Analysis on the Importance of HR Practices in Managing Organisations - Essay Example

?Analysis on the Importance of HR Practices in Managing Organisations Introduction The literature suggests of the importance of managing human resources for the benefit of the company, but this practice is apparent to the large organizations. Human resources management deals with attracting, recruiting, training, and maintaining employees that can contribute to the organisational performance and meet the objectives and strategies. Due to the commitment of big corporations to generate profits, they implement HR practices to maximise the potential of employees to be productive. However, small and medium enterprises tend to disregard employee management, since they are small in numbers compared to huge companies. HR practice in SME has been the center of research because of the issues raised. The study found out that the size of the company is congruent to the choice of implementing HR policies because of resource constraints. This paper analyses the significance of HR practices such as training and development in managing organisations. Resourcing an Organisation SME has captured the attention of researchers due to its rapid growth which contributes to the national economy. Thousands of small businesses are established, which increase the employment of individuals; hence, failure of small businesses to remain in their business operation hurt the economy. Europe and UK narrate that two-third of its job are employed in SME, but the enterprises lose a huge number of jobs due to business failure (Bacon & Hoque, 2005, p.1976). The business failure of SMEs is caused by the poor management of resource and informal practices of HRM. Beaver and Hutchings (2005, p.593) support that SME rejects the value of HR as the source of gaining competitive advantage. Due to their lack of knowledge in the managerial aspect, the growth of the company is sacrificed. Furthermore, majority of small and medium enterprises believe that HR practices are hindrances to the generation of profits because training and development require budget. SME considers training as a waste of time and money because employees tend to become unproductive. Reid, et al. (2002, p.248) posit that in achieving competitive advantage, employees must be treated as valuable assets and stressed “commitment, adaptability, and consideration of employee.” To emphasize commitment, SME should adapt HR policies to strengthen the loyalty of employees and motivate them to render their maximum potential. Thus, it is inappropriate for SME to think that HR policies will lead to unproductive. “The management of people is strategic to success” (Harney & Dundon, 2006, p.48). This statement accentuates the role of HRM in aiding companies to achieve their mission statement. The knowledge on HRM is critical in ensuring that right employees are recruited and trained at the right time. Zheng, et al. (2009, p.177) confirm that “consistent and effective manner” of human resources management through recruiting and maintaining competitive staff who are talented will add to the companies’ competitive advantage and “sustain superior performance in the longer term.” Therefore, the failure of most companies is rooted to their inability to support HR practices. In UK, the government encourages SMEs to implement HR best practices because of its positive outcome to the organisational performance. Studies have shown that companies employing HRM have attained excellent performance compared to those who are neglecting HR (Bacon & Hoque, 2005, p.1977). According to Pfeffer (1994 cited in Reid, et al., 2002, p.249), successful organisations have common HR practices such as “employment security, self-managed teams, extensive training, high compensation contingent on organisational performance, recruitment, sharing of information, and reduction of status differences.” The HR practices of organisations motivate employees to be competitive and productive in their job design and role designation. Job design and role specifications are crucial in matching the talents of the workforce. Therefore, it is necessary that SME possesses knowledge on HRM so that they could attract and retain deserving employees for the realisation of business goals. Joining the Business Induction, socialisation, and training are processes that leverage the employees’ commitment to the company. These processes are involved in the knowledge management of employees to perform better, and to adapt the policies of a certain company. Sprogoe and Rohde (2009, p.49) define induction as a process of learning the “basic values, culture, formal and informal procedures … basic practicalities in order to adapt to and function in a new job.” As noted earlier, HR practices employ the recruitment and selection of employees. According to Mulders, et al. (2010, p.158), these stages belong to the pre-entry phase of induction. This is part of introducing employees to the internal environment where they will work for. It is also a process of welcoming new employees so that they would feel at home, or relax due to the atmosphere presented in the company. The second phase of induction is the post entry that involves the orientation and socialization. Induction and orientation are strategies for a short-term period. This is similar to projecting the gist of an organisational environment and perspective. It may be the tacit management of knowledge wherein employees educate themselves based on the observation method. Moreover, the knowledge management also involves the HR initiative to orient employees through introduction courses, videos, handbooks, and e-learning programs. On the other hand, socialization is the opposite of induction because it caters to the feeling of employees as being part of the company’s system. They participate in the