Evaluation of HR Practices in the UK and the Relationship with Productivity and Efficiency - Literature review Example

Name Tutor Title: An Evaluation of HR Practices in the UK and the relationship with Productivity and Efficiency Institution Date Introduction Increased demands for greater efficiency and productivity, accountability as well as the value of money have contributed to the need for re-evaluation of how the public or international services ought to be resourced and delivered. Therefore, the human resource functions and practices are considered as one of the major functions in both the development and implementation of the applicable strategic responses aimed at increasing the competitive pressure. For example, public and private organizations are expected to adapt and respond to the domestic and international competition, declining markets and slower growth. The study evaluates the impact of human resource practices on organizational efficiency and productivity as the most important channel of organizational departments in the UK as the case of study. Based on the French industry survey data, there is an indication that human resource practices greatly influence organizational efficiency and productivity, though moderated by the availability of unions. For instance, in France the human resource practices have positive effects on organizational scale efficiency. On the other hand, such an effect is more dampened within the presence of unions (Tzafrir 2005). Studies indicate that on the basis of their own capability, human resource practices do not have any effect on the technical efficiency. However, various research findings suggest that the human resource practices can largely exert positive influences if combined with unions. Human resource managers are tasked with the responsibilities of selling the management values across the entire organization. They engage in persuasive acts that explicitly inculcate certain values into employees through a variety of channels. For instance, marketing and selling roles of the human resource is considerably more visible than with employees who are perceived as consumers of both human resource programmes and policies. Therefore, the contributions made by human resource specialists are currently working in specific organization contexts under the circumstances in which the practices are appropriate (Zheng, Morrison & O’Neill 2006). Human capital and performance More and growing body of evidences demonstrate that a positive relationship between human capital development and organizational performance exists. The emerging emphasis on human capital within the organizations reflects the perception that market value has less dependence of the tangible resources, but instead on intangible ones with particular focus on human resources. This implies that human capital generally consists of individual capabilities, knowledge and skills as well as experience of an organization’s employees and managers (Dess & Pickens 2000). Nahapiet and Ghoshal (1998) argue that social capital increase the efficiency of employees’ actions, and as a result, aids the aids the cooperative behavior. They also examined that both social relationships and social capital are the significant influences on the development of human and intellectual capital. This suggests that based on the individual level, employees attributed with better social capital such as stronger contact networks, are able to earn more rates of return on their respective human capital than those with poor social capital. There is an implication that human capital is a common term used in the business literature, and thus widely recognized among the UK firms in developing mechanisms that determine their employees’ value base. In addition, there is a suggestion that the significance of human capital notion as well as its measurement may lie within its capability to re-frame the perceptions of the existing relationship between employees’ contribution and the competitive performance of business operated (Kintana, Alonso & Olaverri 2006) Kozlowski, et al. (2000) suggested an approach to organizational improvement and development. This was based on enhancing the required knowledge, skills as well as attitudes or abilities of a given workforce. He examined that the paradigm may be well accomplished through the training activities, identifying training as an effective approach to the achievement of organizational efficiency and improved productivity since it directly contributes to the set in strategies, objectives, or outcomes that are considered central to the organizational effectiveness. However, the theoretical frameworks are not well and adequately addressed within the current models. As a result, theoretical models are proposed in the view that they will enhance the understanding of the relationship between the training provided and the performance of a firm. In addition, the theoretical framework was basically developed and proposed in order to fulfill the necessity for analyzing the training and organizational performance issues. The illustrations below represent the framework of training and its impacts employee and organizational performance as reflected in Figure 1 and Figure 2. In this case Figure 1 is basically focused on the fundamental premises of the applied training processes, Human Resource outcomes as well as firm performance. Therefore, training is predicated on its ability to contribute to higher rank groups and the organizational objectives, outcomes and performance. Majority of the Human Resource outcomes and organizational performance that considered important in evaluating the relationship, are clearly enumerated into both the second and third box. Much of the attention is reflected on some of the most critical variables. Figure 1 suggests