Introduction

Contemporary business organizations are engaged in an endless struggle to adapt and adjust themselves in a fast changing environment. It is seen that business organizations, which are attempting to find a fit between the organization and its environment, are better able to reach a satisfactory fit only if the organization can have access to right people. Thus, it is not the people that is critical, but the right people. How does an organization ensure that it has the right people? It is believed that when an organization reaches the status of a most preferred employer or a branded employer it would be in a position to attract and retain the right people. This may be true in the case of a few organizations that have established their identity and reputation in the market place. But some are saddled with people-related problems such as losing promising employees and being burdened with those who fail to perform up to expectations. Indeed, the search for the right people on the one hand and the loss of trained employees to the competitors on the other, poses a dilemma to the contemporary business organizations. The ability of an organization to attract the right people and have them in right places is the differentiating factor of high performing organizations when compared with mediocre or average performers.

What is Human Capital and Why it is Important? Human capital represents the knowledge, skills, abilities and capacity to develop and innovate possessed by people in an organization (Baron and Armstrong, 2007: p.6). A broader definition of human capital has been offered by another writer in the following words:

Human capital represents the human factor in the organization; the combined intelligence, skills and expertise that gives the organization its distinctive character. The human elements of the organization are those that are capable of learning, changing, innovating and providing the creative thrust which if properly motivated can ensure the long-term survival of the organization (Bontis et al (1999) quoted in Baron and Armstrong, 2007, p8). It has also been observed that Human Capital (HC) is a component of Intellectual Capital (IC) possessed by an organization. Two other components of IC are the Social Capital (SC) and Organizational Capital (OC). Social

capital refers to the stocks and flows of knowledge derived from relationships (social networks) within and outside the organizations.

Core Competences, Employee Competencies, and Their Implications for Business Strategy

The concept of core competences refer to a set of knowledge, skills and technological capabilities required for an organization to sustain its competitive ability over time. The core competences of a business organization could be a product of its employee competencies (knowledge, skills and attitudinal disposition) and the technological mastery acquired over a period of time. It is also important to note that an organization may acquire new knowledge and competencies as it evolves from a lower to a higher level of intensity and sophistication. For example, a business which is engaged in growing of food may depend on core competences in agricultural knowledge and skills such as soil conservation, plant breeding, pest control etc. If the same business moves in to a more sophisticated operation like food processing, which involves value addition, then the business will have to re-define its core competences and acquire new knowledge and skills in food science, food processing, packaging etc required to sustain a profitable business in the long run.

When an organization plans to achieve a strategic objective, say for example, to offer a differentiated product in a niche market within a certain period of time, it would involve combining a set of core competences with a series of employee competencies. It is important that HRD professionals understand the nexus between the business strategies and the HR competencies required to support implementation of business strategies. This involves firstly undertaking an HR audit by making an assessment of the current competencies to determine how far the existing employee competencies match the required competencies. Secondly, it is important to identify the required competencies that are lacking at the moment and take necessary action to develop such competencies among the employees through training and development.

High Flight Airways High Flight Airways (HFA) employs 20,000 staff and was once the countrys most prestigious airline. It was originally owned and run by the government but, since privatisation, it has gradually lost market share. HFA face unrelenting competition from other airlines (particularly the low-cost carriers), high fuel costs, a global economic collapse and staff morale is falling as fast as our passenger numbers. Corrupt practices are apparently well-known around the organisation but they are accepted as an inevitable aspect of business. The airlines safety record is comparatively poor. Last year HFA launched flights to a new set of international destinations. This launch was poorly organised and resulted in a lot of bad publicity in the press and in the countrys parliament. Pay and conditions disputes with staff are frequent, and unions and staff have often taken the airline to court over its HR practices. The airline offers an above average total reward package.

The HR function is centralised, which means that whenever there is a problem, someone from the HR Department is sent out to deal with it, so that local managers can get on with their day-today work. The trade unions are large, well organised and generally hostile to management. HFA faces a number of ethical problems. My proposal is to get staff costs down and rebuild morale - its as simple as that! We must reduce the headcount by 20% over the next six months; otherwise the airline has no chance of survival

Ethics at HFA Ethics defined right and honourable conduct that strikes a balance between the needs of all stakeholders.

HFA provides employment and all the benefits that come with that- generation of income, sense of personal identify for employees, community for workers and families. However, because of new competitive external environment, employment is not viable long-term without reductions in headcount. The organisation has a legal and ethical responsibility to carry out redundancies with

reasonable care. Suppliers depend upon HFA making cuts particularly through redundancies. Although they might compensate by switching to airlines that are filling the gap left by the ailing HFA. HFA management must create and sustain a culture in which it is acceptable for staff to complain about unethical behaviour within the organisation.

There needs to be a partnership rather than adversarial relationship with staff and the recognised trades unions. Management must address the stressful and commercially damaging collapse of staff morale and create an open and unthreatening culture. It appears that the airline has drifted into attempts to buy staff loyalty rather than to earn it.

Proposal for promoting ethical behaviour at High Flight Airways

It is likely that a bureaucratic HFA will already have an all encompassing and generous redundancy package, including early retirement and outplacement. It would be appropriate to involve and support the families of those affected. Top management need to define, approve, demonstrate and enforce minimum standards of acceptable conduct by employees of HFA. To encompass financial propriety, whistleblowing even where whistleblower is proved incorrect and the disciplinary consequences of unethical behaviour. In parallel with the codes of conduct, management style must be changed. The devolution of HR activity will signal this change, but it must be supported by new standard setting, monitoring and reward structure. Stress and other occupational health needs must be addressed quickly.

High Performance Model

The four standard elements of the High Performance Working model which can be adapted to fit HFA are; 1. Employee autonomy and involvement in decision-making. 2. Support for employee performance. 3. Rewards for performance. 4. Sharing of knowledge and information

All such models are supposed to increase; Staff motivation and quality of employer brand through engagement and autonomy. Quality, quantity and innovation through concentration on these features Prices, turnover and market share, outputs of improved quality, quantity and innovation Job security and earning potential of staff through increased performance

Proposal for High Performance Working system at HFA

1. Employee autonomy and involvement - Develop flexibility of skills, Team working to give variety and responsibility.

2. Support for employee performance - Appropriate selection and recruitment processes finding and retaining staff at all levels that will support a high performance culture, Comprehensive induction programmes, including moving the airline to the new high performance culture, Sophisticated and wide training, Integrated and wide ranging performance management and reward, Emphasis upon work-life balance.

3. Rewards for performance - Offer a career not just a job - talent management, Harmonised terms and conditions, Pay that remains competitive with other employers, Rewards linked to individual and team performance.

4. Learning - Create a culture where exchange is valued and practiced, Create structures that promote sharing across divides for example. Mixed project teams to address organisational problems, staff they spend time on environmental scanning and considering appropriate responses to changing environments.

Proposal for reducing headcount by 20% within six months

1. Offer voluntary early retirement: can be expensive and HFA will lose experienced staff. But maintains morale.

2. Short-time working: This option can be used for a limited period, in the hope that business will improve and redundancies can be minimised. Unlikely to be appropriate unless there is an upturn in passenger numbers.

3. Redundancy: either compulsory or voluntary, with the latter being preferable but more expensive because it involves enhanced terms.

4. Reducing or eliminating subcontracted work: this will be essential but the airline must ensure it either does not need the work to be done, or that other staff are available to do it.

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