topics in hr asstopic: human resource management practice and institutional constraints: the case of...

7/27/2019 Topics in HR AssTopic: Human resource management practice and institutional constraints: The case of Africa

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Running Head:Topics of Human Resource Management BUS 9300 1


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Running Head: Topics of Human Resource Management BUS 9300

Topic: Human resource management practice and institutional constraints: The case of

Ghana

Introduction

The human resource is the most productive of all resources, the most versatile, and the

most resourceful. The purpose of this study is to explore the nature of contemporary HRM

practice in Ghana, and the extent to which "best practice" HRM strategies are likely to

emerge, given present institutional realities.

Background to the Study

An enterprises wealth does not depend on the financial and material resources

available but rather on the people who make things work. It is therefore important for owners

and managers of firms to understand how best to manage this most resourceful; human

resource of the firm.

Within the developing world; given the weakness of regulatory institutions in many

national contexts, and an inability or unwillingness of governments to intervene on the behalf

of domestic industry in the face of intensified global competition it is likely that firms will

find it particularly difficult to adopt policies that entail significant investments in people and

supporting infrastructures that do not result in short-term benefits. Therefore the contributions

of the institutional framework is key is the growth of every industry.

How the presented literature reviews relates to various learning objective of the course.

LO 1 - Synthesize the need for human resources in relation to the strategic direction

of the business and the role of human resources management in strategy formulation

The practice of HRM in Africa has been based on procedural and administrative tasks

such as salary and benefits, employee relations, absenteeism and grievances among others


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(Akinnusi, 1991; Taylor, 1992). This assumption limited HRM issues to an operational

dimension at the expense of its strategic approach which should have viewed the employees

as the most valued assets of the organisations. Added to this is the fact that organisations in

Africa appear to adopt a reactive approach to the hostilities in the environment thereby

neglecting the know how and expertise that HRM brings to the table (Kamoche 1997)

Clearly, the above points emphasize the strategic importance the authors placed on the

human resource management and went ahead to suggest that most organisations are not doing

well in Africa because they had place lesser value on their human resources. This means that

the importance of HRM practices is universal and that geography does not matter.

However, there is a growing awareness to formulate and pursue HR activities such as

recruitment, selection, rewarding, performance management, training, and development in

line with the mission and strategic objectives of firms (Kamoche, 1997).This approach,

appears to recognize the critical nature and role of the employees in organisations as strategic

partners in a challenging competitive environment.

Those same points raised by the above authors also sits well with the learning

objective two which states thatPropose how human resources practices can and should

contribute to business goals and help to improve the quality and effectiveness of the

companys product or services.

Ghanaian Context

The rest of the literature tried to look at the various issues in Ghana since the intended

study was case specific.


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Ghana like many African countries has gone through a number of socio- economic

reforms since Independence in 1957. These reforms began with state led economic activities

through to the Economic Recovery Programme in 1983 to HIPC in 2001. At independent, the

philosophy was that government has a business to be in business because the indigenous

private sector could not be trusted (Asante, 2000) to lead the economy to prosperity. The

private sector in Ghana just like some developing countries was therefore perceived as

exploitative of the poor (Prahalad 2009). In the introduction to the Seven- Year Development

Plan, it was stated among other things that Ghana has chosen a socialist form of society as an

objective of her social and economic development which is based on the belief that only a

socialist form of society can assure Ghana of rapid rate of economic progress. Thus, the

economy must be developed rapidly and efficiently so that within the shortest possible time

assures a high rate of productivity and high standard of living for each citizen. Never must

public want and private affluence be allowed to coexist in Ghana (Seven Year Development

Plan 1963/64; 1969 -1970:1-2) These led to a large number of government enterprises from

textiles and garment factories through transportation to distilleries. Unfortunately many of

these enterprises collapsed due to a host of factors which are beyond the scope of this paper.

The National Liberation Council Government which overthrew the Nkrumah regime in 1966

and the civilian government that took power in 1969, adopted capitalist economic approach to

managing the economy but that could not also yield the desired results as disagreement over

the strategies coupled with political instability over the years frustrated the efforts.