that training greatly affects the general knowledge, skills, attitudes, behaviors, abilities as well as motivation of the employees. Therefore, Human Resource outcomes have a direct impact on the organizational performance. On the other hand, in Figure 2 the framework appears to be more complex than in Figure 1 since it implies that interactions between the training offered and organizational strategies as well as how such strategies relate to both training and organization’s performance relationships (Kalleberg & Moody 2003). Figure1: A framework for analyzing training and organization’s performance issues Figure2: Training, organizational strategy, and the firm performance Based on the diagrams above and in perspective of the long run, there is an implication that striving to enhance the Human Resource outcomes will eventually lead to some favorable consequences for organizational performance such as the financial and non financial performance. Thus, in order to determine whether or not training improves the performance of an organization, financial performance, or the non financial performance, the Human Resource outcomes’ process and organizational performance assessment should be taken into consideration together within the real situations so as to reach a consensus on its significance. In regard to the performance being considered in the model a distinction may be made between the financial and non financial performance of an organization. For example, the financial performance in this context is related to some indicators such as return on investment (ROI), return on equity (ROE), return on sales (ROS), and return on assets (ROA), Tobin’s q, the sales as well as market share and productivity. The non financial performance consists of the labor turnover, absence of the employees, quality of product, conflict, service and innovation (Huang 2000). Proponents of a high performance paradigm argue that the unpredictable success of the new forms of organizational work is basically explained by the failure to implement them. They suggest that such forms need to be implemented comprehensively as well as to adapt a complementary human resource management practices such as job security, training and performance pay should be taken into consideration. This generates a positive work orientation and ensures that worker competence is achieved for improved organizational efficiency and productivity. According to Guest (1997) and Purcell et al (2003) argue that if the human resource management activities are expected to impact the human resource management outcomes as well as firm performance, then that can only occur if the worker attitudes, in particular their behaviors are also affected. This suggests that it is important to explore not only the real practices that are implemented, but also the ways through which they are enacted by the line management and the associated human resource department. A consideration has to pay on how such practices are perceived by the employees (Truss 2001). Most of the contemporary surveys of human resource professionals in the UK have presented an increased emphasis on strategic partner role. However, the ultimate role of human resource professionals in redirecting most of their energy and efforts towards the alignment of human resource management with the business strategies as well as being way from the employees in order to solve the role conflict, should be a question for discussion (Sisson 2001). Caldwell (2003) identified the role ambiguity and role conflict in the human resource profession due to the competing demands posed to it by the senior managers and employees. This implies that a certain amount of conflict inherent in the development of strong association to the organizational strategy, undertaking some long –term perspective. However, maintenance of internal consultant role for the line managers should focus on the short-term and reactive issues. As a result of the adoption of the increasing strategic roles for human resource, much of the responsibilities for a people-focused human resource management practices such as employee champion as well as change agent roles is currently being devolved to the line management. Empirical study suggests that significant barriers, for instance, lack of enough time and training, absence incentives given to the managers to aid them in the fulfillment of an additional work, hinder such managers from implementing their work policies in effective manners are also in existence (Brewster & Holt Larsen 2000). Therefore, the human resource department and line management in an organization plays a crucial role in the stimulation of appropriate employee behaviors (Purcell et al 2003). The growth in the people management responsibilities has occurred in response to rise in the human resource management as well as changing nature of the human resource roles (Caldwell 2003). In the UK and in the world business management at large, it is a common practice to examine more responsibilities of the operational side of human resource left with the line, rendering the human resource professionals free to pay much attention on the strategic aspects of their respective roles. Human resource strategies and organizational performance improvement Based on the firms in Britain, a study was carried out to explore whether or not the adoption of good human resource practices to improve the organizational performance is considered to be a practicable approach to firms in the UK. It is has been discovered that for a social and economic system, in this case for Britain in which the competitive strategy is usually not based on a high-road human resource management as well as quality enhancement. This also applies to firms which operate based on a more or less short-term horizon. The emerging