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Significance of Human Resource Management - Essay Example

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According to the paper 'Significance of Human Resource Management', HRM is defined as a strategy commonly used by organizations, for attracting, attaining, retaining, using, and improving the human resource of the organization. It consists of a set of policies developed to maximize and improve organizational integration, flexibility, commitment…
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Significance of Human Resource Management
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? INTRODUCTION The topic that has been chosen for this essay is Human Resource Management. This is a function within an organization that focuses on the people of the organization and its workforce. HRM is defined as a strategy commonly used by organizations, for attracting, attaining, retaining, using and improving the human resource of the organization (Armstrong, 2003). It consists of a set of policies developed to maximize and improve organizational integration, flexibility, commitment and the overall quality of work, within the organization (Guest, 1987). Bratton & Gold (2003) defines HRM as "A strategic approach to managing employment relations which emphasizes that leveraging people's capabilities is critical to achieving sustainable competitive advantage, this being achieved through a distinctive set of integrated employment policies, programmes and practices." The above definition explains that human resource management does not only include recruitment, pay, controlling but in involves maximizing the potential of organization human capital in a more strategic way. It is focused on the management of the workforce in an organization and the provision of direction to them. The aim of the HRM is to deal with and solve all the problems, within the organization, that are related to the workforce. These include hiring and recruitment, performance management, appraisals, compensation and benefits, organizational development, communication, training, safety and well-being, employee motivation, administration and conflict resolution. HRM also deals with all the issues pertaining to corporate social responsibility. In addition to this, HRM serves as the only association that a company usually has with the trade union. More than anything else, Human Resource Management is a comprehensive as well as strategic approach of managing not only the employees but the entire workplace culture (Budhwar, 2000). Effective HRM is needed in order to ensure that employees contribute positively and effectively to the goals and objectives of the company. Thus HRM is extremely important if the organization wants to ensure that the employees do not go astray. It provides a policing arm to the organization. SIGNIFICANCE OF HRM It is a very important part of the organization and its significance can be judged from the fact that most organizations now have a separate Human Resource Management department, given that the organization is big enough to afford it. From being a low scale and low scope department, Human Resource Management has now become a strategic business partner of the organization since its function is to provide constant support to the vision and mission of the organization. This also because HRM aims to implement the business strategies and ensuring that they work. HRM is now believed to be the management of people in the organization, not employees. It is responsible for ensuring that the organization complies with the labor as well as employment laws. According to Cheddie (2001) the aim is to gain competitive advantage by using a wide range of structural, personnel and cultural techniques. THEORIES AND PRACTICES As the discipline of HRM continues to grow and gain momentum across the globe, more theories and studies are being devoted to it. Most HRM theories and practices are directly drawn from the field of behavioral sciences as well as from theories related to strategic management (Som, 2008). For HRM to work effectively there are certain practices that the organization must adopt. Among the first theories on the HRM concept was proposed by the Michigan school. According to this theory, the HR system must be managed in a way so that it is in line with the organizational goals and strategies. This concept became very popular as the ‘matching model’. It was further developed that there is human resource cycle which comprises four functions. These are selection, performance appraisal, rewards and compensation and training and development. Delegation to Line Managers Budhwar and Khatri (2001) argue that in order to make Hr managers more focused on the strategic decision making process rather than the routine administrative issues, the responsibility of the routine administrative issues should be delegated to the line managers. This contact can prove to be very effective because line managers are in frequent and direct contact with the employees and are in a better position to handle trivial, day to day issues of the workforce. However, the prerequisite for this practice is that the line managers must have the suitable skills in order to be able to carry out the required Hr practices effectively and competently. The standards that need to be followed by the line managers can be advocated and set by the HR department (Hall and Torrington, 1998). This essentially means that the HR managers must strive to act as strategic partners of the line managers, giving them the appropriate resources, training, directions, communication channels and incentives to ensure that the line managers carry out their responsibilities in accordance with the HRM policies (Teo, 2002). Manpower planning Human resource planning or the manpower planning is an important function of HR managers. It involves employing the right kind of people, putting them in the right departments and allotting them the right tasks which align with their set of skills. Human resource managers needs to forecast the number of people that an organization will need at a specific time, during recession or booms, analyze the