Human resource practice enhance value chain
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How might exemplary human resource practice enhance and strengthen a firm’s value chain activities?
1. Definition of Value Chain
The value chain is a systematic approach to examining the development of competitive advantage. It was created by M. E. Porter in his book, Competitive Advantage (1980). The organization is split into ‘primary activities’ and ‘support activities.’ Primary Activities include: Inbound Logistics, Operations, Outbound Logistics, Marketing & Sales, and Service. Support Activities include: Procurement, Technology Development, Human Resource Management (HRM), and Firm Infrastructure.
The goal of these activities is to offer the customer a level of value that exceeds the cost of the activities, thereby resulting in a profit margin. The firm’s profit or margin depends on its effectiveness performing in these activities efficiently, they are not isolates one another, one value chain activity often effects the cost or performance of others.
2. Human Resource Management
HRM supports individual primary and support activities and entire value chain. There are four components of HRM functions:
2.1 Effective recruiting, development, and retention mechanisms for employees
(Recruiting) HRM evaluates human capital through interview; see whether the candidate is competent to the job. Sometimes, HR ranges interview vie capability test by STAR technique (Situation, Task, Action, Result), require candidate describes a special task that he has been needed to accomplish, how did he analyzed and make solutions, what did he implement and accomplish, how did the event end and what did he learn from that etc. (http://www.quintcareers.com). So that HR could be defines the special strongpoint of this person. For example, Salespeople are required to develop and maintain excellent relationships with customers; they need communicate with customers and internal staff actively and patiently.
Thus, personality test and stress test may taken by HR in interview, questions such as “are you usually walk fast ?” or “what color do you like most?”(http://www.personalitytest.net), if the person used to walk fast perhaps he is impetuous; people who likes blue may he is calmly. As stress test, HR may ask some slashing or uncomfortable questions, and then observes the reaction of candidate, see whether he can copes stress easily. If firm gathered excellent salespeople, the “marketing and sales” and “service” or even “procurement” of primary activities will spread fast and effective, because work efficiency increased, staff always know how to plan competitive marking strategy to save time and cost, and how to strive for a profitable customer till the last second.
(Development) Nowadays, economic develops rapidly, HRM continues to prove that staff added value to the firm’s value chain by organizes various training, such as learning new polices and strategies that company found during each period; upgrade employees’ knowledge and skills, in order to maintain more effective people who can catch up steps with company and world business trend. For instance, economy tends to globalization day by day, many of enterprises in China, HRM arranges Business English training for employees, act to brings more opportunities to their company then its competitors.
Another example, in advertising company, most conflicts between designers and account executives is that account executives are not really understand the meanings of designs, because they are not too “arty”, so it will be hard for them convey or sell the ad to clients; whereas, as designers, they may more concentrate on “arty” but overlook business factors, Thus, to exchange professional knowledge is important to these employees, HRM then organizes internal seminar, so staff in different department can share experiences and knowledge. Accordingly, cost minimized by less misunderstanding, staff have ability to meet critical deadline, “operation” and “service” activities improved.
2.2 Quality work environment to maximize overall employee performance and minimize absenteeism
“in order to work efficiently, I have to be able to concentrate that there must be as few distractions as possible and my workspace needs to be comfortable” (http://www.456bereastreet.com/). People now work longer hours and more days a year than ever before, scientists reported that the stress increased absenteeism and decreased employees’ social support and office harmony. So it’s up to HRM to take the initiative to promote workplace relaxation for the good of employees.
Microsoft’s Career Page states: “Dress comfortably. Wear whatever makes you comfortable” Why? Because Microsoft prizes intelligence and contribution over style, HRM believes “casual style” might cause higher productivity when employees released from tight suits. In my ex-company, there was a small pantry where you could get magazines, snacks, coffee, microwave oven, and even regular medicine. It was convenient to staff have a short break whenever they feel tired or need to relief stress from overloaded work. Furthermore, the company provides sleeping bag and comfortable couch in drawing room as staff could take a nap while they are working overtime. All these reflected HRM drove at better work environment for employees; accordingly, productivities increased, absence reduced, because we were happy and relax to work in office where it feels like home.
2.3 Reward and incentive programs to motivate all employees.
People will do what they want to do or otherwise motivated to do. “Wherever the employees are recognized, it creates harmony across the company….When companies do reward, employees tend to do so for the same reasons: increased productivity, timely completion of projects or hitting sales goals.” Eric Mosley says, CEO of Globoforce Inc. (http://www.workforce.com/).
Probably we all had experience that rewarded candy or new toys from parents when we hit a better score through hard studying. It is same for HRM to apply reward principle in company, such as bonus schemes , employee recognition schemes, job evaluation, long service awards, long-term pay deals,etc. In the ex-company of mine, HRM founded several annual awards such as “the Best Communication” which recognized employee who maintained relationship with clients and colleagues successfully; “the Best Attendance” which to encourage employee who never absented in the year; “the Best Sales” which awarded with an overseas travel package to employee who has achieved highest sales target and etc. Awards encouraged employees try to do better, it has speeded company’s development by higher productivities, better service qualities. The company’s turnover increased decuple till year 2004, most of reasons attributed to effective strategies of HRM.
The more value you create, the more people will be prepared to pay a good price for your product or service. If firms add a lot of value to HR development, they will excel in what they do. Exemplary HR practices absolutely enhance and strengthen entire value chain activities, firms should then expect to be rewarded in line with the contribution.
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