The Primary Function of Human Resource Management - Article Example

The Primary Function of Human Resource Management Systems processes are an important part that HR plays in the overall organization, especially with one of the most critical systems a company has, their employees. The development of a talented pool of personnel and the retention of those personnel is now becoming one of the primary focuses of the HR department. Systems are being put into place that attract, retain, and develop talent. These systems also have the double-duty of keeping the job itself interesting and exciting for the staff. Programs such as those that rotate employees between different kinds of units within the organization and those that encourage directed learning as well as promoting inter-agency communication across the entire company are being increasingly viewed as having paramount importance. Furthermore, Human Resource department must develop a system of recognition and reward for the staff in regards to their contributions to the agency. To create value and deliver results, HR professionals must begin not by focusing on the work activities or work of HR but by defining the deliverables of that work. HR's roles in building a competitive organization include management of strategic human resources, management of transformation and change, management of firm infrastructure, and management of employee contributions (Ramlall, 2003, p. 51) The role of the Human Resource department has gone through substantial changes over the past century. Human Resources (HR) had its beginnings during the industrial revolution and by the early 1900’s many of the modern components of the HR department were falling into place. With the influx of unions, the Civil Service Commission, the industrial welfare movement and scientific research into management and the birth of industrial psychology, personnel departments became essential components of any well run business, from the 1920’s forward. Then as now, HR departments became the responsible sections for areas such as employment (hiring and firing), employee welfare (housing, medical, educational and financial), wage setting, safety, training, and health as well as employee benefits. (Jamrog, and Overholt, 2004) Then, during the middle part of the Twentieth century the human relations’ movement along with the application of knowledge and research from the disciplines of the behavioral sciences and systems theory enhanced HR’s responsibilities and overall requirements. However, in spite of the tremendous amount of research showing that happy and well trained employees were more productive and held longer term associations with a company, as late as the 1960’s the HR professional… …was often viewed as little more than a glorified file clerk who planned the company picnic. This all changed with the passage of the Civil Rights Act of 1964 and the subsequent social, demographic, technological, and economic trends in the '70s and '80s. Top management began to take notice, and the modem HR professional was born. (Jamrog, and Overholt, 2004, p. 52) While there is still some truth to the image of the HR department as keeping track of birthdays and other events for the betterment of the morale of the staff, HR is now developing into a much more sophisticated part of the overall business network. In fact there is bound to eventually be a complete split between the duties of the “file clerk” aspect and the duties of the director of the department. …the Society for HR Management (SHRM) Global Forum report on "The Maturing Profession of Human Resources Worldwide" (2004) showed that over half (54.8%) of HR professionals say the most frequently encountered obstacle to career advancement is HR's not being held in high esteem by the organization. One thing is certain, HR is evolving and the profession will either be driven reactively by external changes or will more proactively define its own future. (Vosburgh, 2007, p. 13) Much as there is now accepted a split between the accounting and the finance department in any organization (Boudreau, 2005; Boudreau & Ramstad 2006; Ivancevich, 2006). In fact at present even in the smallest of companies there is a difference between the bookkeeper and the finance director that seems to go without saying. One of the first steps in bringing HR into a more productive and strategic part of the business model is to make the same type of paradigm shift in separation of functions. While many HR professionals today still struggle to get a seat at the business table, the HR profession in the future should continue to evolve and take more responsibility for overall organizational effectiveness. To do this the HR professional will need to become better at utilizing systems thinking and systems measurement. (Jamrog, and Overholt, 2004, p. 54) Talent, for lack of a better term, is one of the most strategic parts that HR is playing in the current business model. “Talentship” is a term being used to describe this new paradigm in the creation of a more far-reaching strategy for Human Resource Planning. Similar to the roles between finance and marketing, HR is now also being asked to help companies’ research and locate another critical component, the market for talent. Using the same analogy, a company cannot succeed if their finance and accounting team is not successfully pared with their sales and marketing team. In fact over time there have been regulatory and best practice applications that have helped to further cement this finance-marketing relationship. However, in