Importance of Reward and Resourcing within Human Resource - Dissertation Example

 Importance of Reward and Resourcing within Human Resource Introduction The importance of human resource has increased all over the world after rapid industrialization n early 20th century. Different management styles and techniques have been introduced to manage styles. Human resource management is also received much attention with scholars and researchers trying to find insights into better ways of managing the human capital in an organization. Reward and resourcing are basic functions of a human resource department. It is vital to find the right people in order to achieve organizational goals and retaining them through reward system is equally essential. In this essay we will talk about the relative importance of reward and resourcing in overall role of human resource function. Different theories of reward will be discussed along side with the relationship between reward resourcing. The tough global business environment has increased the need of human resource management in giving an organization competitive edge over other companies. The role of reward and resourcing in providing companies competitive edge will be specifically discussed. Importance of Reward and Resourcing Human resource management involves finding the right people for the right job but it is also important to provide employees everything they need in order to retain them for a longer period of time. In all industries and sectors employees are the most valuable asset of a company. Success and failure of any company is dependent on its employees. For this reason it is vital that a reward structure is established that provides employees with an opportunity to excel and in turn motivates them to work harder for the company. Employee retention is very important because of the high costs linked to recruitment. Also additional training will be required for the new employees. These costs are becoming a nightmare for companies all over the world. Reward and resourcing are also important because employees have some needs that should be fulfilled. These needs are not always monetary but are non monetary as well. Encouragement and admiration can seriously affect an employee in continuing with the same company. If an employee things that he is being well taken care of then he will also deliver. Reward and resourcing is therefore extremely vital. Selection of employees and job design are important elements of resourcing. These are essential because finding the right person for the right jobs is important or else the company will suffer. Jobs should also be designed keeping in mind the human needs of employees. Selection and recruitment of employees is important especially in services industries and in considered among the top three issues in human resource management (D'Annunzio-Green, N. 2004). For determining appropriate reward structure appraisal of employees is also essential. It forms the basis on which a particular reward or incentive is given to an employee. This is a how resourcing and reward are interlinked. Through performance appraisal one will identify who is worthy of a reward. It is also important to provide incentive to employees in order to retain them. Selection procedure is also related to reward because through benefits and pay structure employees are attracted towards employee. This is how resourcing and reward are related to each other. Theories of Reward &Resourcing and their Relative Importance In this section the possible benefits and short comings of different theories and perspectives on reward and resourcing will be discussed. The relative importance of reward and resourcing will be highlighted with the help of these theories. There can be two types of recruitment namely internal and external recruitment. Internal recruitment involves hiring people from the company and external recruitment involves hiring people from outside the company. The potential advantage of internal recruitment is cost effectiveness and external recruitment provides a company a wide range of talent (The Times 100, 2011). Recruitment process also usually involves application form, reference checking and interview. These are traditional method of recruitment process and are used even today. The aim is to put the applicant at ease so that he or she can be evaluated. Recruitment is the most important step in resourcing. If a right person is hired for the job then company can benefit from it greatly. The use of technology however is suggested in the process of selection (Rynes, S. 1989). This can help in the screening process and can also prove cost effective for the company. Job design is also important part of resourcing. It involves drafting a set of duties of a particular job. There are three approaches of job design. The first is the scientific management approach that focuses on efficiency. It calls for job design that maximizes the productivity of the workers. The problem with this approach is that it ignores the human element of jobs. People are not machines and they cannot be treated like machines (Campion & Thayer, 2001). The second approach is the humanistic approach of job design. It involves designing jobs that motivate and engaging employees. This in turn, according to the approach, will lead to increased performance. This approach takes into account the human side of jobs and tends to focus on intrinsic motivation (Campion & Thayer, 1985). The third approach to job design is job sculpting. It is a relatively new idea that involves designing jobs that around the needs and ambition of the people. Jobs should be made for people rather than forcing people into jobs. It involves using psychological techniques to design jobs that are fit for