Why are we still narrow-minded in the way we manage people?
– The value of HR Architecture
What we often see in many shipping companies is that management of crew is rarely connected to the company’s strategy, and that activities like recruitment, appraisal and training are disconnected; in many cases different crew management practices apply to different nationalities of seafarers working for the same employer. While there is a constant will to improve people’s performance in the shipping industry, the value of performance management is often undermined as the management approach lacks coherence.
This article argues that separate, inconsistent crew management practices turn to dysfunctional management of people; most importantly, when fragmented from each other and from the company’s goals the various HR activities fail to accelerate people’s performance and miss the point of identifying, enhancing and utilising their talent. The ambition of this article is to challenge why shipping companies are being myopic about the management of their people, and question ‘Why can’t we see the forest for the trees?’ This article explains the importance of linking the various human resource and crew management activities and getting them aligned with the company’s strategy. Thereby, it introduces the reader to the concept of ‘HR Architecture’.
There are companies that are dedicating capital to their human capital, and score high in revenues.
Where do shipping companies stand?
A 2012 global survey on the relation between capabilities and firms’ profitability has revealed that high-performing companies consistently invest a lot more than others in the following activities: recruitment, induction of new joiners and retention, talent management, employer branding, performance management and rewards, and leadership development.
|The decision of shipping companies to invest more in the long-term development of their human resources is of great importance|
Having in mind the globalised character of the shipping industry where companies operate, the scarcity of talent, the financial pressures in crew salaries, along with the intermediating role of manning and crewing companies, we see that the decision of shipping companies to invest more in the long-term development of their human resources is of great importance. If we also consider the scarcity of talent, shortage of officers, pressures of maritime legislative framework and the fragile and disrupted employer-employee relationship within the shipping industry, we understand that in shipping the matter of managing people’s performance requires a more holistic approach.
Design a coherent HR management process
Research in the human resources management throughout the years has shown that employees’ performance can be driven higher if they are motivated, satisfied and supported by the organisation. Linking business performance with people’s performance seems relevant, but to understand the ‘how’, it is worth probing on the applied HR management practices; or what we define as the ‘HR Architecture’.
If we are to develop an approach that aims to support employees’ value making and competencies development, then a coherent form of processes in managing people is required. This unified approach considers that the process of managing people within an organisation resembles a chain of activities, all of which – when linked – can produce high performance and increase the value of the human capital in a way that this contributes to the creation of sustainable competitive advantage.
Realising the value of people management through the HR Architecture
In construction, ‘architecture’ (coming from the Greek ‘άρχι’-chief and ‘τέκτων’- creator) means the process and the product of planning, designing and building physical structures. The architecture considers both the macro- and the micro-level of the construction. With regards to the HR Architecture, the structure considers both the content of each activity, as well as the inter-relations among them, and the loop between the HR Architecture and the organisation’s strategy.
The HR Architecture comprises a set of primary human resource management activities, and a set of supporting ones. The core activities represent rings in the HR Architecture chain, as they add value to the people’s performance within the company in the form of a strong capability of managing human resources. In architecture, design precedes the construction, and before design comes planning.
Similarly, in our HR Architecture, before evaluating performance comes new joiners’ induction and familiarisation, while recruitment follows the HR planning activity. The activities of HR planning, recruitment, induction, appraisal, rewarding, training and career management are those that drive people forward from candidates to the company’s valuable and talented HR force. In parallel, the supportive activities aim to brace the core initiatives and assist in building a strong foundation of performance management. Supportive activities are the screws that keep the craft stable, and as such, every now and then need a winding.
A chain of activities tied to the strategy
|This unified approach resembles a chain of activities which can produce high performance and increase the value of the human capital|
The HR Architecture elements are presented as a chain of activities because they are interlinked and take place in a continuous manner. The essence of the unified HR Architecture is the alignment of HR activities and the bond to the company’s strategy. Through this, the impact of people’s performance is reflected on the business as it helps the firm achieve its objectives. The HR Architecture is the organisational support needed to manage the company’s bundle of human resources and management capability with the aim to reach sustainable competitive advantage.
In this chain of HR performance value, the principles of architecture shall apply:
- Firmness and Durability. The HR Architecture shall be planned and designed to last for long and be flexible in adjusting to internal and external changes, such as the increase or diversification of the fleet.
- Convenience and Utility. The HR Architecture of the shipping company shall be suitable for the purposes for which it is used; thus, it must be based on the company’s vision, values and business objectives.
- Harmony and Delight. While physical structures should be aesthetically pleasing, in the intangible world of HR Architecture, balanced and well-tuned HR activities are vital for the employees’ satisfaction from their work tasks, the work environment and overall, the culture of the organisation.
The example of performance appraisal
Quite often shipping companies request our help on evaluating their employees’ performance. Special concern lies in the evaluation of the crew’s performance from the captain, as well as the appraisal of the masters and chief engineers from the office. Most frequently managers come with a ready solution request, like ‘fix us the appraisal’- but from a Green-Jakobsen perspective, there are other activities that also need to be amended. In order to mold employees’ performance, one needs to shed light on how performance can be managed from the time that the seafarer is a candidate employee.
|“Fix us the appraisal”|
There are times when managers state ‘why spend money to evaluate them? They should know their job and we should employ only those who know their job’. When companies feel that ‘the problem lies in the recruitment of non-talented employees’, in our view, this reflects the non-existent HR planning or the weak induction. So, if we try to fix only the performance appraisal process, we target on improving one of the stepping stones of the crew’s performance management. If so, even when the appraisal process and content is replaced, the problem of limited performance remains.
Leadership is the force that excels the value coming from the HR Architecture
While it is important that business objectives are translated into clear team and individual objectives, people need much more to thrive. Leading people’s performance is crucial, as it can make or break any strategic plan. For the process to breathe, take action and progress, leadership force is in need. Leadership is a lot more than steering the business and work.
|Leading people’s performance is crucial|
The management of people lies in the leaders who drive performance towards the company’s vision and goals. Leaders can turn the HR Architecture from a mere process to be the means of creating value from people and reaching excellence. The modern approach in leadership requires for managers to lead by coaching and facilitating; thus, leading by supporting the others’ development in a way that self-efficient employees are nurtured. Leadership, and more precisely performance leadership, meets the need to support the HR Architecture by helping people identify goals that are relevant and challenging, strengthening their capabilities, motivating and coaching them to develop further, and encouraging them to stay in the company. This kind of leadership has the greatest impact on the employees’ behaviour, engagement and reaching organisational goals.
Seeing seafarers as more than a cost element
|Seafarers are claimed to be the most valuable asset, but many companies still handle them solely as a cost element|
Performance management is a process that companies shall be using to help their employees channel their talents towards the company’s business objectives. Strategic human resources management is rather undermined in the shipping industry where seafarers are claimed to be the most valuable asset, however still being handled by many companies solely as a cost element. To excel in performance management, the unified structure of the HR activities is vital. The aligned HR processes on managing seagoing (and shore-based) personnel, linked to the company’s policies and strategy form the foundation of the company’s HR Architecture. This is to be regarded as a strategic business asset and a source of sustainable competitive advantage.