Human Resource Management Initiative and ERP †Free Samples

Question: Discuss about the Human Resource Management Initiative. Answer: Introduction Human resource management Human resource management is a relatively new approach that has gained importance in the past few decades and has brought a great revolution in the business world. Human resource management aims at improving the performance of the workforce and achieved it by developing better relations between employers and employees and promoting a better environment for the employees to work in (Hendry, 2012). Today, business organisations are spending billions of dollars every year in the management of their human resources because human resources have become an important asset for all business organisations. The investment in human resource is made with a hope that the business originations will be able to achieve market competencies by developing their human resources and increasing their competencies. Even in such tough market situations, where the market competition has reached a global scale, organisations have started feeling scarcity of resources but are always ready to invest these resources for the development of their human resources because they are heavily relying upon their human resources to help them in preforming better than the competitors (Armstrong Taylor, Armstrong's Handbook of Human Resource Management Practice, 2014). Thus, it becomes important for business organisations to measure the return on investment which they receive by allocating important resources to the ir human resources. Business Case ABC Company Pvt. Ltd. is a multinational manufacturing company based in Australia. The company was started in 1987 and has its foreign subsidiaries in China, India and Vietnam from where it outsources all the manufacturing process and assembles the final products in the headquarters (Australia). ABC Company Pvt. Ltd. has an approximate workforce of 850 employees that help the company in carrying out all of its operations. The company has been preforming well since its foundation but has started losing a significant portion of its market share of late. The loss in market share can be attributed to the companys orthodox work practices as the most of the departments in the company are still using multiple softwares to plan, monitor and analyse the work operations. The company has been conducting a lot of research in this area and has concluded that to remain competitive, it will have to implement an ERP business suite throughout its subsidiaries that will enable them to carry out their operations with more efficiency (Oseni, Rahim, Smith, Foster, 2014). The management of the company has finally decided to invest in the acquisition of an ERP business suite that will be tailored to the needs of the organisation and will cover important functional areas, such as human resource management, supply chain management, customer relationship management, financial management, production management, etc. but a major issue that the company is facing is to design and implement a training and development program that will be aimed at increasing the skills and technical efficiency of employees in using ERP business suite (Jain Sharma, 2016). Due to tough market competition and scarcity of resources, it is important for the company to allocate its resources towards the right business programs because a wastage of investment will not only make the company incur losses but also might throw it out of market competition and make it difficult for the company to sustain in the market for a longer period of time (Armstrong Taylor, Armstrong's Handbook of Human Resource Management Practice, 2017). To check whether the initiative is feasible or not, the company has planned that it will conduct a thorough cost-benefit analysis and check the return that it is likely to receive over a period of one year on the investment that it will have to make to fulfil the training and development program. Human resource management initiative The human resource management initiative that ABC Company Pvt. Ltd. is planning to undertake is the training and development of its employees so that they can become familiar with a new software that will be implemented in the workplace within a short period of time. Training and development is one of the most important core functions in human resource management that aims at improving the skills and competencies of the workforce so that they can cope up with the changing market trends (Jehanzeb Bashir, 2013). In this business setup, it is important for the business organisation to arrange for a training and development program that will help the employees in learning how to operate the new software and use its various tools and functions to carry out the business operations with a greater efficiency than before. The employees are going to be the end users of the new software, which makes it obvious that they should know how to operate it and also have knowledge about the errors or issues that might come up while using the software. In case the workforce is not comfortable with the software, the entire investment would go in vain and would even cause collateral damages to the company, such as loss of productivity, failure of supply chain managem ent, etc. The details of the training program are given below: On the job training and development sessions that would last for a month The employees will be trained for one hour during their work hours Professional support and software engineers will train the employees The employees will be taught how to use the software and deal with some major and minor errors that might occur while carrying out day-to-day operations Apart from training the employees for the software, the professionals will also conduct social activities and team building activities to help them understand the importance of team work and a team oriented environment (Phillips Phillips, 2016) The training sessions will also include simulation activities where the employees will be given practical situations to deal with A batch of 85 employees will be trained at once A total of 10 batches will be trained everyday The professionals will also help the employees in transferring the learnings from the training program to their jobs and will visit the company every week (for 1 month after the end of the program) to help the employees with any issues that they might be facing while using the software post-training. The training cost or the training fees will cost $600,000 to the company, which will include training and development of 850 employees over a period of one year and all the material that will be required for training the employees, such as papers, documents, books, study material, etc. The management at ABC Company Pvt. Ltd. is now planning to calculate a return on the investment and a cost-benefit analysis that it would achieve through the training and development program which it is planning to implement for the employees, so that a better view of the entire business decision can be achieved. Cost-benefit analysis Cost-benefit analysis is a process that allows business organisations to carefully analyse their decisions in terms of cost involved and the benefits that will be achieved. It is an approach in which the benefits of a business situation are analysed and then the cost associated with taking that action are subtracted. For this particular business case, the cost-benefit analysis will be analysed for a period of 1 year since the commencement of the training program. The cost incurred in a training program can be