Relationship between Employee Benefits and Employee Satisfaction at Google
This dissertation contains the findings of a research project that investigated the relationship between employee benefits and employee satisfaction at Google. The performance of an organization highly depends on how motivated the employees are as this directly impacts on the efforts of the employees. Satisfied and motivated employees would put in the right efforts that will help an organization achieve the set objectives and goals. Therefore, this dissertation explores the types of employee benefits at Google, employee satisfaction and the impact of employee satisfaction on the operations of Google. This study has centred on exploratory research process rather than analytical research as the topic under research is itself exploratory. The findings presented are based on exhaustive questionnaires and interviews with 70 respondents being employees and remaining 30 respondents being managers respectively.
The interviews were recorded, decoded and analysed using descriptive statistics mainly the SPSS. On the other hand, the questionnaires were issued to the employees and after being filled, they were analysed using the descriptive statistics. The findings in both cases were presented graphically for better and easier understanding. In terms of the sex and age of workers, the study showed that most workers are male with a higher percentage of 55 as compared to the female percentage of 45 although most of these workers are young with an age bracket of 31-40 years. However, 78.3% of employees believe that the various benefits offered by Google have helped motivate them in their duties. Nevertheless, most employees prefer the retirement plan benefits (38.3%) and workers compensation plan (31.7%).
The aim of this dissertation is to conduct an investigation on the relationship between employee satisfaction and employee benefits at Google Inc. The business environment is quickly changing with increased emphasis being put on corporate growth and productivity. As such, job loyalty and satisfaction by employees have received outstanding attention from organizations. To achieve this, employee benefits motivate workers to be retained pending the investigation of the inquiry.
To identify the various form of employee benefits offered by Google
To critically analyse the relationship between employee satisfaction and employee benefits at Google
To investigate the relationship between employee satisfaction and improved organizational performance at Google
1 – Introduction
Background of the Study
2 – Literature Review
Forms of Employee Benefits
Social Security Taxes
Family and Medicare Leave
Role of Employee Benefits
Employee Benefits and Satisfaction
Employee Satisfaction and Organizational Performance
3 – Methodology
Methods of Data Collection
Primary Method of Data Collection
Secondary Method of Data Collection
Sample Size and Sampling Technique
Data Analysis Plan
Ethical Issues in Research
4 – Results
Part A: Descriptive Statistics
Part B: Inferential Statistics
5 – Discussion
To identify the various forms Employee benefits at Google
To critically analyse the relationship between employee satisfaction and employee benefits at Google
To investigate the relationship between employee satisfaction and improved organizational performance at Google
Before discussing the elements of a reward systems, their aims, other issues related to design strategic reward system, reward strategies, implementation of chosen strategy along the evaluation; it seems worthwhile to explain the reward system which would make the discussion coherent. Armstrong (2004:4) explains the reward system in very lucid words as he regards employee reward system, an organizations’ integrated policies, processes and practices through which organization reward their employees on the basis of their skill, competence, their market worth and their overall contribution to the organization.
A reward system could include financial rewards (fixed and variable pay) and employee benefits, which together comprise total remuneration. The system also incorporates non- financial rewards (Recognition, praise, achievement, responsibility and personal growth) and in many cases, performance management processes. The non-financial compensation, financial rewards and employee benefits form the total reward system (Armstrong, 2004).
Aims and Purpose of a Reward System
Armstrong & Murlis (2007) put forward number of aims of reward management/system which are very helpful to understand what businesses want to drive through these reward systems which are as follows:
To create total reward processes that are based on beliefs about what the organization values and wants to achieve;
To reward the employees for the value they have created for the organization;
To bring into line the reward practices with the employee values and business goals and objectives;
To develop the positive psychological contract and employment relationships with the employees;
To reward right behaviours in order to deliver the positive message to the employees that what organization expects from them in terms of outcomes and behaviours;
To win the war of the talent by attracting and retaining the talented, skilled and competent pool of employees that organization need to make the difference;
To gain the commitment and engagement of the employees by motivating them through reward practices;
To cultivate and sustain the performance culture within the organization.
