Icelandic HRM Practice, Essay Example

In the 21^st century corporate world, HRM practices are gaining popularity because organizations thrive on the efforts of their workforce and the training that Human Resource department give to the staff. With a particular attention to private and public corporations in Iceland, we seek to understand the challenges that HRM faces when it comes to training staff. In this discussion, we are going to take a deeper look into the training and development practices that exist in the Iceland corporate environment. We will review the available literature to see what has been done previously by other scholars, as we look at the research outcomes from professional bodies.

To begin our discussion, we look at the mechanisms of developing leaders from within the organization. In most cases, companies and public sector do not grow their leaders from within the workforce. It is due to the difficulty of nurturing staff from junior roles to where they can be able to handle senior positions without training (Younger & Daveulrich, 2013). In Iceland public and private sectors, only 30 percent of workers take time to advance their careers (CRANET, 2011). This hinders them from getting the required knowledge that can help them when they take up bigger and more technical roles. Iceland being a sparsely populated country in Europe does not have many people who can swap roles in workplaces, compared to bigger countries like China and Japan (CRANET, 2011). For that reason, HRM practices in this economy revolve around improving and developing the available qualified workforce when new roles come up. It is a significant challenge since the cost is a considerable factor in business. Developing leaders is the pride of every organization since it helps in containing secrets and avoiding role gaps before new leaders can catch up (Richard & Johnson, 2007).

Training employees is an excellent idea since it adds up to the body of knowledge already existing in the organization. However, it might not be a pretty good idea to train people without evaluating the effectiveness of the training they are receiving (Younger & Daveulrich, 2013). Training and development is the principal role of HRM, and a lot of costs are incurred during the process. In the European Union countries, Iceland included, only 46 percent of organizations take time to evaluate the effectiveness of their training mechanisms (CRANET, 2011). This mean, 54 percent of the organizations train staff just for the sake of teaching them. Training evaluation is a practice of getting to know whether employees understand what they learn and whether it will be applicable in their current roles (Biron & Christiansen, 2012). Icelanders do not use formal ways to evaluate the effectiveness of training, through weighing performance after and before the training. This is where most organizations fail since training is a cost that should be measured against the results (Aime, Johnson, & Ridge, 2010).

The other challenge that Iceland HRM faces in training and development is a management of change in roles. When employees change positions, it becomes a little bit challenging, especially if they did not go through appraisal training(Biron & Christiansen, 2012). Iceland is still challenged by appraisals, where workers in private and public sector change occupations and are unable to adapt the current positions. Lack of appraisal training contributes to role overlap, where a staff cannot be able to differentiate between their past and present jobs (Mayrhofer, Morley & Brewster, 2010). Organizations in Iceland have not fully implemented formal mechanisms of performance review and appraisals since activities are manually monitored and evaluated (Nelson & McCann, 2010).

Training and development is an investment in the HRM that is aimed at making the workforce better skilled and more prepared to handle issues. However, it becomes unfortunate when organizations do not invest in the practice that is much needed to drive the objectives (CRANET, 2011). Training investment is measured in comparison with the annual level of salaries paid, also known as payroll cost. Iceland training budget on payroll cost is only 3.61 percent (CRANET, 2011).This is to mean that organizations and management in the public sector do not invest the much needed in training and development. The country with the highest percentage is Japan with 11 percent, followed by Russia with 7.5 percent. Looking at those two countries and their workforce productivity, one can be able to understand why the return on investment for labor in Iceland is small. Productivity of workers is determined by several factors, among them, adequate training, fair pay, motivation, better tools, and equipment, as well as conducive working environment (Kobia & Sikalieh, 2010).

Another primary challenge that organizations are facing in Iceland is lack of training and development strategy during the formulation of organizational goals (CRANET, 2011). Only 29 percent of organizations have their training plan well drafted and included in the company vision. Training is not being taken as a critical component. Hence, things are done casually without formal backing. It denies organizations funding for training since it does not seem important to train and develop skills (CRANET, 2011). This figure is too low in an economy, and it clearly shows how organizations disregard the practice of training.

Using the HRM theories, we can be able to address the above-discussed challenges, and find their theoretical explanation (Aime, Johnson & Ridge, 2010). Theories help us in understanding things that may have a relationship and cannot be manually determined. In HRM, there are theories that explain the activities that determine the effectiveness of HRM policies (Sels, Winne & Faems, 2006). Best practice SHRM, the Universalist approach argues that organizations can only benefit from their human resource if put into action best practices within their HRM policies (Kobia & Sikalieh, 2010). In this theory, the best HRM practices must be in a position to improve the general and individual performance of the workforce. These best practices include rewarding, motivation and training (Biron & Christiansen, 2012).