HR the guidelines are a little fuzzier, and in fact are usually only to be found in individual policies and procedures and certainly in some academic and business journals. “Organizational decision processes and tools employed in the talent market are far less mature and refined than those used in finance or marketing” (Boudreau, 2005, p. 18). Now more than ever companies need professional practices in place in order to align their business needs with greater effective decision making in the acquisition of talent. Every day more organizations recognize that their people are a source of competitive advantage. As a result, HR departments are evolving from playing a merely administrative role to becoming "strategic partners" responsible for contributing to the achievement of business objectives. This evolution requires that new ways of defining and assessing HR success be developed. Traditional operational measures of internal efficiency are not sufficient. HR departments must now be able to demonstrate the value of their strategic contributions. (Cabrera, and Cabrera, 2003, p. 31) Here is the crux of the new paradigm for HR: this department needs deliverables to be more clearly understood by the company as contributing to the success of the bottom line. While the exact dollar value has often been difficult to truly measure in the performance of small numbers of satisfied employees as opposed to large numbers of underpaid and under trained, disgruntled employees, there are now other factors that businesses are coming to realize have a greater long term impact. (Ivancevich, 2006) This impact is along three axis of responsibility, corporate, social and environmental, otherwise known as the three P’s: People, Planet and Profit. This has been viewed with more and more interest as the “Triple Bottom Line” (TBL) that many larger and more responsible business are adopting. A growing majority of corporations (68% of the top 250 global companies on the Fortune 500) has embraced triple bottom line (TBL) public reporting, alternately termed corporate responsibility or sustainability reporting (KPMG, 2005), and many of those companies vie for industry, national, and international honors, such as the Dow Jones Sustainability Index, awarded to the world's most sustainable firms by industry sector. (Colbert and Kurucz, 2007, p. 21) Now that the deliverables include social reporting as well as financial, there are certain openings here that HR is now filling. Companies have seen that the only way to achieve sustainability in a global economy is not only to adopt TBL reporting, but the realigning their business strategies accordingly so that each part of the bottom line is addressed. In other words, the strategy of the HR professional is now focussed upon building Human Resource Planning systems that proactively anticipate and support both internally and externally sustainability-framed business strategies. But more importantly these strategies need to substantively connect both human and organizational building schemes (Colbert and Kurucz, 2007, p. 27). By organizing human resource management processes around a set of coherent, mutually supporting principles, a firm has the potential to build a unique resource-based advantage in its industry (Colbert, 2004); by linking those HR principles to the company's triple bottom line sustainability objectives, it can create lasting industry advantage, and build capabilities for positive change--in economic, social, and environmental terms (Colbert and Kurucz, 2007, pp. 27-28). Apart from talent as part of the HR domain, another aspect of talent, that of knowledge management has also become a prime responsibility of the HR department. In fact many researchers into the emerging change in dynamics view HR as becoming less person-centered and more knowledge-centered in their approach to their contribution to the overall organization (Ivancevich, 2006). This is often a substantially different approach to the management of resources, especially when it comes to the career development of staff members. In this respect the emphasis is on the community as a whole and the service aspect is towards sharing and the generation of knowledge among the entire organization as opposed to only the individual. However, there is also the potential for vast development of that same individual in such an arena as well. HR will need to have better guidelines in place for individuals in this new atmosphere (Ivancevich, 2006). However, there are and will always be two main components that the HR department of any organization will cover. The first is comprised of management, leadership and employee motivation and the other is the traditional realm of HR practices which include performance appraisal, training, recruitment and selection, as well as compensation management (salary and bonuses) (Ivancevich, 2006). In this regard payroll is usually located within the HR department in some respect and there is a certain amount of crossover between HR and the Finance area of any company in this regard. However, fundamentally HR is concerned with the human element and the return on investment (ROI) regarding that element has become a primary concern of the business world. Measurement of that return is not as clear-cut as it is in finance. In the business world ROI is composed of the following four elements: 1. The inflow of returns produced by that allocation; 2. The offsetting outflows of resources required to make the investment; 3. How the inflows and outflows occur in each future time period; and 4. How