described as: The cost incurred towards the assessment of training needs, compensation of the training program designers, investment made in the acquisition of training material, computers, handouts, etc. The main cost of the training program i.e. the fees paid to the training organisation and professionals The third and one of the most important costs of a training program is the loss of working hours that will be caused due to the employees missing their work for a specific period of time to attend the training sessions (Cost Benefit Analysis for Training, n.d.). The cost incurred in this training and development program are given below: The main cost of the training program - $600,000, which includes an assessment of training needs, procurement of training material and the fees that will be paid to the training organisation. The loss in working hours of the employees will cost the company around $100/hour. The cost here is significantly reduced because the workforce will be divided into smaller groups and will be trained for one hour. When a particular group of employees will be attending the training session, the other groups can handle their work for the time being. On the overall, the company will have to bear a cost of $100/hour or $1000/day or $30,000 per month. In short, the loss of working hours will cost the company $30,000 in the entire training program. Total cost of the training program = $600,000 + $30,000 = $630,000 If the company will invest such a high amount in training and developing its employees, there must be certain benefits that the company aims at achieving through the training program, which will help the company in evolving in the market and becoming more competitive. The benefits of the training program are discussed below: The company will definitely be able to achieve an increase in its productivity and efficiency by helping the employees in becoming more competitive. The efficiency and productivity benefits will be around $50,000/month ($600,000/year) in terms of increased production, increased customer satisfaction and increase in sales due to streamlined operations and better quality products. The company will also be able to save a lot of resources that were earlier being wasted because of effort duplication. The company will achieve benefits worth $10,000/month ($120,000/year) in terms of saved resources The company will be able to increase the competencies of its workforce and will also be able to engage and retain them for a longer period of time. The monetary benefits of reduced labour turnover rates, better employee engagement and satisfaction levels will be approximately $2,000/month ($24,000/year) The company will be able to grab a greater market share and will become more competitive because of an increase in its workforce competencies. The benefits of this will be approximately $5,000/month ($60,000/year) Miscellaneous training and development benefits, such as increased team work, will be $1,500/month ($18,000/year) The total benefits that the company will be able to achieve through this training program in a single financial year are = $600,000 + $120,000 + $24,000 + $60,000 + $18,000 = $822,000/year From the above cost-benefit analysis, it can be clearly seen that the training program is highly beneficial for the company and will definitely provide the company with a competitive edge in the market. Return on investment model Return on investment, also known as ROI, is a model that helps business organisations in calculating the return that they will achieve by investing a certain amount of money in a specific program (Satiman, Mansor, Zulkifli, 2003). ROI helps business organisations in identifying the right investment opportunity by comparing the rate of return of different programs. The formula used for calculating the return on investment for a particular program is given below: Rate of return (in percentage) = (program benefits/costs of program) * 100 (Cost Benefit Analysis for Training, n.d.) The return on investment for the training and development program that the ABC Company Pvt. Ltd. is planning to implement in its workplace is given below: Rate of Return = (822,000/630,000) * 100 = 130.5%, which means that for every dollar invested in the training program, the company will receive an approximate return of $1.3 above the cost of the training program. Evaluation From the above cost-benefit analysis, it is evident that the benefits of the human resource management initiative being planned by the organisation will far outweigh the cost of the entire training and development program. The company will receive a return of 130.5% on the investment that it will make in training and developing its employees over a period of one year. To sum up, the benefits of the training program are listed below: A competitive workforce that will be able to use an ERP business suite to carry out various functions and operations of the business organisation A workforce that would understand the important of team work and will be comfortable in working as a team An increase in the level of employee satisfaction and competencies because of the training program Increased job satisfaction, job engagement, job commitment and organisational commitment Reduced employee turnover rates and absenteeism Streamlined operations Greater efficiency and productivity due to digitisation of operations Less wastage of resources due to reduced duplication of efforts A competitive edge in the market Critical Reflective Analysis Even though there were a number of problems in finding out the right costs and benefits related with the training and development initiative being planned by ABC Company Pvt. Ltd., on the overall, the report has been greatly helpful in understanding the importance that cost benefit analysis and return on investment play in a business set up. In the present day business world, the competition has reached a global scale and the resources available to business organisations are also scarce, which increases the importance of investing the right amount of resources in the best available options so that the companies can ensure a sustainable position in the market for a longer run. The business case of ABC Company Pvt. Ltd. is helpful in understanding the way in which a cost benefit analysis and a return on investment approach can be used to identify the positive outcomes of a project. The case is also helpful in understanding that business decisions can become better when the cost involve d is weighed against the monetary as well as the non-monetary benefits of a project. After preparing this report, to become competitive and to ensure success in the market, one must analyse each and every business opportunity using a cost benefit analysis and a return on investment model so that the project that can bring the highest return on investment is passed. Comparing the cost-benefit analysis and the return on investments of different initiatives can help in understanding the feasibility of each initiative and choosing the best imitative out of multiple initiatives. Bibliography Jehanzeb, K., Bashir, N. A. (2013). Training and Development Program and its Benefits to Employee and Organization: A Conceptual Study . European Journal of Business and Management , 5(2). Cost Benefit Analysis for Training. (n.d.). Retrieved May 05, 2017, from www.managementstudyguide.com: https://www.managementstudyguide.com/cost-benefit-analysis-for-training.htm Nas, T. F. (2016). Cost-Benefit Analysis: Theory and Application. Lexington Books. Rackley, J. (2015). 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