The concepts of ‘best fit’ and ‘best practice’ are two well known approaches in human resource management. The ‘best fit’ perspective claims that HR strategy become more and more efficient when it is linked to its environment of the business. It explores the close link between strategic management and HRM by assessing the extent to which there is a vertical integration between an organization business strategy and its HRM policies and practices. ‘Best practice’ school claims that certain ‘best’ human resource practices would result in enhanced organizational performance, manifested in improved employee attitude, lower level of absenteeism and turnover, higher level of skills for higher productivity, enhanced quality and efficiency.
The ‘best fit’ approach explores the close relationship between strategic management and HRM by considering the influence and nature of vertical integration. Vertical integration, where leverage is gained through the close link of HR policies and practices to the business objectives and therefore the external context of the fir, is considered to be key theme of strategic HRM. “The inflexibility of ‘tight fit’ models in a dynamic, changing environment was evaluated, and consideration was given to achieve both fit and flexibility through complementary SHR systems.” (Julie Beardwell and Tim Claydon ,2007).
The ‘best practice’ highlights the relationship between ‘sets’ of good HR practices and organizational performance, mostly defined in terms of employee commitment and satisfaction. These sets of best practice can take many forms; some have advocated a universal set of practices that would enhance the performance of all organization they were applied to. (Pfeffer, J,1998).
1. Introduction 3
1.2 Sri Lanka Insurance Corporation 3
2. What Is Human Resource Management? 5
3. HR Management Activities 6
1. Acquisition 6
2. Training and Development 6
3. Appraisal 6
4. Compensation 7
5. Employee and Labor Relations 8
6. Safety and Health 8
7. Fairness /Equal Employment Opportunity 9
4. HR Systems and Strategies 10
5. Recommendation 14
6. Conclusions: 14
7. References 15
This report evaluates the Human Resource Management Practices in the Sri Lanka Insurance Corporation and provides ways and means to improve the current Human Resource Management Practice by introducing and linking Human Resource Management Practices to the Strategic Business Plan.
Modern economic approach puts increasing emphasis on human resource as an essential element of increasing efficiency, effectiveness and competitiveness of organizations. It is considered that the human factor is the only able to combine the other factors of production, so as to create added value. Studies have shown that there is link between human resource management and performance of organizations. Human resources management acquired increasingly important role in the management system of any company. Proper management of human resources can be a key factor for success (Stephen Gates and Pascal Langevin4 , 2010).
Objective of the study
Achieve high levels of organizational performance through people
1.2 Sri Lanka Insurance Corporation
Sri Lanka Insurance Corporation Ltd (SLIC) was incorporated by a special act of Parliament in 1961. SLIC is the largest and strongest composite insurance provider in Sri Lanka. It has 117 branches in island wide. SLIC is the first and only insurance company in Sri Lanka to be assigned a prime AA- rating for Insurance Financial Strength from the global rating agency Fitch Ratings London. SLIC has made an immense contribution to the development of the economy, progress and prosperity of the country.
To be the Trusted Insurer to the Nation.
To be a customer focused company that is trusted, which constantly innovates in providing insurance services of best value to our customers, whilst rewarding our employees and adding value to our Shareholders.
2. What Is Human Resource Management?
Human resource management is the management of workforce, or human resources in the organization. Human Resource Management is deal with in respect of how people are employed and managed in an organization. HRM has largely taken over from that of personnel management, which came from foregoing terminology including labour and welfare management.
This emphasis on the strategic management of people (the human capital of the organization) which achieves “fit” or integration between the business and the HR strategy. And the importance placed on gaining commitment to the organization’s mission and values.
Armstrong and Taylor (2015) identify the goals of HRM as to:
• Support the organization in achieving its objectives by developing and implementing HR strategies that are integrated with business strategy
• Contribute to the development of a high-performance culture
• Ensure that the organization has the talented, skilled and engaged people it needs
• Create a positive employment relationship between management and employees and a climate of mutual trust
• Encourage the application of an ethical approach to people management.
3. HR Systems and Strategies
The HR system consists of strategies, policies and procedures. Many organizations have multiple discrete HR practices (e.g. employee well-being, employee development, pay and reward etc.) with no explicit or discernible links between them. When organizations seek to improve their people management arrangements they will typically consider developing a HR Strategy. A HR strategy sets out what the organization wants to do about its human resource management policies and how delivering on these will help to achieve the overall objectives of the organization. In some organizations a HR strategy may exist without necessarily being deliberate or even written down. It may simply exist in the collective minds of the relevant people. However, obviously this is something of a precarious situation and most organizations evolve to a situation whereby their strategy is somewhat more deliberate and planned, while also being responsive to changing circumstances and the environment.