decision-making of firms and the creative department. Socialization is “the process by which individuals are introduced and learn how to work in a particular organisational setting” (Ponte & Rizzi, 2010, p.145). Similar with induction, it focuses on the values, principles, roles, and interpretative frameworks to incorporate newcomers with old employees, and other factors. In addition, the companies utilise strategies in the socialization process such as institutionalised socialisation and individualised socialisation. The formal type of educating employees is institutionalized; individualised is devoid of design in passing knowledge to them. To lessen the uncertainty of newcomers, HR tends to communicate with the employees to give them an overview of the organisation. This is the adjustment period of employees where they evolve in a process of learning. The three HR practices lead to understanding of the employees’ role and task, attaining confidence in the role and performance, and accepting co-workers. Furthermore, Bauer, et al. (2007, p.709) affirm that information seeking is part of the adjustment period of newcomers. The authors based this assertion to the uncertainty reduction theory wherein the information gathered are used to predict the unstable environment. Their study discovered that socialization is related to the high level of performance and organisational commitment. HRM accords with human resource development that deals with training employees. Training is the process of acquiring knowledge and skills that are necessary in maximising potential for the growth of company (Vinten, et al., 1997, p.9). Moreover, training increases “work competence, skills development and quality, as well as motivation and commitment” (Beaver & Hutchings, 2005, p.594). However, in implementing training, it is important that it blends with the organisational objectives to encourage employees to stay. This is supported by Woodruffe (2006, p.3) that companies must train their employees despite the threat of leaving the company. Training increases employees’ motivation to remain in the organisation. Companies often have a notion that increasing compensation will motivate employees to perform better, but Devi (2009, p.3) attests that organisational culture involving teamwork, pleasant working conditions, considerate treatment to employees, growth opportunities, skill enhancement, and training opportunities leads to long-term engagement. Job Design Managing human resource is concerned with designing a job that would increase the level of employee’s performance. Job design specifies the identification of “relevant tasks and activities and allocating them across employees … as well as bundling job tasks to take into account possible synergies between tasks” (Foss, et al., 2009, p.873). Thus, job design also manages the sharing of knowledge within organisations by informing the employees of the task they should perform. However, HR must consider that job design is aligned with the organisational goals and employees’ perception of the skills and tasks. That’s why, the role of HRM is very critical in the organisational performance because the studies have proven that there is a significant relation with the job design and employee’s satisfaction and the quality of performance (Garg & Rastogi, 2006, p.572). The literature also suggests that job design has an impact in motivating employees. The job design model proposed by Hackman and Oldham shows the core characteristics that motivate employees to render a higher level of performance. Job design must possess the experience meaningfulness, experienced responsibility, and knowledge of results. Experienced meaningfulness pertains to the extent of employees’ perception on the importance and value of their contribution in the firms’ performance. It is related to the skill variety, task variety, and task significance of job characteristics. Moreover, responsibility refers to the extent by which employees are bounded by the outcome of their work. This is associated with autonomy. The third characteristic is knowledge of results in which individuals know their ranking in terms of their performance (Garg & Rastogi, 2006). In designing job, HR should consider if it acquires autonomy. Autonomy is the extent of rendering full control to the employees in managing their task. The employees are given the freedom to carry out the task in their own way. This strategy motivates employees because of the trust that is given to them. If the company trusts its own employees, the tendency is to reciprocate the behaviour (Kilduff & Brass, 2010, p.312). They will be motivated to contribute effort in performing the task efficiently and effectively. Moreover, task identity is acute in motivating employees. It refers to the degree by which employees identify with the job design so that they could complete the task from the beginning until the end. Therefore, the task identity is related to the perception of employee. When employees have negative implication to the job design, there will be no productivity involved. Finally, feedback is a method of informing the employees of their performance level. Erez (2010, p.393) concludes that feedback is conferring employees for self-control. They are evaluated based on their performance, which scrutinises their strength and weaknesses. Employees with excellent performance must be given a higher degree of responsibility and reward to increase motivation, not dissatisfaction. Challenging works keep them motivated, which prolong their stay in the company. Employee Development HR is responsible in developing the potentials or talents of human capital through extensive training. Training improves the capability of employees that is beneficial to the growth of the company. Although there are assertions that the growth of company relies on