current inventory of employees, develop employment programs as well as training programs for their development. It is through efficient manpower planning that an organization is able to utilize its human capital productively and survive in the world of industrialization today. Selection One of the primary aims of HRM is to attract and retain the best people and talent that is available. In order to ensure this, a very strong, sophisticated and stringent selection procedure needs to be adopted. This is imperative in ensuring that the right candidate with the right potential is chosen for the task. A rigorous procedure will help generate a high expectation in terms of performance and will also help generate a belief of elitism and gives the people in the organization a feeling of importance. A mismatch between the required job and person selected can prove to be fatal as it not only reduces performance but also leads to high attrition and low motivation. On the other hand a well-developed selection system can help facilitate the best fit between the person, his skills and the goals of the organization. Thus stringent and valid selection can prove to be of utmost importance. Training and Development Training and development is one of the most important functions of HRM. It involves the improving of organizational performance by enhancing the skills and abilities of the employees and enabling them to develop continuously. Organizations have been able to improve and enhance the quality and hence the performance of employees by giving them extensive training as well as development. In fact research has proven that the capital that an organization invests in providing employees training on team-work, inter-personal communication and problem-solving actually lead to beneficial outcomes for the firm (Barak and Harel, 1999). Performance Appraisal In order to improve or maintain organizational effectiveness, it is imperative for organizations to monitor the performance for employees over a period of time. It may be defined as a structured and formal interaction that takes place between a subordinate and supervisor, in form of a periodic interview or a survey. It involves evaluating the performance of employees or a subordinate to identify weakness, strengths and improvement opportunities. Several types of appraisal mechanisms are used for evaluating employee performance. Some of the appraising methods include job results/outcome, ranking, forced Distribution, behavioral Anchored Rating Scales (BARS), management by Objectives (MBO) etc. One of the important concepts in appraising systems include the 360 degree feedback system.360 degree feedback system is a process which allows employees to receive confidential feedback from their subordinates. It is considered an effective tool for employee development. Compensation and benefits Compensations and benefits are considered to be a part of a specialized area in human resource management. It is all about the HR controlling, setting and implementing procedures and rules along salaries and benefit. Compensation and benefits function of HRM connects an organization with its competitors. An organization designs compensation and benefits in a way which are competitive in the job market as well as supports the achievement of goals set by the firm. Some of the important concepts of compensation and benefits are: Total cash basic components: it refers to the total amount of cash earned by an employee in a year and consists of fixed and variable pay. Fixed pay is the base salary which provides a security to employees. While the variable pay includes bonuses and incentives. Incentives can be highly individualized, and many authors believe that variable pay may not necessarily increase employee performance. Bonus: organizations may award bonuses to employees to reward the performance of employees and promote the feeling of ownership in the firm. Bonuses should be designed in a way that should also help in retaining good employees All compensation and benefits packages evolve around the concept of motivating employees. It is more effective if employees are aware of what type of behavior are rewarded, and benefits are kept keeping employee needs in mind. Substantial evidence is there to suggest that incentive based compensation effects firm performance positively. (Milkovich and Boudreau, 1998). Health and safety One of the important steps of the strategic human resource management process is to implement the health and safety policies. These policies aim to protect employees against some of the hazards and dangers prevailing in the work environment. The implementation of such policies reflects the fact that management is concerned about the safety of their employees. This promotes the feeling of safety, thus making employees more committed to work. The health and safety polices help in saving costs which occur in the form of lost working hours, medical expenses, insurance premiums and legal suits. The employment laws include the requirement of maintaining health and safety standards in the organization such as the OSHA law. The implementation of such laws are not a onetime process, in fact, polices need to be review over time to match any changes in the requirements of the law. Stress management One of the concepts that has gained momentum over time and gained the attention of HR managers is the management of stress in the organizations. The stress management programs abound and research has enlightened us about the various causes of stress extending from bad employers, unhealthy work conditions, and poor relations with subordinates to challenging jobs. It is considered important to manage stress as employers have responsibility towards their employees and stressed employees are less productive causing a fall in organizational performance. Labor relations As already discussed, human resource management is all about managing, retaining, motivation and controlling employees. Labor relation also falls under the umbrella of human resource management. Labor relation refers to the management of employees during the times of union conflicts and contract negations. A trade union in a large company is formed