Human Resource Management Essay: Wage Disparities And HR Theories At Woolworths And Coles.

Theories and Concepts of Human Resources

Discuss about the Human Resource Management for Woolworths and Coles.

Human resource management is considered the key determinant of organization performance. Clear outlined human resource management structure normally reduces management challenges. The HR wage issue has become a problem in Australia though organizations are required to comply with HR policies that indicate the need for equal pay for employees. In studying human resource and important issues that affect the most organization in Australia and globally remains wage disparities. In identifying this challenge two organizations were studied and these are Woolworths and Coles. Employees tasked with trolley collection in these two organizations had poor payment issues leading to wage discriminations. Upon pressure from institutions such as Fair Work Ombudsman, Coles reviewed its wage policies while Woolworth maintained payment policies for trolley collectors. Woolworths being an employer of more than 200, 000 employees, has recently come into the spotlight for two human resource issues. These human resource issues are poor payment of trolley collectors and subsequently discrimination of these employees. The human resource remains one of the most important aspects of the organization and should be treated with the most care. Theories of human resource also indicate that HR is an important department of an organization. There are many theories and literature that have been advanced to give a deeper understanding of human resource especially solving certain human resource challenges. The following literature review explores various human resource theories that give a clear understanding of HR wage disparities issue.

According to the theory of Ability, Motivation & Opportunity (AMO), for the organizations to solve problems of poor performance there is need to motivate employees. According to Brewster, Sparrow, and Harris (2005), one way to motivate employees is to remunerate them is according to their role or standard. Poor pay is an issue that requires high attention as it determines the performance of the employees. A similar theory of performance also indicates that a motivated employee will work better than a less motivated employee. Moreover, the organization policies, especially on compensation of employees, play a critical role in the motivation of employees. This implies that an organization that has low payment policies is most likely to face similar issues as Woolworths. In addition, setting organization policies that aim at the motivation of employees should comply with the set standards for such employees. According to Lowry (2006), ethics also play role in compensation of employees as ethical standard prevent any discrimination of employee in terms of wages. A case study conducted by Michelson and Kramar (2003), shows that a motivated employee normally feels encouraged and hence their performance increase. However, Bjorkman (2006) contradicts the theory of motivation indicating that employees will be motivated by pay for a short period of time and thereafter their performance either reduce or remain constant. Wall & Parker (2001) summarise the theory of motivation indicating that even if the employee is shortly motivated, their performance cannot reduce to the same level as initial before motivation.

HR operative model is another theory of human resource that explores the flexibility of the organization operates.  According to Radhakrishna & Satya (2015), a flexible operation allows adjustment when there are challenges affecting the human resource. It worth noting that one of the key challenges that Woolworth is facing is operation inflexibility as the organization is unable to review compensation policies for trolley collectors. Similarly, Kaufman (2008) also explains that a more flexible organization in terms of how it handles HR issues determines the organization’s ability to solve problems of discrimination. Another theory, McShane and Travaglione (2007), explains that ethical standards require human resource department to review the compensation rates for wages of employees periodically to accommodate the financial or economic situation within the country. This lay foundation for the flexibility that is needed for organization’s operation and management with capabilities to adjust payment periodically.

According to the theory of contingency, the compensation of employees also rests on the organizational environment and circumstance. This theory, therefore, shows that at times the working environment within an organization dictates pay rise for employees. Furthermore, the larger the size should reflect on the pay of employee since large organization such as Woolworth attracts high customers. Therefore, at high customer number, there should be increase compensation to reflect on the magnitude of work. According to Patrickson & Hartmann (2001), the working environment for employees needs to use in developing HRM policies and practice as this determines the wages.  Moreover, collecting trolleys during high customer seasons becomes high demanding as compared to other times. These factors need to be considered in compensating employees to increase their performance.

There are also pressures from various institutions that are the task to regulate the HR. The Institutional theory explains the relationship between the human resource and other organizations such as Fair Work Ombudsman. The Human Resource Director, Australia, is an example of institutions that normally pile pressure on organizations to tackle pay and discrimination issues. As explained by Bjorkman (2006), human resource management is an important issue that cannot be left to operate on its own without pressure from outside the organization. The Constitution, on the other hand, highlights the relationship between various external organizations that regulate the behaviour of the organization towards employees. This institution theory is also supported by Paauwe and Boselie (2003) when explaining the need for an organization to act according to standards required. In contrast, Osland, et al. (2007) explains that various institutions will always push for employee wage increment despite their performance in an organization. Nankervis, Chatterjee and Coffey (2007), on the other hand, shows that the legitimacy of institutions lay in their ability to protect the right of employees and therefore there is need to increase their pressure on the organization.

HR Operative Model Theory

The matching model of human resource management also takes the HR to another level where HR system needs to match organization structure. This means that the organization’s strategy should assist in managing the employees since there is congruency between the two. According to Michelson and Kramar (2003), larger organizations such as Woolworth and Cole have a humanitarian strategy that aims at bettering the lives of people around it. This should also reflect on the management of employees and therefore limited discrimination. Similarly, Kochan (2004) advocate for implementation of strategies that are similar to human resource management. Streamlining human resource management according to the organizational strategy helps the organization to perform better. This according to McShane and Ravaglione (2007), indicates that performance of the organization solemnly rests on employees. 

