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The Effectiveness of HRM Should Be Assessed Only by Financial Measures - Article Example

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"The Effectiveness of HRM Should Be Assessed Only by Financial Measures" paper presents the affirmative and negative sides of this statement and concludes that it should be done but by means of improving the overall worth of its people resources as they perform their respective roles in society. …
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The Effectiveness of HRM Should Be Assessed Only by Financial Measures
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Download file to see previous pages People constitute an organization’s most important and vital factor in its success or failure. In order to function efficiently and effectively, people must be managed well. Human resources management (HRM) is the art and science of dealing with people at work for the optimum achievement of individual, organization, and society’s goals. While general management is the orchestration of all the resources, human resource management is limited to people management – their motivation, acquisition, maintenance, and development. There are those who aver that the effectiveness of HRM should be assessed only by financial measures – meaning, its effect on the organization’s bottom-line, or net income. 

First of all, maximization of use and value of benefit choices to employees means that the company should determine the mix of options and alternatives which would give them more income and the least cost that would make their employees motivated to do the tasks required of them. Benefits represent substantial annual expenditures for a company. The design for the appropriate benefits program in the short and long term should account for the following factors: the long-term plans of a business, its stage of development, its projected rate of growth or downsizing, characteristics of its workforce, legal requirements, the competitiveness of its overall benefits "package," and its total compensation strategy.

Organizations normally assess the effectiveness of an action in terms of its effect on the financial performance of the firm – how much it increased the firm’s net income in a specified period of time. According to Crawford (2005, 1), “typical financial measures may include revenue growth and cost improvements.” In this regard, HRM is effective only insofar as its activities contribute to the increase in net income of the organization since it is the bottom line that the stockholders of the organization are mostly concerned. ...Download file to see next pagesRead More
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