Structural Design Issues of Reward system
There are number of options for the organization to design its reward system because there are number of ways through which rewards are given and distributed among the employees in the organization. The reward’s content dimension or structural dimension denotes the practices (e.g. the performance appraisal forms, and the salary structure), formal procedures and mechanisms (Lawler, 1993). In relation to the structural dimension, there are many issues which organization will have to address, some of them are briefly discussed below:
Market Position- the organizational preference and its market position would influence not only the organizational environment but also the reward strategy. If business wants itself ahead of its competitors, it would rather go for setting the higher pay levels than the competitors. If organization sees its employees less important for the organizational effectiveness, it would be likely to have different reward system (Marchington & Wilkinson, 2005).In conclusion, market position of organization could influence its overall structural design of reward strategy.
Structure- the structural choice of organization also influence the organization overall reward system as what type of structure, an organization wants to pursue whether it would like to have the flexible and broad banded structure or comparatively formal (narrow-banded) and hierarchical (Armstrong, 2004).
Reward Priorities-The organizational reward priorities have influence on the reward system. Organization decides whether it has to limit the reward to the small number of key players only or it wants to share the reward many in the organization in order to support the steady improvement of many (Armstrong, 2004).
Reward Mix- The form of rewards actually shows that what type of culture or environment an organization wants to cultivate and maintain. Whether it wants to give the mix of rewards (base pay, benefits, non-financial reward) or it allows employees to choose their own package (such as Cafeteria-Style Approach) influence the overall reward system (Marchington & Wilkinson, 2005).
According to Armstrong & Murlis (2007:30)‘’Strategic reward management is the process of looking ahead at what an organization needs to do about its reward policies and practices in the middle or relatively distant future’ ’It enables the organization to drive its reward management to deal with the wider business issues for obtaining its long-term business goals (Armstrong & Murlis, 2007).
Reward strategy drives an organization to achieve business goals by developing and implementing the reward practices, processes and policies in order to address critical reward issues in the long-term (Armstrong & Brown, 2006:31). The three reward strategies are discussed below along with their strengths and weaknesses:
Financial Rewards: -A various ways by which a company can gives money to its employees is known as financial rewards. According to Armstrong (2007), financial rewards can be the one of the component that could motivate people in the workplace to work hard and to be able achieve higher standard as these rewards will be only given if the workers are competent in their jobs. These rewards come in ‘Pay packages’ such as salaries, fringe benefits, time-rate pay, commission, performance-related pay and pensions. However, the drawback of the rewards is that the company might not be able to pay the market rate and can be at the risk of losing a worker if the others organizations are offering higher standard of pay mix.
Non-Financial Rewards: -Some businesses find non-financial rewards methods are more approachable when it comes to motivate staff and it involves indirect payments. An achievement, autonomy, recognition, scope to use and develop skills, training, career development opportunities and high quality leadership which concerned with expectations and self-efficacy all are a part of non-financial rewards (Armstrong, 2007). These rewards can boot employee’s confidence and can satisfy employees. The possible downside of the reward could be that the employees can have better opportunities in the competitors company, who are willing to offer financial rewards along with non-financial rewards.
Total Reward Strategy:-According to Manus & Graham (2003) as cited in Armstrong (2006:629)‘’ total reward includes all types of rewards- indirect as well as direct, and intrinsic as well as extrinsic’ ’This strategy is proved to be very successful for many companies who implemented this strategy to motivate their employees as mentioned by Armstrong (2006). This is the holistic strategy in which every aspect of reward practices are employed so employees could gain satisfaction through their work Armstrong (2006). Maintaining the balance in financial and non-financial reward while pursuing according to the organization’s circumstances could be very difficult for the organization which could be regarded as the weakness for using this approach.
Implementation of Chosen Strategy
The chosen strategy of total reward could be implemented as it has number of benefits and it incorporates both the financial and non-financial rewards. Developing reward strategy is easy but implementation is hard. According to Armstrong (2006), implementation initiates the challenge of change management. The guidelines for implementation of chosen strategy which are as follows:
The value in-depth employee consultation should never be undervalued.
Without looking at the return on investment, no initiative should be implemented.
Actions should be taken as required and effectiveness of programmes should be evaluated.