for the protection of the rights of employees. The trade unions negotiate with HR managers on issues like the working conditions, wages etc. in many of the large organizations where there are both union and nonunion employees, labor relations is not considered a part of human resource management. However, HR managers tend to have expertise for labor relations as well as employee relation strategies and thereby, they function in both the areas. HJR managers play the dual role of protecting the interest of the company while at the same time strengthening the relation between employees and the employers (Singh, 2004). During the labor conflicts, HR managers have to play duties that are supportive of their dual role. They represent the management of the organization while at the same time; they participate in a good faith bargaining process with the representative of trade union. They strive to reach a decision that is mutually beneficial for both the management and the employees. Employee Participation Human resource management promotes the concept of employees being one of the most valuable assets of the organization. HR function involves facilitation and enhancement if employee involvement in the organization, greater empowerment of employees and delegation of autonomy. Many studies have proposed that there is a positive relation between the employee participation and productivity of employee (Verma, 1995).employees are now engaged in the decision making process for successful value creation. However, there is a great deal of debate over the extent of employee participation. Some managers believe that trade unions should be allowed to participate with the management as partners while others have an opinion that their participation should be restricted. There are different ways in which employees can be involved in the decision making process such as job enrichment, through ownership, through suggestion schemes etc. Teamwork Gone are the days when organizations have different departments operating independently regardless of what other departments were doing. In today’s competitive world, organizations are integrated units where different departments need to communicate on the daily basis. Product is not a result of one department; in fact, it is the collaborative result of the marketing, research and development and sales department. To gain competitive advantage and to capitalize on the potential of employees, organizations prefer employees working as teams. Workgroups and quality circles are now very common, where every team consisting of 10-15 members work on a task. Managers leading such teams are responsible for managing, motivating and controlling members of the teams. In organization where team work is promoted and appreciated, organizational culture is better than other organizations and employee performance is high. Career Planning System Hr managers are introducing the culture of career planning in their organization. a well functioning planning system promotes the feeling of responsibility, ownership and development. The development of skills and abilities is considered to be critical for the success of the firm. As a result of the internal advancement opportunities that are based on merit, employee motivation has surged up to higher levels affecting the effectiveness of firms in a positive manner (Milkovich and Boudreau,1998). CONCLUSION In conclusion it can be said that an organization can become a leader on the basis of its efficient human capital. HRM is an umbrella term consisting of various functions of controlling, staffing, monitoring, appraising, training etc. The effectiveness of an organization and the achievement of its goals is of paramount concern. Once an organization is able to improve the administrative capacity of the firm specifically the human resource aspects can contribute in helping the organization overcome most challenging problems. Human resource department of an organization performs the role of guiding and mentoring the rest of the departments in the organization. therefore, organization should not underestimate the importance of this department. REFERENCES Armstrong, M. (2003). A Handbook of Human Resource management Practice, 9th Edition. Kogan Page Barak, M. T. Maymon and G. Harel (1999). Team Work in Modern Organizations: Implications for Technological Education. International Journal of Technology and Design Education 9, pp. 85- 101 Bratton, J. and Gold, J. (2001). Human Resource Management: Theory and Practice, 2nd Edition. USA: Lawrence Erlbaum Associates Budhwar, P., and N. Khatri, (2001). HRM in Context: Applicability of HRM Models in India. International Journal of Cross Cultural Management 1(3), pp. 333–56. Budhwar, P. (2000). Strategic Integration and Devolvement of Human Resource Management in the UK Manufacturing Sector. British Journal of Management 11(4), pp. 285–302. Cheddie, M. (2001). How to Become a Strategic Partner. HR Focus 78(8), pp. 1–14. Guest, D E., and Conway, N., (1997) Employee Motivation and the Psychological Contract, IPD, London Hall, L., and D. Torrington (1998). Letting Go or Holding On: The Devolution of Operational Personnel Activities. Human Resource Management Journal 8, pp. 41–55. Milkovich, T.G., and W.J. Boudreau (1998). Human resource management, 8th Edition. Boston: Irwin. Pfeiffer, J. (1994). Competitive Advantage through People. Boston: Harvard Business School Press. Singh, K (2004). Impact of HR Practices on Perceived Firm Performance in Indian. Asia Pacific Journal of Human Resources. 42, pp. 301 – 317 Som A. (2008). Innovative Human Resource management and Corporate Performance in the Context of Economic Liberalization in India. Thunderbird International Business Review, 49(2), pp. 1-33. Teo, S. (2002). Effectiveness of a Corporate HR Department in an Australian Public Sector Entity during Commercialization and Corporatization. International Journal of Human Resource Management 13(1), pp. 89–105. Verma, A. (1995). Employee Involvement in the Workplace. In Research in Personnel and Human Resource Management, (eds) M. Gunderson and A. Ponak. New Haven, CT: JAI Press. Read More
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