employees. All these approaches have their strengths and weaknesses but the important part to consider here is that all of them focus on improving performance of employees. The relative importance of resourcing can be highlighted through these approaches. Resourcing is vital because it can improve the performance of employees and this can be seen in all three approaches of job design. Performance appraisal is another element of resourcing and it is extremely important because it provides a basis for reward or punishment. It is essential to record the performance of an employee as it will help the organization in identifying who is rightly doing the job and who is not. There are two broad ways of evaluating the performance of employees. An employee can be compared to a standard set by the management or he can be compared with other employees of the organization. Both approaches are used by companies all over the world according to the nature of business of the companies. There are specific theories of appraisal as well. Trait theory focuses on how well an employee fits into an organization and its culture. This theory ignores the relative performance of the employee. There are many problems with this theory because it ignores the most important thing that is performance. Attitudes of a person and his or her personality has nothing to do with the company, rather it is the performance of the employee that matters (Drucker, P. 1974). Behavioral appraisal is based on the behavior of employees. Behavior of employees is judged by a scale and employee is evaluated according to it. Another approach is result based appraisal. It focuses on results of employees and the goals of organization. These two things should be congruent. All these approaches and theories of appraisal try to evaluate the performance of an employee. This aspect of resourcing is vital for human resource function because a check and balance system needs to be created. Without it reward structure of any company cannot be based. Managers also need to know how employees are doing in order to guide them. It is also vital in identifying redundant employees in an organization. Employees who are not performing are actually causing company loses and that is why they need to trained or removed. For this appraisal is extremely important. There are many reward techniques used by different managers to motivate employees. Many theories of rewards have come up and teach has pros and cons. The importance of rewards has forced researchers and management gurus to come up with a reward structure that can increase performance and job satisfaction. An employee who is satisfied with his or her job is likely to stay with the company for a longer period of time. Rewards can be intrinsic, extrinsic or in the form of social relationships. By increasing the pay or giving monetary benefits to an employee performance can be increase extrinsically. Intrinsic reward involves job satisfaction, interest and growth. Social relationships like status and friendship can also serve as rewards. The Herzberg’s Motivation-Hygiene Theory explains reward and performance by suggesting that employees are not always satisfied or dissatisfied. Rather employees may not be dissatisfied but at the same time may not be satisfied as well. He gave two types of factors motivators and Hygiene factors. Motivators include achievement, recognition, growth etc and hygiene factors include security, status, salary etc. Hygiene factors have a short terms effect on dissatisfaction. Motivators on the other hand must be given great importance because they motivate employees (Herzberg, F. 1959). The importance of this theory is that it highlights the factors that can motivate employees. This also tells us that motivation is not related to environmental factors. Managers have to improve the environment of the company along with increasing motivation of employees. Reward strategy can also be 3 dimensional in nature namely external, internal and individual. External dimension involves minimum wage and other influences on reward strategy from outside of the company. The implementation of external dimension of rewards is not always ubiquitous (Poole & Jenkins, 2002). The wages set by governments are not effective form of rewards. Internal dimension involves job evaluation and negotiation within the company. Individual dimension involves performance and competence. There are also security driven rewards which involve jobs security and prestige of company. These rewards give satisfaction by giving surety of job in the long run. In time of recession this can be great reward for employees. Tradition driven rewards involve normal increase in income due to inflation. Contribution driven rewards are based on the performance of the employee. They are monetary rewards given in return of the work of employee. Employability reward involve are individual reward like job satisfaction and growth. The reward system was found to be important for companies that pursue quality management in production (Anderson, Rungtusanatham, & Schroeder, 1994). The reason for this might be the fact that production involves innovation and employees can innovate if they are given better rewards. Innovation is carried out by employees and if employees are better treated then there are better chances that they will come up with new ideas. Rewards are extremely important because they are the only things that can motivate employees. Workers are not machines and they need encouragement and motivation to work. This can come in any form and there may be different theories on rewards but that fact remains the same that reward management is a vital function of human resource management. Performance can be increased by giving right