Evaluation and Monitoring of Implemented Reward Strategy
After implementing the reward strategy, through number of ways effectiveness of implemented reward strategy is assessed and evaluated. Armstrong (2010) puts forward number of suggestions to assess and evaluate the reward strategy as follows:
A reward review should be done through gathering and researching from qualitative and quantitative information on the reward practices inside the organization.
By using this information the effectiveness of the delivery of reward goals from various reward practices should be assessed.
The time to time audit should be performed in order to evaluate the effectiveness of the reward investment.
Through reward surveys, employees could be asked and analysed in order to monitor the effectiveness of the implemented reward strategy.
Motivation and Reward Practice
One cannot separate the process of motivation and the reward practices. It is very essential to comprehend those factors which motivate the employees and it would be recommendable for the organizations to design their reward strategies and practices in the light of those factors in order to increase performance of employees throughout the organization. Practical guidance is provided by the motivation theories in developing the reward systems. The theories of motivation tell that what factors exactly encourages individual, or group of employees to adopt something behaviour or to do something differently. These factors guide the human behaviour and could affect their efforts to do something (Armstrong, 2007). So, designing reward practices in the light of motivating factors could be very beneficial and effective.
Process Theory of Motivation and Reward
Porter & Lawler (1968) modified Vroom’s Expectancy Theory (1964) as cited in Morris & Vascular (2005:8) expectancy theory of behaviour. Bartol and Locke (2000, p. 111) as cited in Morris & Vascular (2005:8) state that expectancy theory “…holds that people make choices based on (1) their expectancy that their efforts will lead to a certain 8 level of performance, (2) their belief that their performance will lead to valued outcomes (instrumentality) and (3) the degree of value they place on those outcomes (valence).”
Expectancy theory underpins best fit thinking because it provides a design framework so that each element of a reward system can be used to the element’s best advantage. Lawler’s (1995) as cited in Morris & Vascular (2005) new pay model provides guidance on what behaviours to measure. They must be linked to organisational strategy. However, Lawler (1981, p. 22)as cited in Morris & Vascular (2005:8) emphasises in an earlier work, the importance of the implementation process when he states: “In order for employees to believe that a performance-based pay relationship exists, the connection between performance and rewards must be visible, and a climate of trust and credibility must exist in the organization.”
The measurement of performance is a critical characteristic of ‘new pay’. Armstrong (2002) as cited in Morris & Vascular (2005) emphasises the need for a robust performance management process. Schuster and Zingheim (1992, p. 210) as cited in Morris & Vascular (2005:8), states “measurement is the core of new variable pay because it provides the justification for sharing performance improvements with employees.”
Content Theory of Motivation and Reward
Best practice advocates rely on content theories of motivation as the basis of their reward systems. Herzberg (2003, p. 91) as cited in Morris & Vascular (2005:8) found ‘…that the factors involved in producing job satisfaction (and motivation) are distinct form the factors that lead to job dissatisfaction.’ Motivators, the source of job satisfaction, are intrinsic to the job including ‘achievement, recognition for achievement, the work itself, responsibility and growth or advancement.’ (Herzberg, 2003, p. 92) as cited in Morris & Vascular (2005:8) Hygiene factor, including salary, are extrinsic to the job and are a potential source of job dissatisfaction.
Performance Related Pay
Provision of financial rewards in terms of increment in the basic pay or any cash bonuses after assessment of the individual’s performance against the set objectives is regarded as performance related pay (Armstrong, 2002). Research and surveys show the both negative and positive aspect of the performance related pay.
One survey showed that, 14% respondents have opinion that PRP has made the fairness worse, 67% respondents have opinion that it conveys the message of clarity regarding performance of organization, while 57% respondents thinks it is fair to be get rewarded by performance related pay (Armstrong, 2002). However, study of IPM in 1997 found no relationship between the performance-related pay and the enhanced organizational performance (Armstrong, 2002).
