Introduction to Applied management
Applied management is a type of study which analyse different ways in which skills of management are used in different areas of businesses. Normally this field is pursued by those who work in technical field who already possess few essential hands on skills (Pasternack and et.al., 2008). Present report is about Goldman Sachs Group, Inc. which an American multinational financial services and engages in global investment banking. It was founded in the year 1869 and is headquartered at Lower Manhattan area of New York. It has approximately 120000 employees working with the aim to achieve the organizational goals and objectives. This report covers competitive advantages the firm has and impact of retention, training and recruitment on the company's competitive advantage. Further, it covers the comparison between company's practices and the best practices. Moreover, it covers the steps which the firm should take in order to gain sustainable competitive advantage in terms of retention, training and recruitment.
1. Competitive advantage and ways to relate strategic human resource management
Competitive advantage can be defined as a business concept that describes the attributes and enables the firm to outperform their competitors. In simple words, these are the strategies which a firm adopt in order to compete effectively (Chughtai, 2008). Basically there are two type of competitive advantages, which are cost advantage and differentiation advantage. If an organization is able to provide same benefits like its competitors but in low cost, then it is said to have cost advantage. On the other hand, when a firm delivers advantage which exceeds the competing product, then it is said to have differentiation advantage.
Firm uses its resources effectively in order to compete effectively. Organization should use its capabilities and resources in creating a competitive advantage which help in creating value. Following is a model for competitive advantage:
Capabilities and Resources:
In order to compete effectively organization should be able to utilize its capabilities and resources. If a firm fail in utilizing these, then the competitors will simply replicate the attempts done by the firm and firm would fail in competing effectively (Competitive Advantage, 2010).
Resources: These are organizations specific assets which are helpful in developing differentiation or cost advantage and which can be acquired easily by few competitors.
Capabilities: It is the ability of the organization to use resources effectively. For example, capability to bring a service or product before competitors. Distinctive competencies is formed for both capabilities and resources. These competencies are helpful in developing efficiency, innovation, customer responsiveness and quality. All these are creates differentiation advantage or cost advantage.
Cost advantages and differentiation advantage
By using capabilities and resources competitive advantage is created which are helpful in achieving a differentiation product or a lower cost structure (Leach, Pelkey and Sabatier, 2002). In order to compete effectively organization should be able to use its capabilities effectively so that they use resources efficiently and could come up with something new which will be helpful in competing with their competitors.
Organization creates value only when it performs series of actions in the value chain. In simple words, the organization should develop value to their customers by providing them with all needs and requirements.
Strategic human resource management is an approach which supports manages human resources which is helpful to support long term outcomes and goals of business with a systematic framework. It basically involves all the components of human resource like discipline, payroll and hiring or recruitment (Rand, 2000). In addition to this it also includes retention of employees, improving work quality, improving the employees mutual benefits, etc.
HR is the one who has to play this role in order to compete effectively and this is possible when he would perform his role efficiently. Mainly the basic roles of the HR is to recruitment, training, development, retention, etc. According to researcher there are three main generic functions which reward, selection and appraisal. For competitive success one should be very careful in selecting or hiring employees of the organization. Selection can be regarded as the primary mechanism which helps in improving the firm's capacity (Billsberry, 2008).
Appraisal performance is a process through which a firm evaluates and measures the employee's accomplishment and behaviour. Rewards are helpful in encouraging and motivating the employees. In addition to this it helps in improving the quality of work which is delivered by the organization to the employees.
2. Role of recruitment, retention and training in influencing the companies competitive advantages
Competitive advantages play a vital role, which influence the retention, recruitment and training process of the organization. Following are the process retention, recruitment and training of Goldman Sachs Group, Inc. in influencing competitive advantages:
Recruitment: Goldman Sachs Group, Inc. hire employees frequently, as it is a well known firm and most of the employees try to get job in it. Applicants can apply through online or by directly visiting the company when there is a vacancy. They firm gives advertisement on the newspaper and its official page (Paridon and Carraher, 2009). The organization is very careful in selecting the right candidate. They consider the qualification, skills and knowledge which the candidate possess. Form the applied application the firm selects few. Selected candidates are call for the personal interview. In order to achieve competitive advantage the candidates are analysed according to the skills they possess and the experience they have. Following are the qualities which the firm look for:
- Candidate with more competencies
- Candidate who can develop themselves with the help of the companies training.
- Who can generate ideas which can be helpful for the growth of the organization.
- Who can follow all the rules and can perform tasks with less error.
- Candidate who will stay with the organization for a long time.
- The goal of the Goldman Sachs Group, Inc. is to select a candidate who with the highest abilities. In the competitive words selecting employees is as hard as to attract a customer.
