Benefits of Effective HR Practices to an Organisation - Coursework Example

College Essay Sub number Benefits of Effective HR Practices to an Organisation The length to which effective HR practices has impacted an organisation’s performance has come out as the central issue the field of Human Resource Management. Several initial reports suggest that human resources practices have a transformative positive effect as far as organisational performance is concerned. Currently, human resources are regarded as the most important asset for several organisations. Of all other resources that the manager has at his disposal; financial, materials and human, turns out that the most central, strategic and potent of all of them is human resource, that provides the organisation with continued competitive advantage (Inyang,2011).Thus there is a rising consensus that efficient management of an organisation’s human resources is important to its success (Inyang, 2011).Effective management of individuals as organisational assets as well as the adoption of suitable HR practices, strategies and policies greatly enhance the profitability and performance of an organisation. A rising number of researchers have studied the effect of particular HR practices on organizational performance .Even though there exists several HR best practices capable of affecting both collectively or independently on the performance of an organization; results are usually difficult to interpret. For the purposes of this paper we shall discuss 7 HR practices that were originally put forth by Pfeffer in 1998 and which can be anticipated to greatly benefit the performance of any organisation. In his influential research, Pfeffer compiled the following 7 HR best practices; firstly, employment security, secondly selective hiring, thirdly teams that are self-managed and decentralization in making of decisions, fourthly moderately high compensation subject to organizational performance, fifthly extensive training, sixthly minimised status barriers and distinctions including language, dress, office arrangements, differences in wages across ranks and finally widespread sharing of both performance and financial information through the entire organisation(Pfeffer,1998). The above HR best practices will be discussed below in detail together with the benefits that they can bring to the organisation. Through compensation policy as HR practice, the employees efforts will be evaluated and rewarded which will in turn impact positively both employee as well as organizational performance(Cardon & Stevens,2004).Employee incentives usually differentiates the rapid-growth firms from the slow growth ones. Organisations that are eager to accomplish fast growth must offer their human resources financial incentives as well as stock options. In doing this, organizations will bring out high performance levels from their workforce, offer employees a sense of ownership in the organization, attract as well as maintain high competent employees and effectively spread a part of the organization’s business risk to its workers. Several empirical studies have proved that there is a positive relationship between organizational performance and performance based package. To be efficient, compensation policies and practices should be in alignment with the goals of the organisation (Vlachos, 2009). The other HR best practice that can benefit an organization arises from decentralization as well as self-managing groups. Thus HR requires all employees to cooperate and work together as teams, make mutual decisions as well as assume common programs so as to meet not only the goals of their team but also those of the entire organisation. Thus through teams that are self-managed, the performance of an organisation can be enhanced through 2 ways; firstly, surplus in junior managers may lead to the creation and supporting of dynamics of organizational growth; which is perhaps a very dynamic and critical stage in the life cycle of an organization. With the expansion of business ,additional management levels of are added, implying that the making of decisions becomes further decentralized making middle level managers to acquire more authority with the self-managed teams proliferating as the organisation increases more and more customers and projects. Secondly, decentralizing decision making and teamwork encourages employee commitment participation, creating a sense of connection and in the process indirectly affects organizational performance. Many studies have concluded that decentralization and self-managed teams are very crucial high-performance best Human Resources practices (Pfeffer, 1998). Thus teams that are decentralized usually influence the organisation positively in 2 dimensions, namely; flexibility and time. A research by Collins and Clark (2003) studied the function of HR practices in the creation of organisational competitive edge and discovered that senior management team practices such as mentorship and incentives arbitrated the relationship between the performance of the organisation and HR practices (Choo et al,2010). The other best HR practice that can greatly benefit an organisation touches on sharing of information which actually has a double effect; first and foremost it sends the right message to the employees that the organisation fully trusts them and secondly so as to arrive at informed decision, workers are supposed to have access to vital information. When performance data is communicated regularly throughout the year, employees are greatly helped in not only improving but also developing in their careers, implying they will execute their duties professionally and in the right away, further boosting the fortunes of the organization. Information sharing in an organization is associated with high profitability. Selective hiring is another practice by HR that ensures the right individuals having desirable knowledge and characteristics are at the right place to enable them fit in the climate and culture of the organization. Furthermore, selecting the right individuals reduces the cost of employees’ development and education (Collins & Clark, 2003). Selective hiring therefore is major HR practice that generates profits. Attracting as well as selecting the right individuals boosts employee productivity, organizational performance as well as contributes in turnover reduction especially in high performing organizations. Hiring standards not only