When decisions are being in regards to the type of reward system, the main strategic decision that needs consideration is whether or not the reward system will be made on the basis of performance, which allows most of the reward systems feature to fit into the right places. However, it could also be based on seniority. In most government agencies, the pay rates are based on factors such as the roles of the employee and the length of their service. Although, in Japan, seniority is mostly used to decided individual pays, employees also receive bonuses based on the performances of the corporate (Lawler 1993).
According to Milkovish and Wigdor (1991) as cited by Lawler (1993), in America, most businesses use individual performances to reward its employees using the pay system and promotion system which is known as merit systems in America. Although it is believed that having a merit pay or promotion system in place helps businesses stay organised but according to Kerr (1975) as cited in Lawler, (1993) it is better to keep pay and promotion separate from performance and find ways to improve performances of an individual. There is a lot of evidence (Whyte, 1955; Lawler, 1971; Schuster and Zingheim, 1992 as cited in Lawler, 1993) that suggest that having a merit system could be harmful.
In order to improve team work and produce integration, organisational and group bonus plans have proven to be effective. A group and organisational plan means that everyone contributes towards the financial results of higher performance. Therefore, an individual work effectively and efficiently as everyone support, empower and encourage each other. People are more likely to empower and support others workers if they feel their performance would benefit them which is less likely to happen under individual plans as it increase competition and differentiation (Lawler 1993).
There are other factors that could arise from using performance based reward system such as poor practise, small rewards and failure to explain the system. Nevertheless, it is hard to determine whether or not pay should be based on performance as there is a lot of evidence to support the system. In conclusion, the negative impact of having such systems should not be overlooked (Lawler 1993).
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“With reference to relevant IHRM theoretical and research material, critically analyse ways in which IHRM is shaped by institutional and cultural/societal factors. How can firms balance the need for global integration of HR strategies, policies and practices with the pressures to adapt to host country requirements?”
The rise of globalization has brought in many changes across the world and has significantly impacted how businesses operate on a global level. Globalization is the process for achieving international integration that results from sharing of ideas, products, services and other such areas of culture. With globalization arises many other concepts touching upon various spheres of life and there are no hard and fast rules with regard to globalization. The process of globalization involves economic integration, the sharing of knowledge and information between countries, power discourse and cultural strength. It is looked upon as a platform for global free market that is devoid of any socio-political influence and brings about exchange of cultural and national resources across boundaries (Al-Rodhan, 2006, p. 1).
Globalization has attained its peak over the past few years as it promotes free trade. Exchange of goods and services have been leveraged in many ways and the transportation cost is low. Corporations functioning in developed nations across the world are able to get cheap as well as efficient labours from developing nations. On the other hand, the developing nations are benefitted with the huge surge in job opportunities and infrastructural development. Proponents of globalized business strongly believe that it is a mutually beneficial arrangement and leads to the upliftment of both sides on many fronts (Robertson, 1992).
While the concept of Globalization has turned out to be the best option for organization in many ways, it struggles when it comes to the most important internal function, human resource management. However, globalization has got its pros and cons. Organizations are struggling to create and implements Human Resource Management policies that fits into the global as well as domestic market. Corporations also need to face the pressure of integrating various HR strategies, processes and practices with that of the host country. This paper will analyse the impact that societal, cultural and institutional aspects have over International Human Resource Management and how the firm balances the whole integration process.
As provided in the website Business Dictionary, an Organization can be defined as,
“A social unit of people that is structured and managed to meet a need or to pursue collective goals. All organizations have a management structure that determines relationships between the different activities and the members, and subdivides and assigns roles, responsibilities, and authority to carry out different tasks.”
In order for a smooth functioning, the different members belonging from different cultural, societal and political background should come together and needs to work towards the common goal of the company. This is possible only with the help of well integrated international human resource strategies.
Institutional impact on IHRM
The institutional factor has a huge impact on the International Human Resource Management and it needs to be understood that the impact can be both external and internal. External institutional sources include the political set up of a country, legislation, national culture and local custom. Internal institutional impact is at the managerial level, corporate culture and strategies. The organization which is doing business with a host country company needs to comply with the rules, laws and regulations region and should set up a HR policy based on this factor. The distinction in the laws could amount to an altogether different approach on rules related to human resource and the main organization located in a different country should set up a code of conduct that is in sync with the host country. By taking an institutional perspective, the organizations need to adapt to HRM rules of the country in which they are doing business with. By standardizing the HR policy and practices according to the host country requirements, organizations are able to operate businesses smoothly (Svendsen, 2011, pg. 3-8).