implication is that an equally beneficial approach may involve the assumption or acknowledgement of the association of both human resource activities and the organizational performance. However, some critiques of the human resource management suggest that part of the human resource policies such as performance related-pay, employee involvement and team working can be ideologically flawed, difficult to implement or associated with negative outcomes for a number of reasons (Procter & Mueller 2000; Purcell 1999). Best practice, the strategic synergy as well as fit and integration are the emergent key concepts that run through human resource understanding. Pfeffer (1998) presents a seven-principle best practice that is universally applicable. Such seven best-practice human resource management elements concerns employment security, self-managed teams or team-working, selective hiring, extensive training and high compensation dependent on organizational performance. According to Patterson et al (1997) argued that human resource management practices influence employee skills through the application of valid selection methods in hiring the most appropriate and skilled employee. Additionally, the influence can be through a comprehensive training in order to develop the existing employees. On the other hand, the effectiveness of a given comprehensive training program can be enhanced if combined with the appraisals. This may be focused on assessing the employee’s performance as well as targeting the emerging developmental needs. Training and development of the employees to a larger extent has been argued as essential to those organizations that seek to achieve competitive advantage. On the basis of highly skilled as well as flexible workforce, there is an implication that training and development as a human resource management best practice is a key ingredient for increased productivity and quality performance. Therefore, human resource function should focus on developing a more proactive and strategic role through the utilization of strategies such as keeping the people issues at organization’s business decision making as well as engaging actively in the negotiation for ownership of strategic agenda, demonstration of business understanding and building of credibility. The growing utilization of flexible employment through non-standard contract forms by the employers within the UK indicates that best practice of human resource management is not largely practiced (Guerrero & Barraud-Didier 2004). The role Human Resource function within the modern public sector The comprehensive conceptual literature on human resource roles within the private and public sectors have generally differentiated between the roles that are more concerned with administration and the ones that are of strategic value (Caldwell 2003). Strategic roles in general have been perceived as focused on the activities associated with long-term implications, for instance, development of more integrated human resource strategies, management of organizational change and involvement in the organizational strategic decision-making. On the other hand, administrative roles are considered as reactive, tactical and routine tasks that are linked with operation of the human resource policies as well as employee-facing roles, including welfare and the industrial relations (Truss et al. 2002). Caldwell (2003) examined that the function of human resource in nearly all the organizations should play multiple and more conflicting, roles as well as torn between competing demands from the employees, professional norms and employers. However, there is no existence of a clear evidence to affirm that an agreed and clear model of the strategic human resource function is available in the private sector that can be either conceptually or empirically adopted by public sectors (Truss et al 2002; Harris 2004). The human resource’s traditional role within the public sector, for instance, of balancing some competing values of both efficiency and responsiveness with the individual rights as well as social equity. As UK public sector has become modernized and sought to be more efficient and cost-effective, the concept of strategic management of people has been given much attention. As a result, more calls on human resource function to meet the increased needs of strategic role have been raised. An argument has been made that enhanced human resource management can encourage flexibility, a focus on an individual’s performance as well as lead to a reduction in formalization in public sectors. Consequently, this facilitates both the recruitment and retention of the highly valued staff, improves the organizational cost-effectiveness and encourages the performance-driven culture by adoption process of more strategic human resource roles (Truss 2003). However, despite the acknowledgement of the importance of human resource management under the current public management model, the evidences on whether or not the roles human resource function within the public sector organizations as of more strategic value still remains ambivalent (Truss 2003; Vere 2005). The new models of human resource management suggest that the expectations on the roles that human resource departments must play within the public sector are widely changing. This is because the public sector organizations are largely striving in order to make their human resource functions more learner and strategic. This clearly indicates that development of a more tailored approach to the evaluation of strategic human resource management within the public sector is need. Such approaches will take into consideration the distinctive nature about the public sector transformation based on strategic priorities, the demands it creates as well as the responses the demand elicits from