The Impact of Human Resource Management on Organizational Performance - Assignment Example

1.0 Introduction The field of human resource (HR) management is one of the many interesting areas of research that has witnessed a paradigm shift within the last few decades (Huselid, 1995, Doty &Delery 1996). Within this area of research, an increasing body of literature contains the argument that, high performance work practices, including comprehensive employee's recruitment, selection procedures, incentives compensation and performance management systems, and extensive employee's involvement and training can improve the knowledge, skills and abilities of firms (Huselid, A. M., (1995), Jackson E. S., Schuler S. R., & Sparrow, P., (1994). Jackson & Shuler (2002) referred to it as an umbrella term that encompasses (a).specific human resources practices such as recruitment, selection and appraisal and (b). formal human resource policies which directs and partially constrain the development of specific practices and in all, it comprise a system that attracts develops, motivates and retains those employees who ensure the effective functioning and survival of the organisation and its members (Jackson & Schuler 2002). This paper examines traditional and contemporary selection methods used today in modern organisation. 1.1Traditional Human Resource Selection Methods Traditional human resource methods include but are not limited to placing an add in the newspaper or hiring a head hunter. However, neither effort can specify details of their requirements in a cost-effective way. The purchase of a advertisement leaves the employer unable to afford to pack in so much information in a print add. Traditional recruitment methods also have higher costs per hire. This is especially so in the case of head hunters who require a percentage of the annual salary of the candidate whom is ultimately hired. Human Resource recruitment has been argued to be the process of attracting the best qualified individuals or candidate to apply for a job. In business, recruitment involves three stages, identify and define the requirements including the job description, job specifications, attract potential employees and make sure the most appropriate people are retain for a particular position (Poole 1999). Human resource selection process can take place either through internal or external method. According to Poole (1999) internal recruitment and selection refers to the filling of job vacancies from within the business here, existing employees are selected rather than employing someone from outside (Poole 1999). A business might decide that it already has the right people with the right skills to do the job, particularly if its training and development programme has been effective (Poole 1999). Poole (1999) went further to states how internal vacancies are usually advertised within the business via a variety of sources such as Staff notice boards Intranets, in-house magazines etc. This internal selection method has largely been applauded because of its growth opportunity given to internal employees. For example, Osborne, Hyman & Jack (2006) stipulated that internal selection processes, gives existing employees greater opportunity to advance their careers in the business and may help to retain staff who might otherwise leave and assist in a situation of a short induction training period (Osborne, Hyman & Jack 2006). On the other hand, external recruitment and selection processes refer to the filling of job vacancies from outside the business (contrast with internal recruitment). Most businesses engage in external recruitment fairly frequently, particularly those that are growing strongly, or that operate in industries with high staff turnover (Poole 1999, Osborne, Hyman & Jack 2006). Most often, organizations used several ways to look for staff externally. Some used external agencies, some headhunts, while others use job recruitment and student placement fare (Poole 1999). The main advantages with using an agency are the specialist skills they bring and the speed with which they normally provide candidates. They also reduce the administrative burden of recruitment. The cost is the high agency fees charged - often up to 30% of the first year wages of anyone employed Poole (1999) also argued that, Up market" recruitment agents who provide a more specialized approach to the recruitment of key employees and/or senior management. They tend to "approach" individuals with a good reputation rather than rely on long lists of registered applicants - often using privileged industry contacts to draw up a short list. (Poole 1999). Job Centres are often being used by organisation to select employees. Beer & Spector (1985) emphasised a new set of assumptions in shaping their meaning of HRM selection and retention process. The researcher also stipulated that, proactive system wide intervention, with emphasis on 'fit' linking HRM with strategic planning and cultural change with respect to people and social capital capable of development (Beer & Spector 1985). In the human resource management world of today, government funded training recruitment schemes are used today by most organisations to recruit and select talented employees. The advantage of these schemes is that government funding lowers the cost of employment. However, relatively few employment requirements are covered by these schemes (Grehart, & Becker 1996). Traditional recruitment and selection method is the most common method of recruitment. According to Gilbreath (2008), creating strong HRM policies requires creating a strong psychological environment in which employees can thrive. Such an environment requires conducting stress audit, monitoring the work of the environment, matching people and work environment and using teams of employees and researchers to study the work environment. Here, people still seem to think that a written application means a hand written application. If a company does want a handwritten letter they will say so (Gilbreath 