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STRATEGIES TO OPTIMIZE THE COST OF HUMAN RESOURCES IN CONSTRUCTION COMPANIES
Dissertation Proposal
Submitted to Northcentral University
School of Business
in Partial Fulfillment of the
Requirements for the Degree of
DOCTOR OF BUSINESS MANAGEMENT
by
Amenia Payne
San Diego, California
Strategies to Optimize Cost of Human Resources
September 2022
Chapter 1: Introduction 1 Statement of the Problem 2 Purpose of the Study 2 Introduction to Theoretical or Conceptual Framework 3 Introduction to Research Methodology and Design (Nature of the Study) 4 Research Questions 4 Hypotheses 5 Significance of the Study 5 Definitions of Key Terms 6 Summary 6 Chapter 2: Literature Review 7 Theoretical or Conceptual Framework 7 Subtopic 8 Summary 8 Chapter 3: Research Method 10 Research Methodology and Design (Nature of the Study) 10 Population and Sample 10 Materials or Instrumentation 11 Operational Definitions of Variables 12 Study Procedures 13 Data Analysis 13 Assumptions 14 Limitations 14 Delimitations 14 Ethical Assurances 15 Summary 15 Chapter 4: Findings 16 XXX of the Data 16 Results 17 Evaluation of the Findings 18 Summary 18 Chapter 5: Implications, Recommendations, and Conclusions 19 Implications 19 Recommendations for Practice 20 Recommendations for Future Research 20 Conclusions 20 References 22 Appendix A XXX 23 Appendix B XXX 24
Chapter 1: Introduction
Management activities in modern business practices are characterized by the reinforcement of a rational approach to the use of our human resources, a distinctive feature in which decision-making is based on systematized information about the state and changes in objects and processes (Lyskova, 2018).
For both theorists and practitioners in the field of personnel management, it has become an axiom to classify personnel as key resources, strategic factors that determine the company's competitiveness. One should not forget that the staff is not only a unique resource but also a significant cost item for the employer. The provision of a social package, significant bonus percentages, moral encouragement, and the organization of corporate events have become a common practice for many Russian industrial companies. However, significant funds are spent on measures to improve the efficiency of the work of the staff, and the commitment and motivation of employees remain at a low level. Staff costs continue to be just expenses and do not always provide the employer with the desired economic effect (Gretchenko et al., 2018).
Systematized information on personnel costs is necessary both for the employer to develop an effective personnel management policy in economic and social aspects and for the employee to assess the composition and structure of the employer's costs that form his personal income or are related to the implementation of personnel activities that contribute to the development of his professional and personal characteristics (Ling & Yumashev, 2018).
At present, in the Russian practice of personnel management of an industrial company, there is a declarative nature of personnel policy, which is often distinguished by the planning of personnel activities without an appropriate economic justification, which results in the irrational use of resources. According to Lobanova (2019), the most significant reasons for this situation are as follows:
· The employer's lack of a systematic idea of the mechanism for managing personnel costs;
· Identification of the concepts of "personnel management" and "personnel cost management": in the practice of personnel management of a modern industrial company, personnel cost management is not singled out as an independent function of personnel management;
· Ignoring the specifics of personnel costs, which are considered in the context of the total costs for the production and sale of products, works, and services;
· the unwillingness of structural units and officials who make decisions on the amount and direction of personnel costs to combine the characteristics of the personnel cost management process into a single system.
· Industrial production is the process of combining resources in order to obtain the desired product. The economic content of this process is the essence of cost management, including personnel costs, as a key production factor.
· Industrial companies currently experiencing a shortage of qualified personnel are interested in the formation of a personnel cost management system, which is the basis for coordinating the socio-economic goals of the employer and employee.