The political set up of a particular country has got a significant impact on organization and its principles related to human resource management. There are various levels of operation and those countries that support liberal economics are the ones that derive maximum benefit out of it (Crouch and Streeck, 1997). Organizations would go for countries that supports liberal economics as they have the freedom to manage, provided with the option to bring about short term competition, training is considered important, payment could be made as per the performance of the individual and there will be flexibility as to the employment and deployment of staffs. In such an economic set up, the organizations are provided with complete freedom as to the business operation (Scullion, 2007, pg. 309-319).
This is a completely different scenario when it comes to CME countries as such countries give importance to long term performance rather than short term strategies. It ensures to develop product and service innovation and development of skills. Employees are placed in regular training and skill development program so that they achieve the necessary skill sets to meet up with the current day requirements. The Human resource principles are created in such a way that it provides for job security, invests on training the employees and other such areas.
Cultural and Societal impact on IHRM
The cultural impact on IHRM is considerably high. It needs to be understood that both the countries doing business with each other comes with a completely different cultural background and it is important for countries to understand the cultural difference and work towards setting up an IHRM policy that does not disturb the present cultural set up. The ways one dresses to the work ethics they follow are completely different in the two countries and it is necessary that companies be well aware of this before doing business. The cultural impact on an organization can never be ignored and it needs to be looked upon in the initial stage itself in order to prevent any sort of issues in the future. A proper code of conduct developed between the two countries will enable the smooth operation of business (Scholte, 2005).
There are certain practices of an organization are known to be derived heavily based on the culture of the country. The organizational structure that a company goes for is based on the culture of both the countries. It could be consultative set up or that of an authoritative set up and it could be some other structure that is new to the field. The next important area that culture comes into IHRM is recruitment. Recruitment could be done based on recommendations or a series of test, interview process. Gender difference is yet another important area that is touched upon when it comes to cultural impact. Certain countries may restrict certain terms of work condition when it comes to woman and the company needs to go by it. There could be restrictions as to time and the nature of work they carry on.
Based on the culture of a country, individual or collective group, the remuneration part is finalized. From this, it could very well be understood that cultural differences have a significant impact on the International Human Resource Policy and this aspect should never be taken slightly. There need to be a clear distinction with regard to the cultural variations of the two countries so that it becomes easy and simple to form regulated and balanced human resource management principles (Hofstede, 2001).
Having understood the kind of impact that culture has over the framing of human resource principles, the kind of impact that the societal setup of a country has over the IHRM policy should never be underestimated. Society is a collection of people from diverse backgrounds and it is regulated by way of rules and regulations in order to maintain order. The societal set up of the organizational country and host country turns out to be different altogether and it is imperative for the countries to develop an understanding over this area. The societal needs and differences should be brought together and a streamlined human resource management policy should come up. There are some activities and behaviour that accepted in one society whereas it is not taken easy in the case of another society. IHRM areas like long term orientation and continuous skill development is possible in countries that provides for a stable and streamlined society (Jing, 2010, pg. 43).
It is applicable to various areas of life including dress code, working hours and so on. The societal differences touches upon some of the most crucial areas which includes employment training and development, appraisal, working conditions, the right and regulations followed by people who are working in the different country set up. This same principle needs to be followed when it comes to developing an organization human resource policy for the two different countries with different societal set up.
To conclude, we can understand that the institutional, societal and cultural differences has a significant impact on the International Human Resource Management policy developed and practiced by an organization. It needs to be understood that every society has got its own culture which leads to the development of a particular institutional set up. These three main aspects are interlinked and can never be ignored when setting or framing a human resource management policy that works perfectly for the countries. Both the host company and the company that is giving business should be able to work in coordination with each other in order to balance any sort of pressure that may arise from the venture.