2008). Traditional selection methods take many forms, from sending an open application letter, enrolling with a recruitment agency. Selection takes place through an interview, a placement test, assessment centres and through work samples techniques. Other methods of selection take place over the internet. Traditional selection method often involves a process. According to Gilbreath (2008), traditional recruitment methods involve, advertising for a position, screening applications and resumes, testing and reviewing work samples of likely candidates, checking references and background and making a selection (Gilbreath 2008). This can usually take weeks or months. Going through these processes will mean eliminating some candidates at each stage of a process. All candidates go through all the selection procedures. According to Gilbreath (2008), traditional human resource selection methods involve, application forms, interviews, assessment centers, psychometric test, and peer assessments. Usually, an applicant is expected to fill out an application forms or write an application letter, the interview method is the most common and the most usual. Not always most valid method- depends on form of interview used by the recruiter. Usually, an interview can be focused on structured and unstructured questions. Gilbreath (2008) criticized this selection method of its biases on part of interviewer, Halo effect, Primacy effect. Interview can take any of the following form. Structured (much higher validity than unstructured) (questions oriented to past experience, and hypothetical questions) Unstructured Panel/ Team (Gilbreath 2008). Interviews-this method of selection is one of the oldest traditional methods often used by hiring firms and organizations to get a hold of their client. In this method, interviewees and candidates are asked certain questions to evaluate them against the position or positions in question. For example, DeMarie & Werbel (2005) argued that, when asked what they would do in a particular situation, candidates for example will often give the answer which they feel the interviewer wants to hear. Another selection method is to let candidates pass through a selection center. In a selection center, it is assumed that no individual method of selection is good. Another traditional human resource selection method often used is Psychometric test, were candidates are examined in line of certain characteristics. DeMarie & Werbel argued that, traditional method of selection should be determined when the person specification is properly developed; here the recruitment firm must be able to identify how each criterion will be measured. Interview remains the primary and main method of selection but may be complemented by other techniques such as presentations, work samples, group discussions and why not validated tests etc. In recruiting and selecting for some specific positions. Recruitment agencies often use person specification template to record which methods of selection you wish to use for each criterion you identify and gives five main alternatives (Jackson & Shuler 2002). Usually, Gilbreath (2008), states that, psychometric test can center on personality, interest inventory or motivation and honesty of the candidates. For the assessment centers, focus for the recruiter is on behaviour, role play and exercises. Here participants are assessed together to watch for interactions. According to Gilbreath (2008), It is necessary to confirm the nature of the previous, period of time in employment, the reason for leaving, attendance record etc.But Allowance should made for prejudice and a check should made. Some firms fear liability in defamation suits for giving references. Importance of training referees to know difference between facts and generalizations. When faced with conflicting priorities and guided by the rational behind investment theory effective human resource policies need to be put in place to gain employees commitment, flexibility and for creating a "core resources" and competitive advantage to sustain performance (Grehart, & Becker 1996),. In selecting applicants for various position, some researchers have caution that the decision making process during the interview could be improved and supplemented from data gathered from other sources such as application form, CVs, references. For some positions candidates might be asked to deliver a seminar paper, write reports or do a departmental presentation. Practical session could be used with candidates requested to diagnose a problem in equipment. Depending on what the organisation or recruitment agency is looking for from the candidate, they could be tested on specific skills. People differ from each other base on their skills, qualification and fit. The first step towards a successful human resource management is choosing the 'right' person for a position. Selecting the right candidate through the right method create a competitive advantages. In all, Kster (2002) researching on this area argued that, traditional recruitment methods can be classified under three topics, application selection, references and interviews. According to the researcher, the recruitment procedure successively composed of application forms, free-form references and unstructured interviews is simply less efficient than alternative selection methods (Kster 2002). Kster (2002) identifies other recruitment and selection methods that include peer assessment and assessment centres. 