Statement of the Problem
Evaluation of information in prior studies, show the result of the internal and external analysis carried (strengths, weaknesses, threats, opportunities, and the key success factors of the sector), below and as part of the strategic formulation, the new vision and mission of the company, strategic objectives are established, and strategies are developed (Fuertes et al., 2020). To define the strategic objectives that the company wants to follow, it must be directed based on the vision, mission, and thus the strategies that are necessary for the fulfillment of the objectives will be obtained. The trend toward the globalization of economic processes demands a new organizational and technological paradigm, making it necessary to establish the organization's mission. Strategic planning is preceded by strategic thinking, which will allow the formulation and execution of the Mission in the organization. Also, those working groups are formed to share ideas about the desired future (George & Schillebeeckx, 2022). Strategies are the starting point for meeting objectives. In this case, we will see how it helps us optimize Human Resources costs. The Operating Result is an effective Project Planning and Control System. It combines a wide variety of aspects, such as physical progress, production, yields, economic result (cost control), and financial result (cash flow control). That is why it is taken as a strategy to optimize the costs of Human Resources in the province of Lima due to its high-cost control. The estimated calculation of the cost of a work that is carried out before its execution is the budget. The more accurate you are, the closer you get to the actual cost. We have witnessed the disappearance in the market of many companies belonging to the construction industry sector due to poorly preparing a budget and;
· Forgetting many details by not having a referential pattern of how to budget.
· Spending many man-hours using spreadsheets and not having time to think about the logistics of the job.
· Not having a data bank of the company's own performance of previously executed works.
· Failure to use a system of costs and budgets suitable for the type of work to be carried out, be it civil or electromechanical. As well as errors made during the execution of the work unrelated to the budget.
· As for the workforce, social laws, overtime, food or personal allowances, and safety implements must always be analyzed (Bagaskara, 2021).
High costs of labor in projects in the construction sector of civil works due to the lack of planning of the activities to be carried out and poor controls. At present, all companies, especially construction companies, need to optimize the costs of their human resources that allow them to improve their objectives and reformulate their mission and vision.
In every company, human resources are important because it allows for meeting the goals set by controlling the use of these. All administrative activity is important to be carried out effectively. It is necessary to know how costs affect achieving all the expected objectives to work.
The study of theoretical and practical studies of domestic and foreign scientists allows us to conclude that the issues of cost management for the company's personnel are insufficiently developed. The application of human capital theory at the company level usually comes down to defining the corporate workforce as the totality of the human capital of employees. In modern conditions, considering the issues of personnel management of an industrial company, it is advisable to talk not about the cost of human capital but about the cost of personnel decisions. This is due to the fact that the implementation of personnel functions requires decisions on the directions, magnitude, and sources of reimbursement of personnel costs.
The solution to the problems of personnel cost management is mainly limited to the development of a conceptual apparatus, composition, and classification of personnel costs. The greatest attention is paid to the issues of material incentives and wage management. There are no studies that reveal the mechanism for managing the personnel costs of an individual company. Not enough attention is paid to the formation of a personnel cost management system as an integral set of interacting elements that ensures the adoption of economically sound management decisions.
It is the reason for this research project because it will provide a useful tool to the company since it was verified that an adequate costing of human resources is not carried out in the construction of works in the province of Lima. It will allow recognizing faults that could exist in administrative management that may affect the company's profitability.
Purpose of Study
The purpose of this study is to analyze the formulation of the budget in the optimization of Human Resources costs in construction companies in the province of Lima, describe the measure of Personnel Management in relation to the optimization of Human Resources costs in construction companies in the province of Lima, and to analyze the influence of the Operating Result method in the optimization of Human Resources costs in construction companies in the province of Lima.
Introduction to Theoretical or Conceptual Framework
The theoretical foundations of personnel cost management in domestic and foreign economic literature are considered in the works of representatives of various areas of economic science, but mainly within the framework of the theory of personnel management and labor economics (Cassar & Meier, 2018).
The study of the main stages of the evolution of personnel management from the point of view of changing the employer's attitude to personnel costs will allow us to systematize scientific views on the management of personnel costs.