much what occurs in future time periods should be "discounted" to reflect greater risk and price inflation. (Boudreau, and Ramstad, 2006, p. 26) Transferring this ideology to the resource of human beings in a company is a little more difficult. If you invest an allocation into a staff member of x amount of dollars worth of education, what is the inflow and rate of return on that investment? How is this related to future periods and what indeed is the knowledge based discount to the rate of inflation on the investment? While seemingly ludicrous when applied in this way, many agencies’ budgets cannot make the intellectual crossover to understand and equate the performance outcomes regarding staff training and development. In HR we do not have decision support frameworks as elegant as ROI, and simply applying ROI logic to HR investments is not the answer. The ROI components are not available for most HR decisions, and the ROI framework really does not focus on the right questions for HR investments, because it was developed for financial investments. (Boudreau, and Ramstad, 2006, p. 27) But again we come back to the paradigm shift that has taken place and there are certainly more viable means of ascertaining whether or not an investment in employee education has a payoff to the organization that is fundamental to the long term profitability and sustainability of that organization. This returns us to the concept of TBL, the Triple Bottom Line. By linking together profit, people and environment when deciding what a company is setting out to accomplish, there is a greater investment in what might be now called ecosystem of profitability. By training, educating and appreciating staff, greater staff retention and staff loyalty and involvement is usually the result (Ivancevich, 2006). There are many steps required to make this realization such as, an analysis of capabilities within the organization, a review of leadership practices and key leadership competencies and the values of the agency must also be clearly defined. But one key concept that is germane to the entire success of the company is an ongoing and open dialog between department, personnel and HR. In researching the importance of the aforementioned steps to realization, Colbert, and Kurucz discovered the following: In every case dialogue was described as highly important: dialogue with stakeholders to negotiate and appease; dialogue to integrate stakeholder needs and to search for win-win value creation; or dialogue to broaden the company's strategic frame of reference, and to enroll stakeholders in a new organizational direction. (Colbert, and Kurucz, 2007, p. 27) Communication is the key tool for HR to use in not only distributing information, but in informing management of the achievement of staff so that the positive return on investment in the employee can be readily ascertained. HR is often called on to mediate disputes and bring the regulatory labor laws to bear on supervisors and employees alike. In instances of sexual harassment or other forms of intimidation and unfair treatment, HR is responsible for following company procedures and guidelines when resolving these issues. In fact, HR needs to assure that the correct polices and procedures are in place so that the staff can adequately assess their position and know where to bring their grievances when in trouble. Legal pro-activism is a primary responsibility of HR and must be thoroughly addressed in both the policies of the company and the training of the HR manger. If the correct protocols are not in place, the company is left open to litigation and lawsuits from staff members, severely impacting the bottom line (Ivancevich, 2006). In this sense HR certainly plays quite a strategic role in the safeguarding of the company and its ethical and moral stature, as well as its finances. Certainly the most important role that HR has in any organization is the continually monitoring and development of staff and the maintenance and improvement of the pool of talent that is available to the organization. While this may at times seem to appear as the mere juggling and explanation of benefits, it also has the more complex functions of training, development and most importantly, retention. As time moves forward the creation of a greater pool of happy and motivated employees will certainly be the primary responsibility of the human resource department. References Boudreau, J. W. (2005). Talentship and the New Paradigm for Human Resource Management: From Professional Practices to Strategic Talent Decision Science. Human Resource Planning, 28(2), 17-27. Boudreau, J. W., & Ramstad, P. M. (2006). Talentship and HR Measurement and Analysis: From ROI to Strategic Organizational Change. Human Resource Planning, 29(1), 25-31. Cabrera, A., & Cabrera, E. F. (2003). Strategic Human Resource Evaluation. Human Resource Planning, 26(1), 41-52. Colbert, B. A., & Kurucz, E. C. (2007). Three Conceptions of Triple Bottom Line Business Sustainability and the Role for HRM. Human Resource Planning, 30(1), 21-33. Ivancevich, J. (2006). Human Resource Management, 10th Edition. New York: McGraw-Hill Jamrog, J. J., & Overholt, M. H. (2004). Building a Strategic HR Function: Continuing the Evolution. Human Resource Planning, 27(1), 51-66. Ramlall, S. J. (2003). Measuring Human Resource Management's Effectiveness in Improving Performance. Human Resource Planning, 26(1), 51-68. Vosburgh, R. M. (2007). The Evolution of HR: Developing HR as an Internal Consulting Organization. Human Resource Planning, 30(3), 11-16. Read More