Armstrong (2016) identifies three types of HR strategy:
• Broad statements of intent with regard to HR in the organization. Sometimes referred to as an ‘umbrella strategy’. The core components of these may include items such as building a strong performance culture, developing leadership capability, attracting and retaining talent, developing HR systems
• HR strategies based around specific models of HR such as ‘High-performance management’
• HR strategies in respect of specific areas, for example a talent management or learning and development strategy. Because all organisations are different, all HR strategies are different. There is no such thing as a standard strategy. However, Armstrong and Taylor (2015) provides some general criteria with regard to HR strategies:
• It satisfies organisation needs
• It is researched and evidence-based, not just wishful thinking
• It can be turned into actionable initiatives
• Its components are coherent and integrated
• It takes account of all stakeholders in the organisation and doesn’t reflect only the views of, for example, senior management or the HR function.
The five stages of the HR forecasting process are: identifying organizational goals, objectives and plans, determining overall demand requirements for personnel, assessing in-house skills and other internal supply characteristics, determining the net demand requirements that must be met from external, environmental supply sources and developing HR plans and programs to ensure that the right people are in the right place.
4. Strategic HRM
Strategic environment is an approach to making decisions on the intentions and plans of the organization concerning the employment relationship and its recruitment, training, development, performance management, reward and employee relations strategies, policies and practices. HRM is that it is integrated and integrated vertically within the business strategy and horizontally with one another. The HR strategies developed by a strategic HRM approach are essential components of the organization’s business strategy. (armstrong, 2003)
The important feature of strategic HRM is the concept of fit or integration. The HR strategy should aligned to the business strategy and this is integral part of the business strategy which contribute to the business planning process as it happens.
5. HR Management Activities
This aimed at provision of Human Resources that would stimulate organizational progress and would catalyze the success of the business and undertaken with the purpose of finding people who would add value to the business, those who would increase organizational capability.
2. Training and Development
Training is important for both the individual and the business as the business environment is quickly changing according to the technological changes, buying behavior of the customers. And training is key factor of development; this development would help in preparing organizations for future challenges and competition.
Training and Development function of HR enhance the job satisfaction, reduce staff turnover, enhance organizational culture, improve working practices, and create a workplace that thrive on knowledge creation and sharing. SLIC organize orientation, in-house, mentorship programmes and also external training programmes in association with Sri Lanka Insurance Institute and Insurance Board of Sri Lanka.
Performance appraisal or performance evaluation is a systematic and periodic process which assesses an individual employee’s job performance and productivity according to certain pre-established standards and organizational objectives
Appraisal is major activity of HRM to provide training and development, making decisions on promotions, staff transfer and increments.
4. Compensation (Pay and Benefits)
Salary and benefits are also within the scope of human resource management. it is an important tool which attract, motivate and retain employees. Compensation not only dealing with monitory rewards but also non-monitory rewards like insurance, travel allowance, maternity benefits, retirement and other special benefits. This includes identifying appropriate compensation based on role, performance, and legal requirements.
5. Employee and Labor Relations
This assists with general management regarding developing, maintaining and improving employee relationships via communication, performance management, disputes as well as interpreting and conveying company policies.
Employee and labor relations is concerned with preventing and resolving problems involving employees which follow or affect work situations.
Employee and labor relations activities include:
• Mediating disputes between employees and employers
• Claim for harassment and other workplace abuses
• Clarify industrial relations processes with trade unions and create harmonious relationship.
• Acting as the voice of the organization and/or the voice of the employees during any broader organizational issues pertaining to employee welfare
• Achieve commitment through employee involvement and communication process
Labor Relations offers balanced advocacy to management and individual employees to protect their respective rights and facilitate a more harmonious work environment.
6. Safety and Health
Ensuring that a healthy and safe working environment is provided and protecting employees from health hazards and accidents.
Safety and health activities include:
• Ensuring compliance with legal requirements based on job function for safety measures (i.e. hard hats in construction, available counseling for law enforcement, appropriate safety equipment for chemists, etc.)
• Implementing new safety measures when laws change in a given industry
• Discussing safety and compliance with relevant government departments
• Discussing safety and compliance with unions
HR Competencies: This chart highlights a few of the key competencies expected of human resource teams in organizations.
7. Fairness /Equal Employment Opportunity
Equal employment opportunity is a right every job applicant has throughout a hiring process. It refers to the protection job candidates have against discrimination on the basis of their race, religion, sex or national origin, among other qualified characteristics and also covers current employees against discrimination for promotions, pay, benefits or discharge.
1. Respect employees as individuals, in addition to the job they do
Respect can be a simple but powerful motivator, just as its unpleasant twin, lack of respect, has the opposite effect. When employees feel genuinely respected (always assuming it’s warranted), they’re much more likely “to go the extra mile” to help a company succeed.