1.2 Contemporary Methods The most employed and modern method of job recruitment today is internet technology. Employers post job openings on their website or on popular websites such as Monster.com and Craigslist. In so doing, the method is critically useful to management and to a prospective employee. Moreover, most employers also have websites that can verify the contacts and references offered by candidates. Simply stated, online information systems offer a faster recruiting method than the traditional. Unlike the print media, or head hunters, the internet the assures a global access and far more visibility. It can also provide more information about the company, the job requirements and the work responsibilities to prospective applicants. To be critically useful to management, Ellis et al(2007) argue that an overall HRM framework should capture and integrate various functions and also clarify how various aspect of HRM add value to an organisation. Gilbreath supported this argument when the researcher calls for organisation facing communication and job satisfaction problems to institutes good fit between employees and their work environment. Under good fit theory, demand ability fit, suppliers value fit, self concept jobs fit and person group fit should be primary for workers integration and commitments. Today, our environment is changing and the way businesses operate has been changing to. Employee's selection, recruitment and selection is becoming increasingly complex and its integration into organizational and Human Resource (HR) strategies means that the successful outcome of these processes is vital for job performance and organizational success (Ellis et al 2007). In addition, organisations are called upon to train both employees and managers. Managers on their part have significant day-to-day interactions with their employees; each manager should be provided with a policy manual with clearly defined roles and career progression path for both managers and employees. Human resource professionals should make sure employees understand that they must uphold expected standards and managers should act role models for other employees1. Cobb Gnyawali & Offstein (2006:6) see selection and recruitment as vital and primary to an organisations survival. To make this a success, these researchers on their work "A strategic human resource perspective for firm's competitive behaviour" refer to human capital as a full range of knowledge, skills, and abilities an individual can use to produce a given set of outcomes and at the "upper echelon of the organization, human capital is usually deployed to scan the internal and external environment, process information, solve problems or recognize and seize opportunities". Drawing from Portals five forces framework, Cobb Gnyawali & Offstein (2006) postulate how internal human assets and human resource practices of a firm help drive the specific competitive activities that result into market advantage. According to their strategic human resource (SHR) model, firms with superior stores of human and social capital are in a better position to launch a high volume of complex and forceful competitive moves within the marketplace and as such to obtain this objective requires careful planning, coordination and action of its human resources2. According to Piercy, N,F, ( 1995) the larger the gap between a company's employees and customer's perception concerning both service product and service delivery the smaller the probability of satisfying the customers. This indicates that organisation in other to have a more profound understanding of their activities and shareholders value creation needs to align it HR management policies with the goals of the organisation. Effective human resource policies and management then becomes critical, and as Mayson &Barret (2006) writes in their paper "the management of human resources becomes even more critical In general systems theory, the unit of analysis is understood to be a complex of interdependent parts. Through interaction with the environment, an open system is dependent on the environment for inputs which are transformed during "throughput" to produce output exchange in the environment3. Proponents of this theory argued that the theory can be used to address organisation or large units within organisation. In the model, skills and input are treated as input while employee behaviors and performance are treated as output. Tsui, S. A., (1990) provided confirming evidence on the theoretical efficacy of the multiple-constituency model and demonstrated the model's utility in analyzing the effectiveness of a specific organizational entity. In his study, human resource subunits at the operating level reported many constituencies that they interacted with on a regular basis. These constituencies were related to the subunit either by resource dependence or by task interdependence. Given the specific operating context of this organizational unit, these empirically derived constituency categories appeared to be meaningful conceptually. Huselid, A. M., (1995) from his results based on a national sample of nearly one thousand firms indicated that human resource practices have an economically and statistically significant impact on both intermediate employee outcomes (turnover and productivity) and short- and long-term measures of corporate financial performance. Support for predictions that the impact of High Performance Work Practices on firm performance is in part contingent on their interrelationships and links with competitive strategy was limited. Conclusion and Recommendation It is concluded and therefore suggested that the best method of recruitment is the more contemporary methods. This is especially so as applied to internet recruitment. The contemporary methods allow the prospective employer and employee greater access to job offerings and to qualified candidates. Moreover, the financial investment of the contemporary methods are far less than that of the traditional methods. The present mode of the economy requires that employment situations be filled efficiently and with economy which is best served by the contemporary method. References Grehart, B. & Becker B., (1996). The Impact of Human Resource Management on organizational performance: Progress and Prospects. The Academy of Management Journal, Vol. 39, No. 4 (Aug., 1996), pp. 779-801 Osborne F., Hyman J, & Jack S., (2006).Small entrepreneurial ventures culture, change and the impact on HRM: A critical review. 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