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To adapt to new demands and ensure business success, organizations have initiated profound processes of transformation, aiming to add value to its shareholders (stakeholders), customers, employees, suppliers, ultimately the entire value chain. The central point of this value chain lays with peoples especially employees of the organization. If technology demands change in core business processes, it also expects to change in the traditional methods of dealing organizational human resources (Dunn, 2010, pp. 02).
A contemporary vision of people management, assumes that the world is changing, people are changing and hence the organizations are in the process of change. Just as people today have more and better access to information, knowledge, new technologies, companies are also changing their old concepts or paradigms in constant learning process. The learning organizations understand the importance of their employees and for them it is often necessary to unlearn in order to learn.In the management of people, the need for change is constant and urgent. The old paradigms of the industrial era and the military model for management of people has completely transformed and the contemporary era of knowledge, cooperation, sustainability and the new information technologies has taken place in modern business organization (Pučėtaitė et al., 2008, pp. 325).
Traditional human resources practices revolve around employee motivation and satisfaction and his performance. But with the rapid changes in business environment and phenomenal growth of technological advancement, such methods become incapable to produce the results. Contemporary People Management (CPM) has provided the solution. CPM has gone ahead of merely satisfying employees to making them satisfied. An organization with contemporary vision of Personnel Management, has strategic clarity inmaking the mission, vision, values and objectives and is assimilated and practiced by all employees consciously and unconsciously creating an alignment and cooperation among the employees (Pinnington et al., 2007, pp. 267).
Employee Satisfaction Discussion
In postmodern business environment, moral values and ethical standards have become increasingly complicated. This has affected the practices of HR, where a decision by HR manager can significantly produce drastic impacts on people’s job and their future employment opportunities.
The practice and theoretical framework of Human resource management is facing several challenges and most important of them are globalization challenge, HR innovation challenge, the sustainability challenge and the challenge of attracting and retaining people. These four challenges can be transformed into a competitive strength of the organization through CPM (Bartram, 2010, pp. 26). The challenge of HR innovation itself is a course to achieve Contemporary people management. Now business organizations are moving towards knowledge management, which include the transformation of techniques, processes, structures and systems, which can lead to the creation and sharing of knowledge throughout the organization. Resultantly, Global knowledge economy starts to develop which helps to increase the knowledge about different cultures, globalization process and intensify the knowledge about production processes. Australian federal government has since 1970 supported and implemented several such schemes and proposals which help to internationalize Australian business.
Changing business practices and innovation in HR practices and policies has created different ethical dilemmas. HR does not take place in isolation. It affects the life of employees and the ethical consideration of organization as well as of HR manager hassignificant impact of the performance of the employees.As the process of internationalization has started to increase its pace, we can see the dominance of neo liberal moral and ethical standards, which are regulated by a balance between alternative ends and scarce resources. It is simply based on utilitarian approach in order to select best method for the maximum number of people. When interests of people are satisfied with the help of common good, it will produce environment of return of favour.State of common good that can be achieved through utilitarian approach, not only benefits employee but it also produce good results for organization (Klikauer, 2012, pp. 74).
Several ethical theories have elaborated the impact of ethical principles on business practices. Utilitarianism approach is rooted in consequentialism and according to it; the rightness or wrongness of our action is described best by the consequence of that action. An action is said to be morally right if it has produced satisfaction to the majority of the people. In consequentialism, there is no universal moral standard unlike virtue ethics. But it depends on the situational awareness and the will of the majority of the people. Some critics believe that it has some demerits and in extreme cases, the will of the people can be unjust and illegitimate.Despites its flaws business manager apply utilitarian approach in their organization because this propagates the goodness of the people at large (Greenwood, 2013, pp. 357).
The concept of utilitarianism has subjective matter and it is very difficult to determine accurately the level of maximum utility.It involves situational assessment and awareness and considers only available information. In this situation, it is difficult to evaluate the impact of decision based on utilitarian in long terms aspect. Similarly, it is very difficult to accurately determine the majority of people. So like other ethical and moral standards, utilitarianism has some weaknesses (Audi, 2007, pp. 596).