Retention: Retaining an employee is better than hiring a new one. Goldman Sachs Group, Inc. focus on retaining their employee by understand the problems or issues of their employees solving them and by fulfilling all the need and wants of the employee (Dale, 2003). There are many benefits through in retaining employees like these employees do not need training as compared to employees who are selected through recruitment process. These employees will be able to contribute to the employee more efficiently and effectively as they already know their job, management need not to give extra efforts in explaining their roles and responsibilities. Retaining employees will be helpful in competing effectively as it will help in reducing the cost which firm would incur hiring a new one.
Training: Training play a vital in improving the skills and in improving the performance of the employees. Goldman Sachs Group, Inc. conducts many training programs according to the requirements of the employees the firm understands the employee's drawback and areas where they lack. Goldman Sachs Group, Inc. applies both On-the -job training and Off-the -job training (Kersley, 2006). The organization analysis all the employee and according to their need they provide training. These training help in knowing the roles and responsibilities of the employees more clearly which helps them to perform more efficiently. Training guides them and clarifies all their doubts and enhance their skills. In addition to this it also helps them in competing effectively with their competitors. As training will help in enhancing their skills by which employees will perform will their full efficiency. No doubt the firm has to invest highly on training and development program but the return through training will be high.
External business environment of Goldman Sachs Group, Inc.
There are many factors which affects the Goldman Sachs Group, Inc. which are legal, liquidity, market and regulations.
Market fluctuations: Being an investment securities and banking firm, businesses are highly affected by the conditions in the economic and financial market generally. It does affects both in U.S. and all around the world. The debt and equity market of around the world or specifically in U.S has achieved near record level and this favourable condition of business is not continue indefinitely.
3. Comparison between the company’s practices and the best practice
Following are the best practices which a firm can follow:
Objective and goals: It includes all the objective and their relationship with the organizations goals. When the goals are not clear, then it becomes very difficult to formulate the planning efforts. With the help of planning firm can allocate resource and could schedule easily (Lundy and Cowling, 2000).
Recruitment: The argument arise that who the management of the firm can select a right candidate. Most of the management of different firms uses job description and job analysis. In addition to this, there are many models which are helpful in selecting employees (Manzoor, 2012). Firms use any mode in conducting the selection process effectively.
Commitment: Peter and Kline, (2009) defines commitment as a process by which the employees get psychologically involved towards the tasks given to them in such a way that they feel a personal obligation in completing the task. On the other hand, according to Jim and John, (2010) the state were the organization goals becomes personal then it is commitment.
Communication: To perform effective work good communication is important. It is basically the responsibility of the manger or the team leader to adopt different tools, system or techniques in order to have an effective communication.
Different firms adopts different types of strategies for effective communication (Michalowitz, 2007). In a firm in which employee communicate effectively perform their task more with their full efficiency. In addition to this, they share all their issues or ideas freely with their management.
Minimizing threats: This is one of the best practices which a firm can follow. According to this practice management should try to solve all the problem which their employee or customers face and this is only possible if they the management conduct various research and surveys which will be helpful in understanding the drawback or the treats faced by the organization.
Designing a personal reward system and appraisal: According to Leach, Pelkey and Sabatier,(2002) rewards should be given to the employee according to their performance. It helps in motivating them and in encouraging them to perform more efficiently. According to Billsberry, (2008) employees perform effectively so that they get the reward not because they want to achieve the goal or objective of the organization.
4. Steps which a company should follow in terms of training, retention and recruitment in order to gain sustainable competitive advantages
These three elements are very important for competitive advantage. There are many firms which focus on providing proper training, retention and recruitment process. For example, HSBC bank focus on retention on employees other than hiring new candidates as they the organization know that it will help in reducing the cost. HSBC maintains a strong relation ship with their employee so that they can understand the issues or problems which they face while performing their task (Strategic Hiring and Selection, 2005). They are very careful in selection process, if the candidates selected through recruitment process is not efficient enough then another selection process has to be conducted and for which the firm has to spent more and as result the experience increases.
On the other hand, Goldman Sachs Group, Inc. should also focus on retention their employee as it is very helpful in reducing the cost. They should understand the issues or problems which the employee were facing and accordingly they should develop strategies which will retain employees. In addition to this, all the need and requirement should be satisfied so that employee can work with a free mind. Further, they should focus on providing training and development program to those employees who have to improve their skills. In order to provide training, management should analyse the employees individually so that all the areas which the employees lack can be determined and accordingly they can be given training. According to the findings, Goldman Sachs Group, Inc. spent highly on providing training to their employees (Michalowitz, 2007). In order to make improvement they should try to identify the employees who really need training so that expenses for training which the firm spends can be reduced. This is possible if the organization analysis all the employee and should know what all skills or drawback they face or lack.
From this report, it can be articulated that the main factor which sets an organization from its competitors is the employees. They are very essential in order to provide growth to the organization. The organization should be very careful in hiring a candidate. In addition to this, firm should always focus on retention rather than hiring employees as it reduces the expenses. Moreover, in order to be competitive organization should use its capabilities so that it could use resource efficiently and effectively.
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