In 1983, The PNDC presided over the adoption of the Economic Recovery

Programme with its antecedent Structural Adjustment programmes. The launch of these

programmes refocused attention on the private sector with a paradigmatic shift in philosophy

to government has no business be in business. The private sector was then tooted as the

engine of growth of the economy. Perhaps due to the dominant logic built for over the years


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(Prahalad 2009) and also partly due to the poor state of the economy, the speed of recovery of

the private sector response have been slow and not been satisfactory (Dimova, 2009). In

trying to reverse the trend and to encourage the private sector to lead economic development

of the country came with it aggressive policies to promote private enterprises which led to the

proliferation of small and medium sized firms across the length and breadth of Ghana. Today,

the major players in the political economy of Ghana namely the ruling National Democratic

Congress and the Opposition New Patriotic Party have all made private sector development

the centerpiece of their policies (Ghana Poverty Reduction Strategy II 2006-2009; Vision

2020).Ghana currently has a sustained GDP growth rate of between 3 and 6%. Inflation

which was 42% in 2001 is down to an average of 10% (Dimova 2009). The country is

therefore getting closer to attaining a middle income status by 2020 of which the private

sector is expected to play a leading role. The focus on private sector development obviously

has implications for human resource management issues especially in small and medium

sized firms where the dominant role of owners of these firms could be felt. Whilst studies

focused on finance and capital issues in the small and medium sized firms, there appears to

be little or no research on the HRM within these firms. This research though exploratory, is

an attempt to provide some information on HRM practices and challenges in Small and

medium sized firms in Ghana.

HRM Practices

It often argued that two distinct clusters of practice of people management practices

are identifiable (see Storey, 2001; Applebaum et al, 2000; Kochan and Ostermann, 1994).

First, there are the "high value added" approaches that base competitiveness on high levels of

employee-employee interdependence and delegation to employees (Pfeffer, 1994; Ulrich,

1997; Applebaum etal, 2000; Kochan and Ostermann, 1994). Such approaches are

characterized by high levels of investment in training and development, high levels of job


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security and innovative reward systems; in turn, these facilitate greater levels of participation

and involvement (Applebaum et al, 2000). Permanent employment reduces turnover, whilst

investing in people and job redesign, enhances organizational commitment, providing fertile

ground for far-reaching involvement programmes (Lincoln and Kalleberg, 1990). second,

there are approaches that seek advantage over competitors by cost-cutting measures, such as

downsizing, a reduction in security of tenure, reduced investment in training and

development and the greater use of sub-contracted labour (Storey, 2001, pp. 14-15).

However, it should be noted that the high/low raw debate is very specifically focused

on the strategic choices open to firms. It is argued that whilst there is considerable evidence

that many firms adopt the low road or "bleak house" scenario, there is rather less evidence

that significant numbers of firms have implemented integrated high road/high commitment

sets of human resource policies, rhetoric and formal policy commitments to the latter effect

notwithstanding. In different institutional and cultural settings, other combinations of

practices are likely to emerge (Lincoln and Kalleberg, 1990).

Within the developing world - given the weakness of regulatory institutions in many

national contexts, and an inability or unwillingness of governments to intervene on the behalf

of domestic industry in the face of intensified global competition (Greider, 1997) it is likely

that firms will find it particularly difficult to adopt policies that entail significant investments

in people and supporting infrastructures that do not result in short-term benefits (see

Hoogveld, 1997). However, despite these pressures, specific cultural practices and

institutional configurations may make for certain continuities (c.f. Lincoln and Kalleberg,

1990).

Hence, a central focus of the debate on African HRM is not so much between whether

high or low road strategies are becoming more prevalent, but whether the pressures


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associated with globalization have made "low road'Vbleak house" practices the norm

(Greider, 1997), or whether African firms continue to adopt a specific model that may, in

many respects, seem autocratic, but is based on a conceptualization of paternalism, underlain

by conceptions of personal ties, duties and obligations (Ovadje and Ankomah, 2001, p. 183).

