Why is Human Resource Management Important - Essay Example

? Why is HR Important Contents Contents 2 Human Resource Management and Competitive Business Advantage 3 Objectives of Human Resource Management as Strategic Management Goal 4 Human Resource Practices in an Organizational Setting 6 Diversity Management as a Strategic Human Resource Goal 7 Best Practices Involved in Diversity Management in Organisations 9 Implications of Diversity Management in Enhancing Competitive Business Advantage 11 References 13 Human Resource Management and Competitive Business Advantage In the global business environment, it is impossible to have technology, machinery or processes which are not available with a firms competitors. But even in the most technological and fully automated facilities, it’s the skill of employees and their commitment which tends to create the competitive advantage. Every successful company has at least one or more competitive advantage that is factors which enables the company to differentiate its products and services from that of its competitors and in a way increase the market share. For example, Apple creative employees tend to produce innovative products. Southwest Airlines is the low cost leader with effective employment policies which motivated the work force (Gary, 2010, p.52). Competitive advantage is the new perspective catchphrase of HRM and business which is mainly achieved by organisation through its employees. This helps to reinforce the value and importance for human resource planning, compensation, recruitment and selection, diversity management and others types of human resource practices. Companies value the employees as return on investment and not just cost which is to be borne by the employer. The advantage is thus not only derived from formal reshaping and reorganisation but also with respect to training and expertise which is made available to the organisation. The adaptability by the employees allows the organisation to have strategic flexibility along with the commitment of the employees to the business plan of the organisation and their goals are the other benefits of the competitive advantage for an organisation. There are number of ways through which human resources can give a business a competitive edge over its competitors such as hard working and contented employees are likely to give excellent work which in return adds value to the organisation; with sound employee relation it encourages investors to buy shares and raise funds for the company; the resources of the organisation are used in the most effective way through recruitment of the best people; the organisational culture tends to be more conducive to quality performance; change can be easily implemented and the core competences of the organisation are enhanced as well as strengthen (Simms, 2005, p.8). According to research, it has been indicated that with HRM practises a firm can have a strong impact over competitive advantage. Number of studies has shown the links between HR practises and profits. A study conducted by Chris Ryan has founded that there exists a relation between the HRM practices and shareholders return. It was concluded that nearly about 15% to 30% of the total value is attributed to the HRM practices which included providing employees with an effective training; letting the employees know what is expected from them and discharging the employees who are below average (Kleiman, 2003, p.13). Objectives of Human Resource Management as Strategic Management Goal Human Resource Management is often described as an approach towards traditional personnel management. Thus HRM can be defined as a set of procedures, policies, programs which are designed in order to maximise the organisation and personal goals. It is in fact the procedure which binds the individuals and the organisation together with a main purpose of achieving the desired objectives. The strategic HRM is all about adaptation and integration, thus the objective includes HRM is integrated with the strategic needs and strategy of the firm or organisation The policies of Human resources are coherent but across hierarchies and policies. The practises of HR are accepted, adjusted and are mostly used by line managers and the HR teams as part of their work Human resource is highly motivated to be productive and achieve excellence. The goal of strategic human resource management in organisation is to allocate and deploy all the available resources in order to achieve a competitive advantage. In order to face the challenges companies requires being proactive and applying the strategic approach in the market place. To be effective at a maximum level, the functions of HRM must be involved with the organisations strategic process. Thus a human resource manager should put the inputs into the strategic plan, for people related issues and also the ability of the HR to implement strategic goals for the organisation. Should poses a knowledge about the strategic goal of the organisation, have an idea about the type of behaviour, employee skills as well as attitude is required to support the strategic plan and develop programs in relation to employees. Business organisations tend to engage themselves into generic strategies which often fit into strategic type. One such example is cost differentiation or focus. Different organisation often has different generic strategies. These strategies describe the way the organisation tends to position itself against the competitors. Generic strategy is a small part of strategic management. Therefore the second aspect of strategic management is the process of developing strategies to achieve the goal of the company with respect to its current environment. A business firm engages it to generic strategies but the firms also makes choices as to how to stay ahead from its competitors in every possible manner such as how to influence or react to pending legislation, dealing with the stakeholders, measures on how to lower the production costs, increase revenues, technology to implement and how many people to employ. Therefore the objective of HRM is to plan the human resource deployments as well as the activities in order to enable the organisation to achieve the desired goals. For example most of the organisation today has implemented advanced technology such as just in time, manufacturing technology and quality management to gain a competitive position but these systems are run by people. Therefore strategic human resource management assess the skills of the employees which is required by them to operate the system and engage in the practise of HRM such as selection and training which helps to develop the required skills