1. Introduction

Due to increased globalization and competitiveness, the organizations have to focus on building its positive image in business market. In order to build positive image of firms, it has become important for management of companies to focus on responsible management. The management has to face huge pressure from all of its stakeholders particularly from investors and employees to focus on responsible management. The employees are highly affected by activities of an organization, so they highly focus on ways through which organization manages its responsibilities (Durden, 2008). This shows that how well an organization treats its employees as well as society. Responsible management helps the company in building trust of its employees. In organizations, different departments are integrated with responsible management, but this essay has analyzed the key challenges faced by human resource management department while managing responsibility in order to build positive brand image of company. In this essay, key challenges faced by Severn Trent have been analyzed regarding responsible management in case of HR (Bratton and Gold, 2012).

2. Main Body

2.1. Responsible Management

Responsible management is like quality management that includes approaches used to set objectives and to articulate the values driven by goals and strategies of organization. It is not possible for organizations to avoid all kinds of criticism because they have direct or indirect impact on its stakeholders as well as natural environment. In Severn Trent, the management has focused a lot on responsible management but it has to face various challenges while integrating responsible management with human resource management department of company. It is the responsibility of Severn Trent to manage its employees in a way through which negative effects can be minimized and trust building can be maximized (Shen and Jiuhua Zhu, 2011). In Severn Trent, the human resource managers have the responsibility of fulfilling responsibilities to community. In case of responsible HRM, the managers have to ensure fulfilling rights of individuals and well-being of employees. In order to show responsible management, the company has to ensure responsibility towards stakeholders of company and stakeholders involve employees, regulators, customers, investors as well as natural environment (Harzing and Pinnington, 2010).

In Severn Trent, the function of human resource department is critical for gaining success in highly competitive business world. The major role of HR is to work in relation with leaders of business in order to build an environment that is highly suitable and comfortable for employees to work in. The HR department of an organization must ensure practice of responsible management. The HR management of Severn Trent has to ensure high sustainability in order to ensure effective responsible management. There is a need of learning high skills and capabilities regarding development of organization, change management and cultural development. With the help of these skills and capabilities, HR managers of Severn Trent can become capable of building sustainability in organization and as a result can gain competitive advantage (Shen, 2011).

Source: (Dessler, 2009)

The human resource management system is defined by Lado and Wilson (1994) as a group of different but interlinked activities that help in attracting, developing and sustaining employees of firm. The practices of human resource management are usually implemented with systems of strategy that are in consistent with culture and strategy of business (Gahan and Buttigieg, 2008). There are different researchers who support practices of HRM to be effective to promote human capital and outcomes in giving contributions to performance and competitive advantage of organization (Paauwe, 2009).  For implementing an effective green management system, it is significant for Severn Trent for promoting management skills and capabilities among workers of company (Goswami and Ranjan, 2015). The companies seek for developing creative tools and environment management that can significantly impact on sustainability of organization and promoting competitive advantage. Hence, for developing this kind of framework it is important for Severn Trent for having effective practices of human resource management that include effective strategies of recruitment, performance management, compensation and training and development (Cherian and Jacob, 2012). Through appropriate human resource management practices, the management of Severn Trent can enhance skills and capabilities of employees. There is a need of aligning principles of human resource management with aims of responsible management in order to ensure high performance of employees. It has been identified that through more focus on responsible human resource management, there is more chances of enhanced employee performance (Hoque, 2013).

The responsible HRM in an organization can help the firm in gaining sustainable competitive advantage through focusing on five phases; recruitment, training and development, performance management, compensation and benefits and employee relations. Responsible management is a step by step process which is also known as total responsible management. It involves processes used by company for ensuring positive image of company in society and also in marketplace. In Severn Trent, the responsibilities towards stakeholders and natural environment are managed with the help of practices and strategies that are used for accomplishing goals. This is done by management of Severn Trent because these responsible HR practices have a direct impact on performance of an individual employee or group of employees (Buller and McEvoy, 2012).