These valid point raised by the authors above re-echoes the institutional difficulties

and challenges which confronts HRM practices in developing countries. Clearly this is LO5;

Synthesize the international dimensions of HRM in globalized, multinational organizations

Indeed, it can be argued that the intensification of global competition, the decreased

range of policy options available to national governments, and the increased mobility of

financial capital have placed renewed pressures on firms to enhance their competitiveness

(Duysters and Hagedoorn, 2001, p. 348). As their power to set prices is eroded in the face of

intense competition, profitability increasingly depends on cutting the costs of inputs, making

labour repressive policies highly attractive (Wood et al., 2004). Massive job losses have

become a feature of the "shock therapy" adjustment policies inflicted on emerging markets,

further weakening the bargaining position of labour (Hyman, 2003). Indeed, it has been

argued that "capitalism has restored its worst excesses on the periphery", characterized by

steadily worsening employment conditions, including low standards of health and safety,

extremely low pay, arbitrary management, a near total lack of job security, and the

discounting of skill (Greider, 1997; Moody, 1987).

Other accounts have suggested that specific African countries have developed their

own modus operandi in the face of both cultural legacies and volatile external circumstances.

The latter includes fluctuating exchange rates, political instability and changes, an unreliable

infrastructure, inappropriate governmental policy choices, and "widespread ambiguity

surrounding the rule of law" (Erondu, 2004, p. 3). This has translated into excessive short-


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termism (Erondu, 2004, p. 3), and a reliance on _ structures of authority that are likely to

prove resilient to external shocks (Jackson, 2002). Citing the Nigerian case, Ovadje and

Ankomah (2001, pp. 183-5) argue that this has translated into a model where older male

managers assuming a patriarchal role, the consistent marginalization of women, and

recruitment drawing on the extended personal patronage networks (Oradje and Ankomah,

2001; c.f. Beugre, 2002). Whilst employees may often have to put up with low wages and

poor working conditions, firms may provide informal ad hoc financial assistance, and are

willing to adjust pay rates in response to external developments, such as increases in transport

costs. Nonetheless, poor motivation, risk aversion, close supervision, little delegation and an

unwillingness to take independent action may result in alienation, low productivity, poor

morale, and the perpetuation of low wages (Jackson, 2002, p. 1006). Again, this also answers

the objective of the LO8;Assess the major federal laws and/or international equivalents that

affect human resource management within the company

And finally, the points below relates directly to the LO10; Debate the importance of

job analysis in strategic and human resources management.

Training tends to be culturally specific, practical and founded on a "community

concept of management", whereby individuals are not so much employed in terms of a fixed

contract, but wedded to a community (Erondu, 2004, p. 6; c.f. Beugre, 2002). However, the

predominance of informal training also reflects a reliance on export led primary production

and underdeveloped consumer markets (Jackson, 2002, p. 999). The intensification of

competitive pressures as a result of structural adjustment policies has made it even harder for

firms to invest in formal training systems (Jackson, 2002, p. 1000). Managerial styles tend to

be control orientated with an emphasis on process and hierarchy, drawing on pre-colonial

notions of chiefly power (Beugre, 2002) and/or colonial autocracy (Jackson, 2002). Attempts

to introduce contemporary Western approaches, based around objective managerial systems,


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including clearly demarcated and formal employment contracts, and recruitment procedures

that are open to all, often fail as a result of deeply embedded perceptions by both managers

and employees that they are overly "academic" and impersonal, as well as "insider" clan or

ethnically based group interests (Jackson, 2002, 2004). These trends - autocratic but

paternalist management, informal and patronage based recruitment networks, and a sense of

mutual duties and obligations - emerge as a common theme in case studies of numerous

African countries (c.f. Kamoche, 2001, pp. 210-20; Jackson, 2002). However, it should be

noted that these practices do not form a totally monolithic model reflecting different

historical experiences (Jackson, 2002, p. 1008). Moreover, managerial practices cannot be

dismissed as uniformally "backward" or despotic; in specific contexts, practices incorporate

emerging alternative and innovative managerial systems (Jackson, 2002, p. 1008).