type of rewards. How Reward and Resourcing can be used as a Competitive Edge The increasing competition globally has caused managers to differentiate their products and services from others. Managers also try to find areas in which they can outplay other companies and can gain competitive advantage over other firms. Reward management and resourcing can also be used by companies in order to earn competitive advantage over other firms. Reward management systems are changing due to increased competition. In order to lower costs the focus is on non monetary rewards (Gachoka, H. 2008). Managers are trying to follow cost leadership styles. Rewards are therefore in the form of recognition and encouragement. Monetary rewards are also given but the focus is on job satisfaction and friendly organizational culture. Resourcing is also being made cost effective. The trend of outsourcing has also come in resourcing and hiring is done by specialized firms. These firms also do performance appraisals for companies. Resourcing is also being used as a way to achieve competitive advantage. Skilled employees are hired and are trained and retained in an effective manner in order to gain competitive edge over other firms. Companies like Southwest Airlines and Google are very good examples in this regard. Both have a mouth watering reward system and have great resourcing techniques. Both companies are leaders in their sectors and this shows their success. Southwest Airlines has a friendly culture and employees are given great amount of freedom. Employees are also paid very well. Employees are highly satisfied at Southwest Airlines and retention is lower as compared to other companies in the same industry. Google is also famous for its cozy workplace and friendly environment. Employment at Google is a dream for people. Reward system is based on monetary and non monetary rewards. Both these companies give out monetary benefits but the important thing is that they are also doing very well. The benefit that these companies get by these rewards increases its costs. The similarity between the two companies is that both regularly innovate and have a family like culture. These factors are important for any company in order to attain competitive edge over other firms. Reward system and resourcing can also be used a marketing technique. Google is extremely famous for its benefits and culture. This is why many people apply at Google and prefer Google over other companies. This can be extremely beneficial for a company because there is always dearth of skilled labor. If a company is attracting skilled labor then it is a very good thing in the current business environment. Conclusion Reward and resourcing are important functions of human resource management. It is vital for organization to attract and hire able and talented employees in order to expand its business. Recruitment is also costly so it is essential that an employee who is hired is retained for a long time and is able to contribute positively towards the organizational goals. It is also important to design the right kind of jobs for employees in order to elicit work out of them. Performance appraisal is also essential for establishing basis for reward and punishment for employees. Managers should also know the performance of employees in order to train employees who are lagging behind. Reward management is vital because employees are human beings and they want monetary and nonmonetary appreciation of their work. This can improve their performance and can also motivate them to work harder in future. There are many theories related to recruitment, job design, performance appraisal and reward. Recruitment is of two types internal and external. Job design is also defined by three different approaches that are scientific perspective, humanistic perspective and job sculpting. Rewards can be of many types like security driven, employability driven, tradition driven and contribution driven. They can also be extrinsic, intrinsic and social relationships. Resourcing and rewards are used in order to gain competitive advantage over other firms. Southwest Airlines and Google are an example of this. Bibliography Anderson, Rungtusanatham, & Schroeder. 1994. A Theory of Quality Management Underlying the Deming Management Method, The Academy of Management Review, 19(3): 472-509 Campion & Thayer. 1985. Development and field evaluation of an interdisciplinary measure of job design, Journal of Applied Psychology, 70(1): pp. 29-43 Campion & Thayer. 2001. Job Design: Approaches, Outcomes, Tradeoffs. Accessed on 24 April 2011. < http://carmine.se.edu/cvonbergen/Job%20Design_Approaches, %20Outcomes,%20and%20Trade-offs.pdf> D'Annunzio-Green, N. 2004. Human resource management: international perspectives in hospitality and tourism. New York: Cengage Learning EMEA Drucker, P. 1974. Management Tasks, Responsibilities, Practices, London: A Butterworth-Heinemann Title. Gachoka, H. 2008. Impact of Globalization on the Human Resource Management Function in Developing Countries: A Case Study of Kenya Public Corporations, Journal of Business Management, 1(1) Herzberg, Frederick. (1959). The Motivation to Work, New York: John Wiley and Sons Poole & Jenkins. 2002. Human Resource Management and the Theory of Rewards: Evidence from a National Survey, British Journal of Industrial Relations, 36(2): pp. 227-247 Recruitment, selection and training. 2011. The Times 100. Accessed on 24 April 2011. < http://www.thetimes100.co.uk/theory/theory--recruitment-selection-training--266.php> Rynes, L. 1989. Recruitment, job choice, and post-hire consequences: A call for new research directions, Cornell University, School of Industrial and Labor Relations, Center for Advanced Human Resource Studies.   Read More