2.2. Analysis of major responsible management challenge faced by Severn Trent PLC Faces with respect to HR

There are number of factors involved in managing responsibilities in addition to just doing good or being involved in philanthropic activities which is known as corporate social responsibility. In broader term, responsible management means corporate citizenship that is an important aspect of a company. In Severn Trent, the management highly considers management of corporate responsibilities in which relationship with stakeholders are involved. In this way, responsible management means increasing level of trust with important stakeholders like employees, suppliers, societies and customers. This help the firm in ensuring that there is a positive image of company in market as well as society. Severn Trent has to face challenge regarding managing workforce in a way that negative effects of corporate activities can be reduced and mutually beneficial activities can be practiced in organization (Decenzo and Robbins, 2015). This requires active involvement of employees in activities of organization. Moreover, responsible management involves use of natural resources in such a way that these have high sustainability. The particulars of responsibility management are different for every organization, its industry and stakeholders. The management of Severn Trent has to face challenge with respect to building relationships with important stakeholders particularly employees. Through this the company can become capable of problem solving with stakeholders with respect to trust rather than just employer-employee relationship. By focusing of responsible HRM, the company can solve various issues related to its employees, rather than fostering those issues and as a result negatively affecting performance of employees. In organizations, the employees have to be organized and management appropriately because they are an important asset of organization. The vision and leadership of a company is implemented by people working in that organization. The policies set for employees of an organization tell that how much the company is responsible. There is a need by management of Severn Trent to manage employees of company with full respect and dignity. In order to show responsibility in case of human resource practices, the management has to go beyond the formal boundaries. The key aspects in responsibility for human resources include recruitment, training, performance management and compensation etc (Bamberger, Biron and Meshoulam, 2014).

 

 

The management of Severn Trent has to be efficient for fulfilling its responsibilities towards employees working in organization. The managers have to ensure high quality and better working environment for employees. There are different HR strategies needed to be focused on in order to show responsibility towards employees of organization (Bhagwatwar, Bala and Ramesh, 2014).

2.2.1. Responsible Compensation as a Key HR Challenge

One of the key challenges faced by HR management of Severn Trent is regarding compensation and benefits of employees. The employee compensation is an important human resource activity that helps the firm in building its positive image in minds of employees. Compensation is actually the reward or remuneration that is paid to employee for the work done by him or her. In order to build good relationship with employees the HR managers of Severn Trent has to ensure fair compensation of employees. The compensation of employees can have different kinds; it can be financial as well as non-financial compensation. Financial compensation includes monetary rewards, salaries or bonuses given to employees for their better performance. Financial compensation helps in enhancing performance of employees. The management has to ensure responsible compensation in order to increase satisfaction and performance of employees. When, employees in an organization do not get fair compensation for the work done by them, then, this result in de-motivation of employees. In order to keep employees motivated and satisfied the management of Severn Trent has to ensure that its employees get fair compensation for their work. In addition to financial compensation, the responsible HR management has to focus on non-financial compensation of employees. Non-flexible compensation includes providing flexible working hours, job authority and recognition for the task performed by specific employee (Brekke and Nyborg, 2008).

In order to ensure responsible compensation for employees, the HR managers of Severn Trent should follow legal compliance while deciding compensation of employees. The employees must be compensated on the basis of laws and regulations of country in which company is operating. The minimum wage law of that country must be followed by Severn Trent in which it is operating. This shows that company is highly responsible towards following laws and policies of country while deciding compensation of employees. When, compensation of employees is not set according to wage laws and policies of country, then this result in negative image of company in market. So, in order to have positive image in industry and also to work on long term basis, Severn Trent has to ensure compliance with laws and regulations of country (Giuliano and Ruiz-Arranz, 2009).

In addition to this, there must be equality among employees with respect to gender, caste or any other related element. The compensation of employees must not be differentiated on the basis of gender, caste or any other similar element. The management of Severn Trent has to ensure that compensation discrimination among employees must be on the basis of their performance. For responsible HR management, the employees must be given compensation and benefits on the basis of performance. There must not be any discrimination on the basis of gender or caste. When, employees are discriminated on the basis of gender, caste or any other similar element, then this build negative image of company in the minds of employees. This also results in high turnover rate of employees because due to this, employees prefer to leave the organization. This also shows negative responsibility of organization towards whole society when company discriminates employees on the basis of different elements. Severn Trent has to ensure justice and equality while giving compensation and benefits to employees whether these are financial or non-financial (Adenutsi, 2014).