technological advancement, human capital is necessary in business operations. Technology projects that employee’s knowledge must not be stagnant. With the rapid changes in the external environment, training and development must be imposed. Hughes (2010, p.53) lists the three types of training: technical skills, management training, and motivational training. These shape the behavior and values of employees toward the organisation. Training is also conceived as the “vehicle for fostering learning” (Coetzer, 2006, p.352). Companies upgrade or update the knowledge of employees to combat the changes in the environment. Furthermore, employee development is perceived by employees that the company values their presence and contribution. Employees tend to work hard to augment the financial performance of the company (Lee & Bruvold, 2003, p.981). Researches have shown that companies devote to employee’s development will achieve strategic advantage because it stimulates the affective commitment of employees and motivation. Affective commitment is a long-term effect to employees that influences their performance. In addition, this type of commitment creates a strong connection between employees and the company, which encourages them to remain. In a study conducted by Gutteridge et al. (1993, cited in Lee & Bruvold, 2003, p.983), they expose that investment in organisational development produces employee’s retention, employee’s skills and morale, and employee’s empowerment, which aid companies to gain competitive advantage. Moreover, continuous competitive advantage is achieved when the company sustains the development of employees. Training and development are essential tools to retain productive employees and develop the skills of other workers. Employees that undergo training will increase the quality of their work, augment productivity, eliminate obsolete skills, and guarantee of endurance and success of an organisation (Olaniyan & Ojo, 2008). Thus, sustainable knowledge leads to sustainable performance. Transformational Vs Transactional Leadership Behaviour The two leadership behaviours differ in its structure and approach to the employees. Transformation leadership is a more humane method than transactional because of its concern with the welfare of employees and set high moral standards to be a role model for everyone. Pieterse, et al. (2010, p.610) define transformational leadership as “a style of leadership that transforms followers to rise above their self-interest by altering their morale, ideals, and values, motivating them to perform better than initially expected,” whereas, transactional leadership is an exchange relationship between the leaders and followers. The transactional leadership entails the cost-benefit process of treating employees. Furthermore, these two leadership styles differ in their characteristics. Transformational leadership considers the well-being of employees such as knowing their needs, motivating them through coaching and development, and treating them with value in the organisation (Sarros & Santora, 2001, p.385). Hence, this is a caring leadership that uplifts the morale of employees. Zhu, et al. (2011, p.152) affirm that transformational style advocates for the ethical practice of the organisation, policies, values, goals, procedures, and processes that shape the character of employees. The employees are expected to become a good follower, and a good example to other workers by exhibiting a high moral standard. Furthermore, this style motivates and encourages employees through “positive moral feedback” that aids employees in apprehending their own morality. It leads to their affirmation that they are moral people that stimulate them to be better individuals. On the other hand, transactional leadership is a traditional form of leading people because employers only care for the contribution of employees that benefits the development of an organisation. Brymer and Gray (2006, p.15) confirm that it is centered on contingent reward leadership. The company exchanges reward in the form of compensation, bonuses, merits, or recognition provided that the employees perform the task sufficiently. Thus, transformational leadership appreciates the value of employees, while transactional appreciates employees when money is concerned. The second difference of these leadership forms is communication. Transformational leadership encourages communication between the leaders and employees. The organisation ensures that the employees know about the organisations’ culture, and work with problem-solving method to manage their differences in reaching mutual decisions. On the contrary, transactional leadership is initiating a gap because leaders do not participate or involve in the employee’s welfare. They believe in the principle of laissez faire wherein interpersonal communication is not encouraged unless important issues must be addressed. Thus, the leaders are only concerned with money, not on establishing a relationship with the employees (Sarros & Santora, 2001). Lastly, transformational is innovative, while transactional is controlled. Pieterse, et al. (2010, p.610) claim that innovation is the focus of transformational leadership because it enlivens employees to be creative in identifying problems, providing solutions, and establishing support for the ideas presented, and applying the solution. In contrast, Bono and Judge (2004, p.902) attest that the concept of transactional is manipulative because the employee’s empowerment is discouraged. The organisation sets standards to be consummated by employees. It adheres to what employers are requiring; hence, the employees are stagnant due to the policy of companies regarding innovation and development. Conclusion Human resources are important components of the organisations. 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