reflects the skill requirements of an organization but also inclinations of different groups for such standards as well as their potential to implement such preferences. Collins and Clark (2003) claimed that selective hiring leads to increased sales. An efficient hiring process makes sure that the presence of workers having the right qualifications leads to creation of quality products, consequently increasing economic performance of the organization (Choo et al, 2005). Choo et al. (2005) studied pre-employment tests as a main element of selective hiring and discovered that when applied, these tests usually can be used in selection of employees that remain with a company for long. When an applicant passes pre-employment tests s/he feels a strong sense of company belonging leading to high levels of commitment on being employed. Thus selective hiring as HR practice cultivates a positive performance in a company (Innocenti et al, 2012). Training and development is another HR practice that may benefit a firm in several ways. First and foremost training programmes increases the organization’s specificity in employee skills leading to increased employee productivity in addition to reducing job satisfaction resulting in increased employee turnover. Training as well as developing internal personnel minimises the risk and cost of hiring, selecting together with internalising individuals from external labour markets further increasing the productivity of employees in addition to reducing turnover. A certain level of reciprocity is required in training and development just like in job security. Thus a firm that systematically and constantly trains and develops its employees makes their value in the market to grow more satisfactorily as compared to other organizations; effectively increasing employes’commitment, productivity and in return lowers their turnover(Cannings & Hills,2012).HR department may also help their workforce in planning their careers; thus encouraging employees to assume extra responsibility for their self development, together with skills development regarded as quite considerable in the organization. Rapid-growth organizations are heavily dependent on the efforts and abilities of their workforce in order to sustain their growth-focused strategies. These fast-growth organizations use training programmes so as to accomplish their goals together with a great emphasize on employee development to a considerably greater degree than the slow-growth equivalents. It is clear therefore that an organization’s level of training and development positively affects the growth of an organization (Parker & Caine, 1996). Another HR practice that benefits an organization is job security which creates an atmosphere of confidence amongst employees cultivating the much needed commitment to the organization. Job security needs a particular level of reciprocity; first and foremost the organization must clearly signal to its employees that their jobs are secure. This way the employees will believe in the organization, feel confident about their jobs, in addition to committing themselves to spend their extra efforts for the organisation’s benefit (Pfeffer, 1998) argues that an organisation which has discovered the importance of job security and its benefit to the company always invests and commits resources time and again in its employees’ job security. Whenever organisations provide job security to their employees, the available evidence suggests that it usually brings about an atmosphere of positivity in the organisation, hence influences growth and better performance of a firm (Pfeffer, 1998). In addition, job security has an indirect effect on operational performance of the firm through organisational assurance.HR practices therefore have been found to indirectly enhance the performance of several organisations (Rynes et al, 2002). Research has therefore shown that there is a direct positive correlation existing between performance and job security for managers, with job security being the most significant predictor of human resource outcomes particularly for non-managerial workforce. Research also has shown a direct positive correlation between managerial promotions particularly on the basis of merit as well as firm performance. In modern-day knowledge-based economy human resource significance cannot be underestimated. This is on the rise especially the role that is played by the human capital in contributing to the firm’s bottom-line. Thus, the notion that a firm’s HR practices represent a main strategic force is widely becoming accepted. In addition there is increasing amount of evidence from scientific research that happens to demonstrate that specific “high performance” HR practices such as training and development, performance-based benefit and compensation, selective hiring and recruitment are allied to higher performance of the organisation financially (Marescaux & Winne, 2013). In conclusion, of all the departments available to an organisation, HR is the most strategic, central and potent .It is the human resource that provides the organization the much needed sustained competitive edge. The various best HR practices discussed above transform the workforce from stand-alone, specialized function to a wide corporate competency whereby line managers and HR create partnerships and relationships aimed at not only gaining competitive advantage but also accomplishing general business objectives. Basically the exclusive talents amongst human capital comprising of innovation, flexibility, high productivity superior performance as well as personalised customer services are some of the ways that employees offer crucial ingredient in enhancing an organisation’s competitive position. Reference list Benjamin, I. (2011). Creating Value Through People:Best Human Resource(HR) Practices in Nigeria. International Business and Management , p.1-10. Cannings, A., Hills, T. (2012). A Framework for Auditing HR:Strengthening the Role of HR in the Organisation. HR Audit Framework,Godalming,Uk , p.1-11. Cardon, M., Stevens, C. (2004). Managing Human Resources in Small Organizations:What Do We Know? Human Resource Management Review , p.295-323. Choo, S., Halim, H., Chew,I. (2010). The Impact of Globalisation on Strategic Human Resources Management:The Mediating Role of CEO in HR. International Journal of Business Studies , p.101-124. Ilias, V. (2009). 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