2. Leadership development programs combining theory and practice with assignments.
3. Finding opportunities to give visibility to CEOs from the employees’ perspective, such as a monthly lunch with small groups.
4. Culture and internal customer service surveys that regularly measure effectiveness and progress.
5. Cross development and continuous development teams that solve real problems in effectiveness and efficiency.
6. Mentor programs.
7. New hire onboarding that provides new hires with a clear picture of company culture, history and goals of the organization.
8. In order to get the most out of their employees, a HRM needs to know what motivates the workers.
To achieve this, the HRM must ensure:
* Jobs are correctly designed
* A system of rewards is in place
* An appropriate management style is being used
* A positive corporate culture exists
* The organizational structure allows for employees to work at their optimum level
The integration of the ideas of human resource management into traditional systems of personnel management may be considered to be a great achievement. Models of human resource management drew attention of both business management practicians and public management strategists because it suggested that, in the long term, HRM practice and organization’s efficiency are correlated. This paper identify the significant aspects of human resource management practices in context of the high performance human resource management. Theoretical and empirical analysis of the various functional areas of human resource management confirms that the 18 human resource management practices can be significant to provide effective human resource management.
As a description of people management activities in organisations the term HRM is here to stay, even if it is applied diversely or used only as a label to describe traditional personnel practices. However, for organisations trying to implement a more authentic version of HRM this report tries to send the message that good HR practices are not enough. Research around the link between HR and organisation performance has shown that a positive approach to people management, in its very broadest sense, is necessary. Transformational or value-based leadership from the top is essential in that it helps to create a positive organisation culture. So too are the actions and attitudes of line managers who are responsible for bringing ‘HR policies to life’. The other central message of this report is the importance of HR reviewing its own capacity and contribution to the organisation. In this regard, considering the original theoretical underpinnings of HRM has considerable merit because HR has been variously criticised for being either overly focused on organisation strategy or swamped by administrative tasks, at the expense of listening to those it serves and developing a deep knowledge of the organisation. Reflecting on the origins of HR, both in strategic management and organisation behaviour, and the consequent goals of HR as originally envisaged, which encompass being both a ‘business partner’ and a ‘people partner’, serves as a reminder to HR of the multiple roles it is required to fulfil.
Improving human resource practices is a process not an event. It involves a whole host of HR strategies within the human resource chain, from recruitment and selection to exit. It takes teamwork and active collaboration. It requires the commitment of all the stakeholders. It has to be monitored regularly and adjustments made. One of the key strategies in improving human resource practices is to link the strategic objectives to the workforce requirements in the organization Change is the only constant in the improvement agenda
armstrong, m. (2003). human resource management. 9th ed.
Sri Lanka Insurance Corporation Ltd. Annual Report 2017
An organisation’s success is largely dependent on the quality and the performance of its people, making HR a risk-prone function of any organisation. With the increase in competition in the industry, SLIC must rethink their talent pipeline and transform their HR function to cope with these priorities and risks to maintain a sustainable growth. It is therefore crucial, now more than ever, for the organisation to be aware of the risks they face in HR operations. Therefore, SLIC has identified several risk factors as follows. a) Talent Acquisition and Management Talent acquisition and management are perhaps the most critical parts of HR. A proper resource planning may avoid overstaffing or understaffing. In order to navigate through these risks, SLIC has taken following steps: Identifying the annual cadre requirement of the organisation Formulating a recruitment policy Conducting recruitment programs to hire insurance assistants to the organisation Develop efficient processes for on boarding talent to ensure new starters become productive quickly (Orientation programmes) b) Regulatory and Compliance HR professionals need to be aware of local labour regulations and ensure they are always compliant. The HR department has taken the following steps to mitigate the regulatory and compliance risk. Understand local and the relevant international labour laws to follow the basic principles correctly Regular audits on HR processes to ensure compliance c) Pay and compensation In order to increase the retention of employees and as well as the productivity SLIC has taken several vital steps thorough out the year. Introduction of an in – house Vehicle loan facility for the staff Distribution of profit among employees in the form of a Profit Bonus Granting an annual salary increment of 7.5% for the year 2017 d) Training and Development Keeping the right employees in the organisation requires more than pay. In order to increase the value of human capital at SLIC and to help the career progression of employees, SLIC has laid down several strategies as follows. Conducting annual training need analysis Develop the training calendar and preparing the training budget to accommodate the training plan by prioritising the training needs Provide opportunities for employees to grow through training and skills development programs (Local ; Overseas) Encourage a learning culture across the organisation Conducting Outward Bound Trainings with the engagement of cross functional departments to ensure working towards a common goal collaboratively Identify successors through a proper succession planning process in order to develop next line managers for SLIC