Common to this growing body of critical literature on HRM in Africa is a concern

that, despite considerable diversity in practices, outcomes remain generally suboptimal

(Kamoche et al., 2003; Kamoche, 2002; Frynas and Wood, 2003). The latter represents a

product of weaknesses in political institutions, lop-sided economic growth, intense

international competition and unfair terms of trade, inappropriate and misdirected foreign aid

and the persistence of practices (such as patriarchal authoritarianism within both the firm and

community) that are incompatible, with "contemporary industrial imperatives" (Kamoche,

2002, pp. 993-5; Hyden, 1983). As Harvey (2002) notes, institutional parameters represent

the default boundaries of organizational behaviour, and, hence, mould organizational

strategic responses. In other words, contextual realities - of both the cultural and socio-

political variety - mediate and reshape HRM interventions (Horwitzeia, 2002).

Terminology and Definitions


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Storey (1992:5) defines human resource management as a distinctive approach to

employment management, which seeks to achieve competitive advantage through the

strategic deployment of a highly committed and capable workforce, using an integrated array

of cultural, structural and personnel techniques.

According to Hodgson (2006) defined institutionsas systems of established and

prevalent social rules that structure social interactions. In other words, language, money, law,

systems of weights and measures, table manners, and firms (and other organizations) are thus

all institutions.

Short Description of Selected companies

The firm selected for the successful application of best practices is a quasi-

government engineering consulting firm called Westwood Engineering Consulting. The firm

was established in the 1980s to cater for all engineering consultancy services of public

projects in Ghana. The government sold its majority shares in the 90s but still maintains its

managerial influence. Westwood present a unique preposition for the study so I intend to use

the use the same firm for the two scenarios.

Successful Application of Best Practices

The professional services firms sector like Westwood Engineering Consulting, by

definition, sells knowledge. The corporate reputation of firms that sell knowledge is defined

by the commitment and performance of its professionals, which will dictate the perceived

value of their knowledge and experience (Nuria & Rodrguez, 2010). Any difference which

may exist between the true value and that perceived by the company will gradually be

corrected over time, meaning that it will be the combination of knowledge plus applied

experience possessed by professionals, which will act as the key factor in establishing the


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competitive edge of Westwood. The firm has done extremely well in dealing with its labour

issues. So far, it is the only company in Ghana with government involvement which has

never gone on strike. Its compensation packages are used as industry benchmark and every

Engineer at some point wanted to work at Westwood. The key for their HR success had been

Leadership. Their management has been proactive and have shown strong leadership. In spite

of their successes, Westwood has done poorly at talent management and this is the basis for

their being used as a study unsuccessful Application of Best Practices.

Unsuccessful Application of Best Practices

Problems and Challenges of Talent Management

All the talent management practices discussed so far are intended to achieve one common

aim: maintaining intellectual capital within organizations as a differential resource, the basis

for their competitive edge.

One critical challenge of Talent Management at Westwood is the confusion its meaning

brings to the outside board-room staff of the company. Most people wonder and ask the

following questions. "What do we mean by 'talent? Talent for what? If I am talent, what will

'managing' me mean? What if I am not talent? And if I am a manager, will I need to tell some

people that they are not as talented as they thought they were?"

Again, more other employees at Westwood often fear that talent management will cut across

equality of opportunity and the transparent processes that allow people to apply for higher-

level jobs in order to further their careers. Other key challenge of talent management has been

presented under the following headings below:

Recruitment and selection practices Challenges


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At Westwood, professionals with great potential but little experience are hired as junior

consultants, and then later fill senior consultant vacancies through an internal promotion.

Westwood only turns to the external market if they do not find appropriate candidates within

their organization, or as a result of specific outside circumstances (external benchmark

salaries lower than those seen internally, or political circumstances making it advisable to

hire outside, among others). The challenge for Westwood therefore is how they could

guarantee the quality of their selection process.