in the employees (Noe, 2007, p.59). Human Resource Practices in an Organizational Setting Human Resource Practises have undergone some drastic changes during the recent years. Practitioners along with the academics have called for providing more attention and tighter the linkages between the HR practices and strategies of the company. Some of the Human Resource practise includes compensation, benefit, selection and recruitment, training and development and diversity management and others which are practised in an organisation. Organisation success depends on the way practitioners manages its employees as a function of the organisation structure and financial resources. Compensating the employees usually represents a critical HRM practices. Therefore without a sound and effective compensations system the organisation cannot attract and retain the best talent and qualified members. Compensation system has the capability to promote the competitive advantage of the organisations when they are linked properly with the strategic goals of the organisation. In a similar manner compensation practise can even undermine the competitive advantage if they are not designed and implemented properly. Similarly benefits can also contribute to the organisations competitive advantage for reasons such as in recruiting and selection of the best candidate, tax advantages and other benefits. But it has been said that companies which provides discretionary benefits to its employees are less likely to promote the competitive advantage than those which with discretionary compensation programs. A company can use the discretionary benefits in order to distinguish from the competitors (Martocchio, 2004, p.385). In the global economy the companies tend to seek for greater opportunities and hiring new employees to help the organisation achieve the growth. With respect to the changing environment, recruitment and selection has emerged as one of the crucial HR practices. Organisations across the sectors have engaged themselves into a fierce competition for recruiting the best talent available to them. Due to the increase in the importance of driving the competitive advantage, there tend to increase more of mishaps in the selection process. Thus individuals must possess mix skills of attitude, motivation and other relating factors which would enable the organisation to compete and create a competitive advantage and thus help the organisation to adapt to uncertain challenges which might occur in the future (Storey, 2009, p.209). The next type f HR practise is the diversity management which also helps organisation to create competitive advantage over the competitors. Therefore the HR practices would deal broadly with the diversity management discussed in the next heading. Diversity Management as a Strategic Human Resource Goal The business organisations operating along a larger business sphere embracing people from different walks of life need to manage such human resources effectively to gain competitive business advantage. Existence of diversity in the workplace signifies that people belonging to diverse cultures, ethnic and national backgrounds comprise the work population in the organisation. Similarly the people inside the concern also largely differ based along gender and sexual roles and also in regards to age and physical competencies. Differences in regards to religious beliefs and marital position of human beings in an organisation also amount to the rise of organisational diversity in the concern. The human resource managers in the business concern are desired to effectively manage the above diverse population in an organisation in order to achieve business competency. Enhancing diversity in the workplace helps the business managers to retrieve new working ideas and concepts that would help the business concern gain a competitive position in newer market places. Formal and informal courses of discussion held with the diverse workforce helps the people gain on productivity and skill sets and thereby enhances the profitability of the concern. Moreover the recruiting functions of the managers involved at taking people from diverse backgrounds helps in enhancing the social and public image of the concern and also motivate the people to work with colleagues belonging to diverse backgrounds. The latter thereby helps the management in effective retention of the workforce recruited. Products and services produced and rendered by a diverse workforce would help the firm to gain a large pool of customers based along extended geographies and thereby help the business organisation expand its market shares. Again respect and honour reflected in regards to a diverse workforce group also helps the business organisation reduce the incidence of any type of conflict. Thus effective management of workforce diversity would certainly help the firm in lowering its legal costs. Workforce Diversity thus strategically helps the human resource business functions gain a larger competitive advantage in gaining the potential of a diverse team of people working to together to enhance business productivity. Strategically speaking the existence of workplace diversity also helps in enhancing the interpersonal relationship and communication between different organisational groups performing across different or same departments. This fact enhances the motivational factor of the people and thereby helps the firm to effectively reduce the cost of recruitment. Management of diversity in the organisation also strengthens the relationship between the higher organisational hierarchies with the diverse sets of people working along different groups and thereby help the managers in enhancing the returns on the investment made in regards to recruitment and training rendered. Thus the management of workplace diversity is considered as a key strategic goal of effective human resource management (Mathis and Jackson, 2011, p.44-46). Best Practices Involved in Diversity Management in Organisations In regards to management of diversity in an organisational setting the business managers are required to incorporate a set of best practices that would in turn help the concern gain significantly in regards to business productivity and enhanced employee relationships. Thus firstly the managers are required to evaluate the need for diversity in a business setting. In that the business and human resource managers are required to identify the business gaps emanating from the existing and desired level of organisational diversity and thereby effectively address the key gaps. Finally the need for enhancing the workplace diversity needs to be integrated with the strategic goals and objectives