Critical Evaluation of the Relationship between Human Resource Practices and Firm Performance: an Empirical Assessment of Firms in Malaysia Article - Assignment Example

 CRITICAL EVALUATION OF THE ARTICLE: “THE RELATIONSHIP BETWEEN HUMAN RESOURCE PRACTICES AND FIRM PERFORMANCE: AN EMPIRICAL ASSESSMENT OF FIRMS IN MALAYSIA” Introduction The article “The Relationship between Human Resource Practices and Firm Performance: An Empirical Assessment of Firms in Malaysia” is a useful tool that can be used by organisations to take a critical approach to implementing human resource practices in their operations. The authors of this article assert that there several limitations that exist in establishment of the relationship between Human Recourse practices and organizational performance. This study is limited in a number of ways. The first limitation of the study is the small number of the participants that restrict generalizability of the collected data. The second limitation is that, there is need of further analysis on the differences that exist on human resource practices that may affect their future usage. Thirdly, there is need of further analysis to determine the effects of business owner’s ideology, size, and use of technology in the firm. The results obtained by the authors of this study are essential rhetorical information that can be used to enlighten business owners on the importance of implementing human resource practices to improve their firms’ performances. The present essay is a critical evaluation of the above mentioned article which was authored by Osman and Carmen. The first limitation of the study is the small number of the participants who responded to filling the questionnaires that restrict generalizability of the collected data. Getting an appropriate number of firms to participate in the research in order to obtain a general data was the main challenge. However, according to the obtained results in this article, human resources can be said to be one of the most important capital in an organisation since they play an essential role in the performance of an organisation (Osman & Carmen 2011, p. 41). According to Abdullah, Ahsan and Alam (2009, p. 23), human capital has, for a long time, been considered to be among the critical resources in most organisations. Whereas in the last decade, organisations used to manage their human capital through the department of personnel which a small division in an organisation, nowadays firms add value to their human resources by ensuring that their HR departments are able to manage human capital, a process known as Human Resource Management (HRM). The second limitation is that, there is need of further analysis on the differences that exist on human resource practices that may affect their future usage. Although most business owners perceive the implementation of human resource practices in their operation, there is still a large number of Malaysian firm owners who does not understand the importance of implementing human resources practice. Therefore, there was need of the authors carrying out further analysis on the existing difference. Osman and Carmen in their study found that most firms in Malaysia have started to realize the importance of human resource practice towards improvement of firms’ performance. Managers of Malaysian firms have started to realise that HR practices have to be effective in order to bring organisational harmony and stability (Osman & Carmen 2011, p. 45). Besides, these authors also asserted that the diversity in the modern workforce composition requires more imaginative and appropriate HRM practices. As many scholars have affirmed that managing employees is more difficult and challenging than managing capital and technology, in a multiracial country like Malaysia, for firms to perform well, they should ensure that they have appropriate means of managing employees and maintaining organisational harmony (Quresh et al 2010, p. 1281). Thirdly, there is need of further analysis to determine the effects of business owner’s ideology, size, and use of technology in the firm. The main factors that Lastly, the authors assert that employee communication and relation which is one of the human resource practices allow them to understand the espoused values of their organisation giving them chances to communicate their complaints as well as grievances, thus minimizing the risk of conflicts in the workplace which may negatively affect the performance of an organisation. This is because conflicts are among the main obstacles towards organisational performance (Mohamad, Lo, & La 2009, p. 229). Secondly, employees’ communication and relations enable them to feel empowered and be able to exercise flexibility in duty. This also makes employees feel more motivated because they have the freedom of making decisions. Although the above limitations may have undermined the outcomes of the study, the authors of this article assert that human resource practices play a very important role of implementing and formulating firm’s strategy. Their study on Malaysian firms provide the evidence that HR managers involve in the strategy formulation process. The increasing significance of human resource practices in organisational performance has led to most organisations involving human resource managers in the decision making process during formulation and implementation of a firm’s strategy (Walters 2005, p. 78). Most studies conclude that Human resource practices are vital towards achievement of the firm’s success. Typically, the practices of human resource are considered vital towards organisational success because they enable firms to maintain competitive advantage (Othman & Teh 2003, p. 78). Strategic Human resource literatures indicate that the practices and systems of human resource manager contribute a lot towards creation of firm’s competitive advantage. It is therefore important for firms to adopt human resource practices that make appropriate use of employees. Organisations that align their human resource practice and systems with their strategies achieves superior outcomes compared to those which do not. One of the important aspects of human resource practice revealed in this article is improvement of performance rate. Although human resource practices are highly considered to be one of the essential variables towards increment of a