The consultancy organizations consider selection to be one of the central strategic planks in

their acquisition of intellectual capital, a differential resource which is directly connected to

their economic activity (Nuria & Rodrguez, 2010). This dictates the specialization and

considerable volume of resources dedicated to this process, compared with other sectors. In

addition to the high financial costs involved, this also leads to a time lag in the process,

ranging between one and three months in the case of junior consultants, and between one and

six months in the case of seniors.

One final aspect, which such companies tend to consider within this practice is the risk

involved in the possible departure of the candidates ultimately selected. Some companies use

the investment made in selection by consultancy organizations as a means of ascertaining the

soundness of the candidate, thereby avoiding the need to take on such high financial costs,

and then presenting offers to candidates previously selected by consultancy companies.

Professional development practiceChallenges

In terms of professional development practices within the consultancy sector, the intellectual

capital of an organization's professionals constitutes the productive capacity of the company

itself (Warren and Kourdi, 2003). The value of such professionals for the Westwood depends

on whether the accumulation of knowledge and experience has generated valid skills, which


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are required by the organization. The challenge for Westwood again in relation to

professional development is how the company could fine-tune the various skills development

process in order to accelerate their employees' learning processes.

Moreover, one of the central planks of the HR strategy at Westwood Consulting is its

organizational capacity to speed up the acquisition of knowledge and skills by its

professionals. This capacity serves as a tool for improving companies which belong to other

sectors, through the advice of expert consultants within each field of operations.

Retention practiceChallenge

Globally, the consultancy sector is noted for having one of the highest staff turnover

percentage rates in the market because of that, managers use the "up-or-out" policy

(Stearman, 2000). In this policy, managers allow mid-level staff to depart if managers unable

to promote them to senior level because there are no opportunities to grow in the market.

Although, the organizational structure of this type of company is based on the constant

renewal of junior consultants, the departure of professionals with key skills may represent a

significant loss of intellectual capital, thereby impeding the acquisition of a competitive edge

by such companies (Godbout, 2000). This situation is current taking place at Westwood.

Within the last five years, more than 50 junior professionals left the firm because their

promotions were overdue. Various reasons have been presented by expert commentators in

support of the above statement.

First, the unforced departure of junior consultant candidates for promotion to the senior

category means that the company loses its most profitable professionals in terms of their

salary cost/professional service rate ratio, preventing the organization from recovering all the

resources invested in developing such professionals (Peteraf, 1993).


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The difficulty of predicting the number of experienced consultants who will leave, and also

the point in time when their departure may occur, presents huge problems when attempting to

plan the process of junior consultants' professional development (Peteraf, 1993). A vacancy

brought about by the departure of an individual can often not be covered by a professional

with similar skills, placing the company in an awkward dilemma: delay the project until a

suitable replacement has been found, or bring in a less qualified professional. In both cases,

the company is likely to see a negative impact on its reputation as a knowledge organization.

This is also a big challenge to Westwood Consulting.

Conclusions and Recommendations

It is clear that the globally competitive advantage is currently being shaped the amount of

talent available to each organisation. Therefore, it is imperative that individual talents are

harnessed for the benefit and survival of every organisation. To the individual challenges

above, in order to guarantee the quality of the subsequent selection process, management

consultancy companies generally deal with differing ratios for the minimum number of

recruits to be evaluated for each pre-selected candidate. This means that only those

candidates, who have passed through the initial recruitment process filter, will be invited to

take part in the organization's selection process. Once a target has been set for employment

contracts, and in order to underpin the quality of the selection process, companies generally

deal with a previously selected portfolio of candidates, from whom they select those who best

match the required professional profile.

Secondly, in order to fine-tune this skills development process, consultancy companies

generally dedicate considerable efforts to the development of training and development

programs intended to accelerate their employees' learning processes. The results of these

practices will be closely tied to the professional career of consultants, in addition to the


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number of projects which they will be able to take on with guaranteed levels of success. In

order to do so, in addition to recruiting and selecting individuals with considerable potential

for learning, investments must be made in training programs and professional development.