of the concern which in turn justifies the need for enhancing the diverse workforce groups in the concern. Thus the set of best practices in regards to enhancement of workforce diversity in an organisational setting involves the incorporation of the following elements. Firstly the organization needs to redefine its goals, values, mission and visionary aspects to help focus on engaging a diverse workforce that would help the concern gain on local, regional and global business competence. Secondly the business managers in that should explicitly focus on rationalising the cause for gaining of diverse workgroups in the concern articulating the same to gain organisational productivity. Thirdly the planning for the incorporation of diverse workgroups in the concern should be carried out by the human resource managers in close cooperation with social bodies working for the development of diverse or minority workgroups. Such cooperation would help in enhancing the effectiveness of the planning conducted. Fourthly the objectives and benefits expected to be accrued behind the incorporation of diverse workgroups in the concern should be reflected by the business managers on a year to year basis and discussed with the existing workgroups. This would help in the avoidance of business conflicts and would help enhance transparency. Fifthly the business managers can help in enhancement of motivation of the existing workforce to help welcome diversity through the linking of such activity to financial incentives. In the sixth case the business managers are required to allocate both financial and infrastructural resources that would help the management meet its desired objective of incorporating diverse population groups. In that effective funds should be created and appropriated among various units to help in reducing the compensation gaps in regards to the diverse workgroups in the concern. Moreover the business managers are required to work on designing effective training programs to help in the development of the diverse or minor workforce groups so as to enable them in meeting of organisational goals in an effective fashion. The resources of the concern in regards to enhancement of knowledge and other flexible benefits designed in respect to the workforce must also focus on the diverse workgroups. This helps them in gaining equal opportunities to exist in the workplace and thereby grow both professionally and personally. Again the set of best practices involved in regards to workforce diversity in the workplace also incorporates the designing of a scorecard that matches the different actions taken with regards to workforce diversity by the business managers against set parameters. Such actions are required to be undertaken by the managers in respect to the different human resource management initiatives starting from recruitment, development and retention of effective manpower in the company. Use of the scorecard thus helps the business managers in identifying the areas where shortfall of diversity is reflected and thereby equips them in designing key strategies to meet the desired organisational needs (ASHE Higher Education Report, 2007, p.91-92, 96-97). Implications of Diversity Management in Enhancing Competitive Business Advantage Having discussed the set of best practices that can be incorporated by the organisational managers in regards to workplace diversity the paper now focuses on the positive implications that the managers ought to take in such respect. The first set of implications that can be taken by the business managers in such respect is to introduce a training program specially emphasizing on diversity. The training program should thereby focus on rendering value to the concept of organisational diversity as in helping the concern to gain both in terms of productivity and skill sets. Further the training program is also required to entice and motivate the existing workforce to work in a different cultural setting taking into hold the diverse workforce. This training program should help the people tune their behaviouristic patterns to help understand the importance of workplace diversity and integrate with them effectively (Monaghan, 2010, p.54). Secondly the senior level business managers are required to set high accountability standards in regards to incorporating a diverse workforce in the organisation. Accountability of the managers in developing the diverse population should be measured against set standards. Thirdly the management must work in involving the existing employees in helping the organisation retain the diverse workforce recruited by them through effective interpersonal relationships. Fourthly as in regard to ‘best practices’ the organisation should incorporate the views of external bodies or councils working on diverse workforces to make the minority or diverse workgroups feel valued. Fifthly the management team and other people in the organisation should work in developing their personal traits by mixing with people belonging to multicultural settings to enhance their understandings of the needs of such diverse workgroups. Finally in the sixth case the implications of development of workforce based on diversity needs should not be restricted by managers to a particular department or unit but must be pursued globally (Clapp, Jr., 2010, p.63-65). The above practices would thereby help in the effective management of workforce diversity and help a concern gain on productivity and profitability. References ASHE Higher Education Report, 2007. Best Practices in Diversity Planning and Assessment. ASHE Higher Education Report, 33(1), pp. 89-102. Clapp, Jr., J. R., 2010. Diversity Leadership: The Rush University Medical Center Experience. Hospital Topics, 88(2), pp.61–66. Gary, D., 2010. Fundamentals of Human Resource Management: Content, Competencies and Applications. South Asia: Pearson Education India. Kleiman, L., 2003. Human Resource Management: A Managerial Tool for Competitive Advantage Third Edition. USA: Dreamtech Press. Martocchio, J. J., 2004. Strategic Compensation: A Human Resource, 3/E. South Asia: Pearson Education India. Mathis, R., and Jackson, J., 2011. Human Resource Management: Essential Perspectives. United States: Cengage Learning. Monagham, C. H., 2010. Working Against the Grain: White Privilege in Human Resource Development. New Directions for Adult and Continuing Education, no. 125, pp.53-63. Noe, R. A., 2007. Human Resource Management (Sie) 5E. New York: Tata McGraw-Hill Education. Simms, H., 2005. Human Resource Planning. Select Knowledge Limited. Storey, J., 2009. The Routledge companion to strategic human resource management. USA: Taylor & Francis. Read More