the human resource functions. In the UK, commercialization reforms suggest that the function human resource within the public sector agencies is not only needed for continuous review of the working practices (White 2000) but is also faced with some unprecedented changes in regard to how its services are offered (Farnham & Horton 2000). They argue that the human resource function is significant in the attraction of talent and development of employment practices aimed at promoting the high employee commitment within the sector. However, moderately little has been established about the impacts that the latest commercialization reforms within the public sector have contributed on the major role played by a personnel function. The function is also traditionally charged with the capability to manage the organizational responsibility for achieving efficiency, justice and improved productivity in employment relationships and organizational performance (Bach 2005). Therefore, the increased empirical evidence about the relationship between organizational performance and the innovative human resource management practices has resulted more into government agencies to adopt these practices in public organizations (Soni 2004; Pichault 2007). Valuing human resources perceptions and practices within UK organizations According to Verma and Dewe (2006) despite the government and academic interests in valuing the human resources, relatively little progress has been made in reflecting the value associated with the human resource practices in UK organizations. Based on the traditional companies, local authorities and the knowledge intensive companies as the three major categories of UK organizations, a focus has been made on the significance of valuing human resources, identification of the key barriers to effective valuation of the human resources, current measurement practices as well as the expected progress within the human resource management field over the five years in UK organizations. Although a number of the respondents examined that valuation or measurement of the human resources was crucial to the organizations, very little or moderate progress in identifying or recognizing the worth of all human resources in the financial statements was taken into consideration. The major reason for the less recognition of human resource worth in UK include lack of understanding as well as support of the field by others leaders within the organization, for instance, senior management, lack of appropriate resources, precision and reliability in the current human resource measures. Uncertainty as to the kind of information that ought to be reported is also a major cause of less recognition of human resource value in UK organizations (Katou & Budhwar 2007). The research also suggests that more interest is in the field of human resource professionals than in accounting professionals. Therefore, valuation of human resources must be included in internal reports instead of being reported externally. This calls for more research both on the conceptual models for valuing the human resources in organizations and the empirical research that will focus on major issues, for instance, gaining commitment to the task of valuing of human resources, how the systems can be used to value employees and when to develop, implement them within the organizations. The consequences that are both intended and unintended on how such systems operate in human resource practices should be considered (Verma &Dewe 2006). Conclusion Human resource practices largely exert positive influences if combined with unions. Social relationships and social capital are the significant influences on the development of human and intellectual capital. Human capital is widely recognized to be important among the UK firms in developing mechanisms that determine their employees’ value base. Training is predicated on its ability to contribute to higher rank groups and the organizational objectives, outcomes and performance. In order to determine whether or not training improves the performance of an organization, financial performance, or the non financial performance, the Human Resource outcomes’ process and organizational performance assessment should be taken into consideration together within the real situations so as to reach a consensus on its significance. Best practice, the strategic synergy as well as fit and integration are the emergent key concepts that run through human resource understanding. Most of the contemporary surveys of human resource professionals in the UK have presented an increased emphasis on strategic partner role. Relatively little has been established about the impacts that the latest commercialization reforms within the public sector have contributed on the major role played by a personnel function. The function is also traditionally charged with the capability to manage the organizational responsibility for achieving efficiency, justice and improved productivity in employment relationships and organizational performance. The Human resource function is significant in the attraction of talent and development of employment practices aimed at promoting the high employee commitment within the sector. The less recognition of human resource worth in UK is due to lack of understanding as well as support of the field by others leaders within the organization, for instance, senior management, lack of appropriate resources, precision and reliability in the current human resource measures. Bibliography Bach, 2000, The Management Strategies of Public Service Employers in Europe, Industrial Relations Journal, 31, 2, 82 – 96. Brewster, C. & Holt Larsen, H., 2000, Responsibility in human resource management:the role of the line’. C. Brewster and H. 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