These investments are considerably higher than those incurred by other sectors, through

personal training plans, remote training, and attendance of specialist programs and

involvement in projects as support staff at no cost to the client, among others, while also

facilitating access to knowledge management systems allowing the learning curve to be

steepened. This process will give rise to the creation of consultancy professionals with the

talent to take on a lead role on projects, with promotion from junior to senior category

generally coming within a period of between two and five years, depending on the nature of

the field of activity and the capacity of the organization, while also swelling the ranks of

those junior consultants ripe for promotion to a senior position during the next professional

review. The number of junior consultants completing the professional development process

required in order to be promoted to the senior category will also be reduced by the outgoing

flow of junior consultants hired by other opportunistic companies.

Furthermore, although the high rate of professional staff turnover is a problem endemic to the

consultancy sector, organizations can minimize the rate of departure through their own

professional management systems. The retention practices most often employed by

consultancy companies are based on a high level of investment in training and developing the

skills of their professionals, trying development to a more accelerated career plan than that of

companies in other sectors. These practices allow professionals to take on greater

responsibilities and earn higher pay at a younger age than would be usual in other types of

company. The main retention problem facing such organizations is the headhunting of

experienced professionals by other companies, which take advantage of the high level of


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investment in recruitment and development seen in the consultancy sector to capture such

professionals before the company which first recruited them has seen a return on the

investment made. Thus, in addition to the resources dedicated by such companies to

communications in the context of their recruitment policy, and their investment in training

tied to a political development policy, consultancy organizations generally structure their

retention practice through the development of a career path for their professionals. This

career path uses to be swifter than that seen in other sectors, leading to a continuous process

of formal promotion and pay rises, which is superior to the market average. Within this

context, these companies follow a routine of establishing the aim of matching the period for

promotion from junior consultant category to senior consultant to the actual time required for

junior consultants to acquire the combined knowledge and experience needed, a period which

ranges from two to five years. The formal flow of promotions will nonetheless depend on the

existence of vacancies at senior level. This will in turn be determined by the external demand

for projects, or forecast turnover. One final decision making rule established within this

practice would be that of maintaining a relative salary level which is consistent with the

strategy followed by the organization.

References:

Akinnusi, D. M. (1991), Personnel management in Africa: a comparative analysis of Ghana,

Kenya and Nigeria, In C. Brewster and S. Tyson, (eds) International Comparisons in

Human Resource Management,. 159-172. Pitman, London.

Applebaum, E., Bailey, T., Berg, P. and Kalleberg, A. (2000), Manufacturing Advantage:

Why High Performance Work Systems Pay off, Cornell University Press, Ithaca, NY.

Kochan, T. and Osterman, P. (1994), The Mutual Gains Enterprise, Harvard Business

School, Boston, MA.

Asante Yaw (2000), Determinants of private sector investment behaviour in Ghana,

University of Ghana

Hodgson, G. M. (2006). What are Institutions?Journal of Economic Issues, 40(1), 1-25.


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Kamoche, K. (1997), Managing human resources in Africa: Strategic, organizationaland

epistemological issues , International Business Review 6(5) 535-568

Pfeffer, J. (1994), Competitive Advantage through People, Harvard University Press,

Cambridge, MA.

Prahalad (2009), The Fortune at the Bottom of the Pyramid: Eradicating poverty through

profits, Wharton School publishing Upper Saddle River NJ.

Pitcher, A. (2002), Transforming Mozambique: The Politics of Privatization, Cambridge

University Press, Cambridge.

Storey, J. (1992), Developments in the management of human resources. Oxford: Blackwell

Storey, D.J. (1985), Small firms in regional economics development, Cambridge University

Press, Cambridge.

Storey, J. (2001), "Human resource management today: an assessment", in Storey, J. (Ed.),

Human Resource Management: A Critical Text, Thomson, London.

Taylor, H. (1992), Public sector personnel management in three African countries: current

problems and possibilities, Public Administration and Development 12, 193-207.

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