The evolution of personnel management is an antagonism of two worldviews: the philosophy of prioritizing human resources and the philosophy of prioritizing "non-human," primarily financial, resources. Nevertheless, scientific research of the last century made it possible to formulate the most important concepts of personnel management (Peterson, 2020), which assess the role of a person in an organization in different ways, and are characterized by the use of various combinations of personnel management methods: administrative, socio-psychological, economic. These include, in particular: - the concept of the use of labor resources; - the concept of "scientific administration,"; - the concept of human relations management; - the concept of strategic human resource management; - the concept of managing a person and organizational culture.
The concept of labor resources (F. Taylor, G. Emerson, G. Gantt, etc.) was developed from the end of the 19th century to the 60s of the 20th century (Stetz, 2021). Taylor proposed a strict scientific system of knowledge about the laws of the rational organization of labor, the constituent elements of which are the mathematical method of calculating the cost, differentiation of wage systems, the method of studying time and movements, the method of dividing and rationalizing labor practices (Taylor, 2004). Instead of a person employed in production, only his function was considered - labor, measured by the cost of working time and wages, which were considered as two main indicators characterizing the efficiency of the use of labor resources in production and, thus, were the main factors that determined the number of personnel costs.
Taylor's teaching was based on a mechanistic understanding of man and his place in the organization. The main way to solve the problem of increasing productivity and, accordingly, the tool for managing personnel costs, he considered the rationalization of operations based on rationing, a rigorous analysis of production processes, as well as the systematic use of material incentives, which was the basis of economic methods of personnel management (Taylor, 2004).
Summarizing the essence of his system, Taylor wrote: “Science instead of traditional skills; harmony instead of contradictions; cooperation instead of individual work; maximum performance instead of performance limitation; development of each individual worker to his maximum permissible productivity and maximum well-being” (Taylor, 2004).
A tangible contribution to the development of the theory of scientific management was made by G. Emerson, who formulated 12 management principles that ensure the growth of labor productivity. According to him, “to work hard means to make maximum efforts; to work productively means to make minimal efforts.” Emerson attached particular importance to the selection of personnel, thus laying the foundations of the philosophy of hiring as one of the postulates of the concept of using labor resources (Emerson, 1913).
It can be stated that the development of the concept of the use of labor resources was characterized only by a production orientation, within which the employee was considered as an impersonal resource, along with material and financial resources. Human resources were, first of all, a means of increasing the financial resources of an entrepreneur. According to D.V. Gross, Taylorism is the classical geometry of labor, the most important axioms of which are organizational harmony and psychological expediency (Corwin, 2003). In organizational terms, personnel management at enterprises was concentrated exclusively at the level of line management, and the main management mechanism was labor rationing.
At this stage in the development of managerial thought, personnel costs were regarded as burdensome expenses for an entrepreneur on one of the other similar resources. It's only difference, considered a key drawback, is animation. Managers tried to smooth out such a flaw by developing a clear personnel management algorithm, rationalizing operations, rapprochement, and identification of a person with a technological mechanism, which was the main principle of personnel cost management. Actually, the task of economic substantiation of personnel decisions, the problem of forming a personnel cost management system, as the basis for the interconnected application of personnel management methods, was not considered separately from company management (Hidayah & Syahrani, 2022).
At the first stage of the evolution of management concepts, the main strategy for managing personnel costs was the tactics of minimizing costs on the basis of an ideal ratio of working time and wages for the employer through technological rationalization. The very term "strategy" is not applicable to the concept of the use of labor resources, which had a short-term economic orientation. So Chandler (2009) interprets this concept as defining the company's main long-term goals and objectives and developing the direction of action and allocation of resources necessary to achieve the goals.
Introduction to Research Methodology and Design (Nature of the Study)
A quantitative research design was used for this study with a special focus on descriptive methods. A survey was carried out to gather information from the study participants. Frequency analysis was carried out to analyze the hypothesis of the study.