The objective of the management is to produce a satisfied employee so that he/she can perform better and an organization can produce profit. Well-being of the employee in this case is a mean to an end but it is not an end itself. However it does not simply mean that an organization is interested in the wellbeing of employee, but it is more interested in a productive employee. Utilitarianism approach does not simply mean that producing greatest good for the large number of people, but it motivates management to produce satisfaction among the employees. If 10 per cent annual increase in the salary fails to bring any kind of satisfaction within the organization, it simply would be rendered as increase in the cost of organization.In the context of utilitarianism, bringing satisfaction is not the total objective of the management, but satisfaction principle in ethical model is to prevent employees from any damage or problems. Power can only be exercised on employees in the situation so that harm to the majority of the people can be avoided.In this way, management creates a civilized community within the organization (Klikauer, 2010, pp. 51).
We have seen the paradigm shift in the practices and policies of traditional human resource management. In classical human resource management, employees were considered as a liability where as in contemporary people management, employees are regarded as an asset.As the organizations are moving towards learning organization and are based on knowledge, highly educated and independent employees demands cooperative attitude and no longer they are considered for granted. This trend demands in operational procedures of HR. classical HR practices cannot boost the performance of such employees and the sharp edges of traditional HR practices, in result are have been removed (Van Marrewijk et al., 2003, pp. 175).
Contemporary practices of HR has taken strategic position among the organization and is regarded the change agent and facilitator for transformation and restructuring processes. It has manifested itself as a strategic partner between the employee and organization. Modern practices of HR are based on knowledge and constant learning process. It pays individual attention on human asset management, human culture management and human potential management. Cultural diversity is no longer regarded as a problem. Contemporary human resource practice transformed cultural diversity into a strength through strong communication skill and motivating their employees to seek knowledge from different cultures (Worland &Manning, 2005, pp. 07). Traditionally, HRM works closely with the bosses and managers but contemporary people management works closely with employees. The role of HR practices has changed. Now making employee satisfied is not sufficient and efficient for business managers. Employees need to feel the real satisfaction and they all should be prevented from harm and injustice. Utilitarianism approach of satisfaction for all has become the central point of contemporary people management.
We can safely conclude that HR has occupied the strategic position in the organizational structure and conventional methods of HR are no longer effective to accommodate the needs of employees as well as organizational objectives.It should not be implied that the classical HR framework and practices have completely become useless and obsolete, but it has provided a basic structure for contemporary people management. Because organization itself is nothing without employees and he/she is an active agent of transferring raw material into a finished good, he/she must be satisfied and happy, so that his performance bring satisfaction to organization and its customers.
Postmodern economy is based on knowledge and learning. Organization that understand the importance of knowledge, keep on changing their HR policies.The classical concept of employee’s high performance with lowest cost of employees has failed to fulfil the business objectives. Employees are no longer regarded as liabilities. They are considered the asset and the value of the asset increase with the time. satisfaction of employees has preceded employee satisfaction. This demands changes in the ethical values of organization. It is through Utilitarianism approach that the goodness of majority of the people can be achieved.It becomes the duty of the manager to increase the total volume of satisfaction of employees. Similarly, utilitarianism approach encourages all those actions which can produce wellbeing for the majority of the people.
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A Comprehensive Definition of Organization Development
The theory of Organization Development relates to an organization’s process and efforts to change the organization for the better. The process includes several steps that must be performed as a continuous cycle to keep the organization at its most efficient in order to achieve the goal of ongoing success.
Organization Development is an organization’s ongoing exercise in planning processes that span the organization, in order to execute effective change in the organization. This process includes a diagnosis of how the organization and its employees function harmoniously or not. This is followed by identification of the specifics of successes and failures within the organization through data analysis. Armed with this information, planning for necessary changes within the organization may begin. Once a plan is in place, it must be executed. Finally, after this implementation, the organization must again make assessments to determine if the desired change was realized. Organization Development is not a one-size fits all solution for an organization, nor is it a singular process; but one that is ongoing and continually adapting to achieve organizational success.
Organization Development Opportunity
Often Organization Development begins in an organization when an opportunity for improvement is acknowledged by management and a positive change is sought. The function of Organization Development is to focus attention on improving the abilities of the organization and its employees to allow the organization to make positive changes from within to achieve its ultimate goal of success. Whether an organization utilizes the contracted services of an OD practitioner from outside or an OD practitioner that is already on its team, the functions and processes along the way will be similar. The first step taken is known in the Organization Development world as entering and contracting.