Training is insisted in this theory since it is a way of making human capital better by improving the skills already in existence (Sels, Winne & Faems, 2006). Human capital is termed as the best set of capital an organization can have in its production. In Iceland, this theory can help organizations in realizing the importance of advancing skills within the workforce. The best practices approach ensures that the needs of human resources are integrated with the needs of other business systems, since human capital cannot be avoided. Best practices call for the utilization of technology in training to reduce costs (Sturman, Walsh & Cheramie, 2008).

The resource-based approach is another HRM theory which lays more focus on the internal resources within an organization. These internal resources include the human capital that is possessed by the workforce (Wong & Snell, 2003). The theory argues that by organizations recognizing the importance of human capital, they can be able to improve their productivity with the existing level of other resources (Carmeli & Waldman, 2010). It is possible through the development of skills by training employees and subjecting them to fair working conditions. Skills get obsolete if they are no advancement through regular training. It is due to the ever evolving technology, which requires people to keep learning new ways of implementing organizational strategies and allocating resources. The theory argues that integration of business strategy with HRM strategy is the key to better utilization of human capital (Sels, Winne & Faems, 2006).

The integration is meant to bring the attention that human resources are the best resources that an organization can have (Pfeffer, 2010). Thus, should be maintained, developed, motivated and reasonably exploited. Icelanders need to understand the value of human capital and integrate HRM policies with business strategies in order to benefit the most from workers (Young et al., 2008). The problem of lacking training strategies is addressed by this theory, where the theory advises HR management to seek a space for HRM issues in the formulation of budgets. Training is a cost that cannot be avoided by any goal oriented organization. For that reason, it should be considered like any other business activity since it reduces chances of employees’ redundancy (Carmeli & Waldman, 2010).

In conclusion, training and development are the arms of HRM practices, which tap and nurtures talents within an organization. In most organizations, this method does not seem important. Organizations choose to keep recruiting academically qualified employees and neglecting the experienced staff that they have been having. It is the main HRM challenge that is experienced in the Iceland labor market, where employers do not give training the necessary attention it requires. Using the two theories of HRM, companies can understand the value of human capital and begin to put the best foot forward in training and developing staff. Most of the times, training is avoided due to the cost implication involved. However, with the advancement in technology, employees can learn through technology platform and reduce costs of seminars and workshops.

References

Aime, F., Johnson S., & Ridge J. (2010). The routine may be stable and favorable, but the advantage is not. Strategic Management Journal, 31, 75–87.

Biron, M., & Christiansen, L. (2012). Global Human Resource Management Casebook. New York: Taylor & Francis.

Carmeli A., & Waldman, D. A. (2010). Leadership, performance, and the behavioral context of work groups in a knowledge-intensive setting. Journal of Technology Transfer, 35, 384–400.

CRANET. (2011). International Executive Report 2011. CRANET survey on Comparative Human Resource Management.

Kobia, M., & Sikalieh, D. (2010). Towards a search for the meaning of entrepreneurship. Journal of European Industrial Training, 34(2), 110-127.

Mayrhofer, W., Morley, M., & Brewster, C. (2010). HRM Practice in Europe. London: Routledge.

Nelson, K., & McCann, J. (2010). Designing for the knowledge worker retention & organization performance. Journal of Management and Marketing Research, 3, 1-18.

Pfeffer, J. (2010). Power: Why some People have it, and others don’t. Boston, MA: Harvard Business School Press.

Richard, O., & Johnson B. (2007). Strategic human resources management effectiveness and firm’s performance. International Journal of Human Resource Management, 12 (2), 299–310.

Sels, L., De Winne, S., & Faems D. (2006). Unraveling the HRM-performance link. Journal of Management Studies, 43, 319–342.

Sturman, M., Walsh, K., & Cheramie, R. (2008). The value of human resource, specificity versus transferability. Journal of Management, 34 (2), 290–316.

Wong., & Snell. (2003). Employees’ workplace effectiveness. Journal of Journal Management, 29, 53-69.

Younger, J., & Daveulrich (2013). The State of the Hr Profession. Human Resource Management Journal, 52 (3), 457–471.

Young, M., Ahlstrom, D., Bruton, G., & Jiang, Y. (2008). Corporate governance in emerging economies. Journal of Management Studies, 45, 196–220.