firm’s performance, Osman and Carmen argue that most firms in Malaysia do not practice human resource management in their operations. Such firms are totally different from those which practice human resource management in their operations. Although it is even unclear on the procedure that can influence Malaysian firms to start involving human resource practices in their operations, this article provides a sound evidence that can be used to influence firm owners to implement human resource practices in their firms. Such firms should be aware that human resource practices such as development and training have a positive impact on the firm’s performance. The better the development and training of employees, the higher the rate of a firm’s performance (Rowley & Abdul-Rahman 2007, p. 67). In other words, development and training programs are essential means of improving organisational performance. In addition, teamwork that is influenced by human resource practices has positive effects on business performance. Incentives and compensations that are provided by a human resource department have positive impacts on the success of an organisation. Lastly, planning has a significant and positive relationship with a firm’s performance (Chatterjee, Pearson & Liu 2013, p. 105). These human resource practices can improve overall performance in business organisations in Malaysia. This is because the practices of human resource improve the performance of firms, including the productivity of employees, quality of products, and flexibility of a firm. The authors assert that implementation of human resource practice such as performance-based rewarding system can highly improve a firm’s performance. Osman and Carmen found that since 2002 to 2008, Malaysia has seen an economic growth of 4.6 percent. Much of Malaysian firms specialize in computer components, medical products, computer services, outsourcing, and electronics. Currently, most organisations in Malaysia are implementing performance-based rewarding systems. This can be clearly seen in a survey conducted by the authors of this article on Malaysian companies. The results of the survey were that the implementation of the performance-based rewarding system has seen a significant improvement toward performance of many companies (Osman, Ho & Carmen Galang 2011, p. 56). In terms of employee training, most Malaysian companies perceive that training workers beyond the required basic skills is costly and this has resulted in the country’s government intervening to promote employee training and development program. The Malaysian government has established several training institutions that offer training skills. According to the results in most studies conducted on Malaysian firms, it can be concluded that implementation of human resource practices in an organisation has positive impacts towards the performance of the organisation (Arumugam et al 2011, p. 49). The findings of Osman and Carmen’s research identified that human resource practices positively impact approximately 50 percent of a firm’s performance. This article helps organisations to be aware and realize the importance of implementing human resource practices in their strategic plans. Most Malaysian firms should be influenced to implement human resource practices because most of them practice view human resource practices as costly. Conclusion In conclusion, in a nutshell, this study according to its results, suggests a positive relationship between practices of human resource and firm performance. The study contributes substantially towards an understanding of the way companies of Malaysia perceive the importance of human resource practices on the performance of the firms enabling other human resource managers to make a comparison of their current operation strategies and identify the practices that will result in higher firm performance. This critical evaluation has attempted to explore the importance of implementing human resource practices in an organisation especially in Malaysian firms. Managers are influenced by the evaluated article to establish relationships between organisational performance and human resource practices. According to most studies, approximately 50 percent of organisational performance is affected by implementation of human resource practices. Human resources practices that align with the organisational goals and objectives are very vital towards improvement of the organisation’s performance in future. Therefore, it is important for firms to adopt human resource practices that make appropriate use of employees. This is because organisations that align their human resource practice and systems with their strategies achieve superior outcomes. Bibliography Abdullah, Z, Ahsan, N, &Alam, SS 2009, The effect of human resource management practices on business performance among private companies in Malaysia, International Journal of Business and Management, 4(6), p65. Arumugam, VC, Mojtahedzadeh, R, Asefi, SM, &Mehrizi, AA 2011,The impact of human resource management practices on financial performance of Malaysian industries, International Research Journal of Finance and Economics, 80, 49-54. Chatterjee, SR, Pearson, CA, & Liu, Y 2013, Global ambition and human resource reorientation of Indian and Malaysian managers: Some indicative empirical evidence. Vision: The Journal of Business Perspective, 17(2), 105-117. Mohamad, AA, Lo, M, & La, M 2009, Human resource practices and organisational performance. Incentives as moderator, Journal of Academic Research in Economics, 1(2), 229-244. Osman, I, Ho, TC, & Carmen Galang, M 2011, The relationship between human resource practices and firm performance: an empirical assessment of firms in Malaysia, Business Strategy Series, 12(1), 41-48. Othman, R, &Teh, C 2003, On developing the informated work place: HRM issues in Malaysia, Human Resource Management Review, 13(3), 393-406. Quresh, TM, Akbar, A, Khan, MA, Sheikh, RA, & Hijazi, ST 2010, Do human resource management practices have an impact on financial performance of banks?African Journal of Business Management, 4(7), 1281-1288. Rowley, C, & Abdul-Rahman, S 2007, The management of human resources in Malaysia: Locally-owned companies and multinational companies, Management revue, 427-453. Walters, M 2005, The performance management book. London: Institute of Personnel and Development. Read More