Forborn Tichy and Devanna model of human resource management explain the interrelationship in HRM activities. According to Martin, Romero and Sanchez-Gardey (2005), HRM activities that form cycle include selection, development, appraisals and rewards. All these activities are linked to form the basis of performance. As explained by Kaufman (2008), appraisal and rewards being a vital aspect of HR plays an important role and should be continuously reviewed.  The model is based on the role played by human resource management cycle through minimally considered determinant of performance of the organization. This does not contradict similar observation made by Johnason (2009) when commenting on the human resource management cycle. The Michigan model also explains the relationship between selection, development, reward and appraisal as the determinants of performance of an organization. According to this model, these aspects of human resource cycle should be clearly monitored to avoid issues as witnessed in Woolworth Limited.

Organizational behavior theories also explain the relationship between human resource management and organizational behavior. For instance, the organizational mechanism theory explains the interrelationship between various employees and the organizational culture or structure. As Heneman and Judge (2005), explains organizational culture, for instance, come into play with standards set by government regulating the body. This means that the strategy laid down by the organization in paying for employees should work in hand with government policy guiding human resource management. Similarly, Brewster, Sparrow and Harris, (2005), indicate that organization human resource structure outlined in organizational chart normally complies with government policy pertaining labor policies. In addition, as organization designs its human resource strategy government standards and organizational culture are interplay. This particularly does not contradict a similar study by Ibid & Kelly (2003) that show the importance of organizational behavior in solving human resource issues.

The Contingency Theory of Compensation

Despite theories that explain the responsibility of organization towards human resource, there are some other theories that explain organizations behavior toward employees. The Harvard model of human resource explains that employees should be competent and cost effective. This implies that trolley collectors demand high pay while their competency is not worth the pay. In addition, the plan by Woolworth of not reversing the employees’ payment may be due to cost ineffectiveness of the move. Similarly, Dessler, Griffi and Lloyd (2007) explain that it is equally no reason to increase pay for an employee that does not match the magnitude of responsibility. This means that revision of pay for trolley collectors by Woolworth or Cole organizations solemnly depend on the amount of work or the magnitude of work these employees perform.

Conclusion

In conclusion, human resource is core to every organization and need good structural or strategy to solve related issues. One of the issues that remain a challenge in human resource management is wage discrimination issues among various organizations. There are many theories and models that have been advanced to explain human resource management with respect to wage related issues. Therefore, human resource management models such as institutional theory, organizational behavior, motivation theory, commitment, matching model, contingency and operative model. These theories clearly explain the role played by various concepts in human resource. 

Reference

Bjorkman, I, (ed) (2006), International human resource management research and institutional theory Handbook of Research in International Human Resource Management, Cheltenham, Edward Elgar Publishing Limited.

Brewster, C., Sparrow, P. & Harris, H. (2005), Towards a new model of globalizing HRM. International Journal of Human Resource Management, 16(6), p. 966.

Dessler, G., Griffi ths, J. & Lloyd-Walker, B (2007), Human Resource Management, 3rd edn, Australia, Pearson, p. 567

Ibid, p. 31; & Kelly D. (2003), A shock to the system? The impact of HRM on academic IR in Australia in comparison with the USA and UK, 1980–1995. Asia Pacific Journal of Human Resources, 41(2), pp. 149–71.

Heneman III, H.; & Judge, T. A. (2005), Staffing Organizations. USA: McGraw-Hill.

Johnason, P. (2009), HRM in changing organizational contexts. In D. G. Collings & G. Wood (Eds.), Human resource management: A critical approach (pp. 19-37). London: Routledge

Kaufman, B.E. (2008), Managing the Human Factor: The Early Years of Human Resource Management in American Industry. Ithaca, New York: Cornell University Press. p. 312n28.

Kochan, T. (2004), Restoring trust in the human resource management profession. Asia Pacific Journal of Human Resources, 42(2), pp. 132–46; See also Ellem, B. (2005) Putting work in its place: The making of ideal workers and social contracts. Asia Pacific Journal of Human Resources, 43(2), pp. 238–51.

Lowry, D. (2006), HR managers as ethical decision-makers; Mapping the terrain. Asia Pacific Journal of Human Resources, 44(2), pp. 171–83.

Martin-Alcazar, F., Romero-Fernandez, P. M. & Sanchez-Gardey, G. (2005), Strategic human resource management: Integrating universalistic, contingent, configurational and contextual perspectives. International Journal of Human Resource Management, 16(5), pp. 633–59.

McShane, S. & Travaglione, A. (2007), Organisational behavior on the Pacific rim, 2nd edn, Sydney, McGraw-Hill.

Michelson, G. & Kramar, R. (2003), The state of HRM in Australia: Progress and prospects. Asia Pacific Journal of Human Resources, 41(2) , p. 144.

Nankervis, A., Chatterjee, S. & Coffey, J. (2007), Perspectives of Human Resource Management in the Asia Pacific, Sydney, Pearson Education Australia.

Osland, J.S.; et al. (2007), Organizational behavior : an experiential approach (8th ed.). Upper Saddle River, N.J.: Pearson Prentice Hall. pp. 35–36.

Paauwe, J & Boselie, P. (2003), Challenging 'Strategic HRM' and the Relevance of the Institutional Setting, Human Resource Management Journal, vol. 13, no. 3, pp. 56-70.

Patrickson, M. & Hartmann, L. (2001), HRM in Australia –Prospects for the twenty-first century. International Journal of Manpower, 22(3), pp. 198–204.

Radhakrishna, A. & Satya, R. (2015), A Study On The Effect Of Human Resource Development On Employment Relations. IUP Journal of Management Research 14.3: 28-42. Business Source Complete. Web. 25 Sept. 2015.

Wall, T. D. & Parker, S. (2001), Neil J. Smelser and Paul B. Baltes, ed. International encyclopedia of the social & behavioral sciences (Encyclopedia) (2nd. ed.). Amsterdam, Netherlands: Elsevier. pp. 7980–7983.