Research Questions
Main question
What are the strategies to optimize Human Resources costs in construction companies in the province of Lima?
RQ1
How does the budget formulation imply the optimization of Human Resources costs in construction companies in the province of Lima?
RQ2
To what extent is Personnel Management related to the optimization of Human Resources costs in construction companies in the province of Lima?
RQ3
How does the real Operating Result method influence the optimization of Human Resources costs in construction companies in the province of Lima?
Hypotheses
H10
The Strategies implemented help optimize the costs of Human Resources in construction companies in the province of Lima.
H1a
The strategies implemented do not help optimize the costs of human resources in construction companies in the province of Lima.
H20
A good Budget Formulation planning implies positively in the optimization of costs of Human Resources in construction companies in the province of Lima.
H2a
A good Budget Formulation planning does not imply the optimization of costs of Human Resources in construction companies in the province of Lima positively.
H3o
Personnel Management has a considerable relationship with the optimization of Human Resources costs in construction companies in the province of Lima.
H3a
Personnel Management does not have a considerable relationship with the optimization of Human Resources costs in construction companies in the province of Lima.
H4o
The Operating Result positively influences the optimization of Human Resources costs in construction companies in the province of Lima.
H4a
The Operating Result dose does not influence the optimization of Human Resources costs in construction companies in the province of Lima.
Significance of the Study
Theoretical significance
The result of this research can be systematized and then incorporated into the epistemological field of science since it would demonstrate the relationship that could constantly exist between the variables under study.
Practical significance
This research is carried out because there is a need to have tools to be more competitive since it is indicated that there is a drop in profitability in the construction sector.
Methodological significance
This research will provide information according to the methods, procedures, techniques, and instruments used, which, once their validity and reliability have been demonstrated, can be used in other research works.
Definitions of Key Terms
Strategies
A strategy is the set of actions that will be implemented in a given context with the aim of achieving the proposed goal.
Budget
Accounting document that includes a forecast of income and expenses that will occur in the development of an activity or the operation of a company, or corporation, in a certain period
Additional work budget
The additional work budget is the higher cost caused by the execution of complementary works and more extensive measures not considered in the bidding conditions or the respective contract and necessary to meet the goal set in the main work.
Human capital.
It is a term used to designate a production factor-dependent not only on the quantity but also on the quality, the degree of training, and the productivity of the people involved in a production process. In addition, it has been extended to designate the set of human resources that a company or economic institution possesses.
Optimize.
Plan an activity to obtain the best results.//Find the best way to carry out an activity.
Cost.
Value is sacrificed in the acquisition of assets to be transformed or resold to generate operating income in a business.
Human Resources: A company has various resources that allow it to function and achieve its goals. Employees, workers, and collaborators make up what is known as the human resources of an entity. The concept is also used to name the department, office, or person dedicated to analyzing, choosing, hiring, training, and retaining a company's workers.
IDENTIFICATION AND CLASSIFICATION OF VARIABLES.
Variables and Indicators of the Research
Independent Variable
Strategies.
Dependent Variable
Human Resources Costs
Operationalization and Variable Indicators
Strategies
· Personnel management.
· Budget.
· Operative result.
Human Resources Costs
· Costs.
· Human Resources.
Summary
This chapter presents the study problem, study purpose, research questions, research hypothesis, and significance of the study. In addition to that, definitions of terms and classification of variables are included in this chapter.
In the next chapter review of the study variables is provided in detail.
References
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Cassar, L., & Meier, S. (2018). Nonmonetary incentives and the implications of work as a source of meaning. Journal of Economic Perspectives, 32(3), 215-38.
Chandler, A. D. (2009). Shaping the industrial century. In Shaping the Industrial Century. Harvard University Press.
Corwin, S. (2003). Picturing efficiency: Precisionism, scientific management, and the effacement of labor. Representations, 84(1), 139-165.
Emerson, G. C. (1913). Scientific management in the public works of cities. National Municipal Review, 2(4), 571-582.
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