Entering and contracting is very much as it sounds. It starts with making clear the organization’s issue that needs improvement, deciding who will represent the organization in the process, and choosing an OD professional that is equipped with the appropriate experience and know-how to guide the process within the organization. Following these decisions, comes the contracting phase, in which, the parties involved establish how the Organization Development process will move forward. Roles are determined, expectations are stated, timetables are determined, and rules are outlined. This phase can be as formal or informal, depending on the desires of the organization, but most organization find that the more detailed the contracting phase the more likely the process is to stay on track and be successful.
After the entering and contracting phase is formulated, the second action to be performed is known in OD as diagnosing. This process is the examination and determination of how the organization is functioning in the present – right now. The OD practitioner and the organization’s team collect the relevant data via interviews, surveys, observations, and reports. Once the data is collected, it is analyzed through the lens of the appropriate diagnostic models which help to recognize and identify trustworthy data. There are several diagnostic models that are commonly used; diagnostic models including the Open System, organizational-level, group-level, and individual level. The OD professional must make the selection of diagnostic model that is most significant and will yield the most advantageous information for the organization. Ideally the model will be selected prior to the data collection so that the data can be collected more accurately, but the data collection can be done and then paired with the most effective diagnostic model. With this fresh data and subsequent analysis the OD practitioner and the organization team can determine what is working well and where improvements are needed. From this diagnosis, the necessary intervention can be developed.
Organization Development Planning
The Organization Development intervention is the development of the plan to be used to generate change that will allow the organization to improve both the organization and its employees and develop more positive interaction between the two in order to drive success. In order for the Organization Development to be successful, the intervention must suit the needs of the organization, founded on fundamental knowledge of the desired results, and be assured that the change-agent can convey the vision to all of the members of the organization. Intervention, execution, and change management must go hand in hand. The fitting intervention must be found for the unique organization from among the four major types of Organization Development intervention: Human Process, Techno-structural, Human Resource Management, and Strategic. After the suitable intervention is chosen, the OD profession must be alert to the organizations readiness and ability to make the changes, the cultural environment’s potential influence, and the expertise of the change agent. Once the execution of the intervention has begun, the process of transition requires close attention and must be carefully managed so that the change momentum can be maintained and resistance to the process can be overcome. As these guidelines are followed, Organization Development can be the coordinated transition by which an organization accomplishes effective and lasting change.
The final stage of Organization Development is the evaluation of the implemented changes and their potential incorporation (known as institutionalizing) into the organization. At this point feedback is gathered and evaluated to determine if the desired outcome for the organization’s improvement has been successfully achieved. If the desired outcome has not been achieved, the OD practitioner and the organization team must return to the previous steps and go through the process again until anticipated result is accomplished. If on the other hand, it is found that the change is effective, the changes will then be made a permanent function of the organization. These changes must become a part of the shared culture of the organization bringing the organization and its employees together. As employees are included in these positive changes, they become more dedicated, more loyal, and ultimately more flexible as change is implemented. With the leadership of the organization and the organization’s employees on board with the institutionalization of the changes; the ultimate goal of organizational success is achieved more efficiently and more rapidly.
The Organization Development process typically begins when someone, management or employee, uncover a need for improvement within the organization. The anticipated results of the OD process are to accomplish positive change for the organization and the employees; as well as any stakeholders related to the organization. For the process to accomplish a best case scenario outcome, everyone within the organization needs to back the process. The OD process begins with the entry of an OD professional, either internal or external, and outlining of the contract between the organization and the OD practitioner. The diagnosis phase follows with information gathering and analysis in order to formulate an intervention. With a plan in hand, the OD professional and the organization team implement the recommended changes within the organization. After the changes have been implemented, they are analyzed again for effectiveness and the determination of their success or failure. If successful, the OD intervention changes become a component of the function of the organization. It is evident that the Organization Development process is unique to each organization, customized just for it, and a process that must be ongoing and adapting constantly to keep the organization moving forward successfully.