovate. Innovation is the main objective at Google Inc, so compensation is of relevance as it helps in meeting this innovation objective. From the discussion above, one can argue that effective rewards and benefits management when linked strategically to organizational objectives has a positive effect on the performance of an organization (Boohene & Asuinura, 2011).
3.4. Employee turnover
In meeting the ultimate objective of making more money, Google Inc and Absa kept their employee turnover rate at minimum. Google Inc recorded a voluntary turnover rate of 4.5% in 2011, which is generally low (Google Inc, 2011). Employee turnover is defined as the process in which employees vacate an organization and have to be replaced (Stone, 2011). A low employee turnover rate might show the strength of the human resources practices in Google Inc as they reduce quit rate in the sense that, when employees are satisfied with compensation, performance appraisal, training and development opportunities they stay in the organization (Batt & Colvin, 2011). Low turnover rate is directly associated with increased performance and quality standards in Google Inc (Google Inc, 2011).
Stone, 2002 argued that, low labor turnover can characterize good working conditions, desirable jobs, wage and salary equity as well as wide opportunities, which contribute to employee commitment hence meeting performance standards. Google Inc a high involvement organization experienced a low labor turnover thereby enjoying low recruitment and selection costs (Guthrie, 2001). Absa recorded an employee turnover of 10.1% in 2010, which reveals continuous HR department improvements (Absa Group Limited, 2011). Low labor turnover involves high level of commitment despite the fact that, both voluntary and total turnover are negatively related to operational performance specifically service quality and customer satisfaction (Kacmar, Andrews, Van Rooy, Steillburg & Cerrone, 2006 ; Shaw, Dineen, Fang & Vellella, 2009).
3.5. Employee empowerment and participation
Kazlaiskaite, Buciuniene and Tarauskas (2012) defined empowerment as, a set of practices or activities associated with giving employees decision making authorities. Absa fosters a culture of collaboration and works to create a safe environment for employees to raise their views (Best employers, 2011). It also adopted a regular employee opinion survey which aims to understand employee trends at every level and tries to direct actions that improve workplace (Best employers, 2011). Employee commitment is the offspring of employee empowerment and commitment entails customer satisfaction which helps in meeting organizational objectives (Kazlaiskaite, Buciuniene & Tarauskas, 2012).
Google Inc also empowers their employees to bring new ideas and innovation into the organization, it places high values on people’s opinions and ideas by allowing every employee to approach and discuss any issue (Google Inc, 2011). This participation move resulted in continued innovation in Google, which lead to goal and objective attainment (Google Inc, 2011). Hales and Klidas (1998 as cited in Kazlaiskaite, Buciuniene & Tarauskas, 2012) believed that, empowerment in the service industry is more likely to enhance customer satisfaction. One can argue that, empowerment can lead to performance increases to some extent as it brings in commitment among the employees and job satisfaction (Kazlaiskaite, Buciuniene & Tarauskas, 2012).
3.6. Performance Appraisal
Performance appraisal is a continuous judgment on the behavior and performance of stuff as well as employees (Boohene & Asuinura, 2011; Mathis & Jackson, 2003). This process encourage risk taking, innovation and high need in adopting new ideas for it to be beneficial in an organization (Ibraheem & Mohammad, 2011). Google Inc for instance, use performance appraisal in finding new ways of doing work and motivating its employees as there is no direct confrontation when performance is below standard (Google Inc, 2011). This key part of the organization’s performance management is profitable and beneficial if managed properly (Mathis & Jackson, 2003)
3.7. Communication and information sharing in Google Inc
Google Inc promoted a free information and idea flow culture (Google Inc, 2011). Communication is considered as the most important skill in life since it creates a common understanding at workplace (Covey, 2006). Information sharing helped Google’s People Relations department to plant trust and commitment in the organization which culminate performance (Google Inc, 2011).
Human resources practices when they are corporate bring in commitment and dedication on work and organizational goals. Google Inc and Absa benefited much from their Human Resources practices. This work points the relationship between human resources practices and perceived performance in an organization. Recruitment and selection was regarded as the main human resource process involves attracting the best talent into the organization to fill a position in a certain point in time. From this research, it can be deducted that human resources management is extremely important to the success and survival of an organization like Absa.
Human resources department aims in stimulating commitment among employees, which in turn lead to higher performance. Equity rewards and compensation is also relevant in meeting the objective of an organization, as it motivates the workforce, thereby influencing on the commitment and performance. A closely monitored performance appraisal process will increases performance but as the case is different in most organization. Most managers tend to threaten employees leading to job dissatisfaction and high turnover rates. Recruitment and selection, training and development, compensation, performance appraisal, and information sharing when linked to business strategy helps in meeting objectives.