The responsible HR management in Severn Trent must be focused for having satisfied and loyal employees in future also. In order to show responsibility towards society, the Severn Trent has to offer attractive compensation to potential employees. The potential employees must be encouraged to apply in this organization for getting job. This can be done when potential employees will perceive that compensation and benefits offered by organization are fair and are in accordance with performance level of employees. The responsible management must be shown through HR management of company. While hiring employees, their compensation must be decided on the basis of his or her qualification, education, experience and skills. When employees are not compensated on the basis of their skills and capabilities then they feel devalued and de-motivated. It is very important for management of organization to increase motivation level of employees through focusing on their salaries and wages (Berber, Baosic and Pasula, 2011).

In order to ensure higher satisfaction level of employees there is a need of offering flexible salaries and benefits to individual employees. In Severn Trent, all of the employees must be compensated on the basis of their individual performance. The employees must also be given with additional benefits and rewards for increasing their motivation level (Dowling, Festing and Engle, 2008).

2.3. Recommendations

 

In order to enhance performance and motivation level of employees, the HR management of Severn Trent PLC has to focus on compensation planning of employees. The employees must be compensated on the basis of their performance. Through responsible compensation, the HR managers of Severn Trent PLC can increase motivation level of employees. The employees must be considered as significant asset of company. They must be provided with fair financial as well as non-financial compensation. There must not be discrimination among employees regarding compensation and benefits. In addition to this, there is a need of appropriate planning while setting salaries and benefits of employees. Some standards must be set for each employee for setting his or her salary (Bol, Hecht and Smith, 2015).

The HR managers of Severn Trent PLC have to follow Reinforcement Theory according to which when a person is given reward or bonus for the behaviour shown by an employee, then there are chances of showing similar behaviour again by that employee. It has also been found through Reinforcement Theory that when employees are awarded with monetary awards, then there are more chances of experiencing high performance from that employee (Premack, 1995).

Source: (Preemack, 1995)

In addition to this, Equity Theory should also be adopted by HR managers of Severn Trent PLC, according to which HR managers must emphasize on keeping equity in salaries of employees. This helps in building positive perception of employees towards their organization because they feel that their organization gives value to them. They also feel sense of equality due to which their motivation level is increased. Due to equity in compensation of employees, the productivity of employees is increased, whereas turnover rate and absenteeism level is decreased (Pritchard, 1969).

Source: (Pritchard, 1969)

The management of Severn Trent should decide compensation and benefits of employees at the time of hiring them. All the employees must be compensated on the basis of their skills and capabilities. When an employee performs well then they must be provided with perks and benefits according to his or her performance. The HR department of Severn Trent must also focus on variable pay system within organization. When management of Severn Trent PLC will change compensation system to variable pay, then this will give a message to all employees that there is an implementation of change process in organization which in turn shows that employees are given value by firm. The variable pay system in Severn Trent will also shift the working in organization to team based working. This will also help in eliminating the entitlement psychology or organizational culture in which employees were not compensated on the basis of their individual performance (Frye, Nelling and Webb, 2006). The employees must be compensated on the basis of their individual performance. The equality must be with respect to other factors like gender, race, caste etc. The skills and capabilities of employees must be focused while deciding for compensation and benefits of employees. The responsible compensation and benefits given to employees can result in increased profitability of Severn Trent, because through this their performance level will be enhanced. The goal of responsible HR managers of Severn Trent PLC must be to motivate continuous improvement and perspective of forward looking. It is suggested by Agency Theory that incentives provided to employees have a major contribution in enhancing overall performance of employees. The responsible HR management of Severn Trent must also focus on team performance in organization. With respect to team compensation management, the employees will be able to monitor each other performance and giving feedback to others at the time of requirement for improvement in performance (Stiffler, 2006).

3. Conclusion

 

It can be concluded from analysis of responsible human resource management of Severn Trent PLC that the management of company has to face some challenges while ensuring responsible management in company. In order to get success and competitive advantage, the company has to focus on ensuring responsibility towards human resource management of firm. The employees must be considered as significant factor of organization for gaining competitive advantage. One of the key challenges faced by human resource department of Severn Trent is regarding managing compensation of employees. The human resource management of firm has to ensure implication of responsible compensation within practices of organization. The employees must be given with fair and equitable compensation in order to enhance their performance and satisfaction level. The management of Severn Trent must make effective human resource strategies for motivating employees. The high motivation level of employees is very important to ensure high productivity. The employees can be motivated through offering fair compensation and benefits.

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