(a) Explain the meaning of the term ‘strategic human resource management’ and discuss the benefits of applying it within ABC Accounting Co.
Strategic human resource management means aligning the human resource management with the strategies of the organisation. In some situations, this may simply mean that once the strategy has been formulated, the HR strategy will be determined to ensure that the organisation has the human resources it needs to fulfil its strategy. In other situations, it may be that the human resources are the focal point of the strategy, particularly in knowledge-based industries, such as accounting. HR strategies include strategies to recruit the right people, strategies relating to appraisal and remuneration strategies.
ABC Accounting Co sells the services of its staff, so it is essential that the human resources strategy be aligned with the overall strategy of the organisation. There are two stated strategic aims in the mission statement. The first is to provide excellent service to our clients. The HR strategy would have to support this by recruiting staff that have the right knowledge and aptitudes to provide this ‘excellent service.’ The second part of the mission is ‘to develop our people to achieve their full potential.’ Clearly the mission must support this through using the appraisal process as a tool to identify the development needs of the staff, and to provide the appropriate support and training – both on the job training and formal professional training.
(b) Explain what a competency framework is, and describe how it could be used within ABC Accounting Co.
A competency framework is a document that provides a list of the appropriate knowledge and skills that are required for a particular job. It may also include details of behavioural requirements, such as ‘shows commitment to the team.’
A competency framework could be used firstly within the recruitment process at ABC Accounting Co. The company may employ graduates or school leavers, and provide them with professional training to become accountants. The competency framework will show that types of aptitude are required from such recruits. Knowledge may be less important initially, as recruits will learn on the job.
Later, the competency framework can be used during the appraisal process. Objectives could be set relating to competencies that must be developed over the coming period, and achieving such competencies would be a pre-condition of promotion. Staff can also be assessed against the competency framework for their grade.
(c) List three competencies that might be appropriate for a professional accountant working in practice for a company such as ABC Accounting Co.
There are a large number of competencies that are relevant for a professional accountant. See the ACCA competency framework, for example. Three examples from the ACCA competency framework are:
(d) Evaluate the system of appraisal that is in use for the junior audit staff at ABC Accounting.
The first problem with the appraisal system is that it is very judgemental. This has lead to a perception that the process is not subjective, with people who are popular with managers being promoted. Inevitably in an industry such as accounting, where it is difficult to measure outputs, some judgement will be required. However, it may be possible to combine this with some measurable statistics, particularly for junior audit staff, where much of the work is routine. Statistics such as ‘average time taken to do a particular task’ could be measured. The use of Behaviour anchored rating scales (BARS) could lead to a more structured approach to the appraisal process, rather than simply using managers and supervisors freestyle notes on performance.
Another problem is the fact that the supervisors’ assessments are not discussed with the appraisee at the end of the assignments. This has lead to nasty surprises during the six-monthly appraisal process for at least one member of staff. An advantage of discussing appraisals with staff at the end of an assignment is that staff receive more regular feedback, and are therefore given more opportunity to improve. Staff are more likely to accept feedback if it is given in the less formal atmosphere of a post assignment meeting rather than in the six monthly appraisal. And more trust will be built up between the supervisors and juniors if supervisors are transparent about what they have written in assessments.
It is good that the appraisal is based on the opinions of a number of supervisors, in addition to the line manager, as a larger number of sources of feedback should to some extent reduce the impact of the judgement of one person.
The development of the competency framework should add some structure to the appraisal process.