Critically iscuss how Best Practice HRM Can Contribute to Improved Organisational Performance - Essay Example

Following this, the discussion examines the link between HRM and enhanced organizational performance. The paper examines the arguments and evidence that HRM policies and practices aid in promoting higher levels of organizational performance and studies whether the advanced arguments are convincing. The constantly evolving business environment coupled with the growing competition fuelled by globalization demands adoption of an effective human resource practice, which avails the organization a competitive edge.

Human leverage is a significant contributory factor in attaining competitive edge through customer satisfaction and organization performance. Over the years, interest has been building in the notion of “best practice” human resource management (HRM). The overriding idea hinges on the notion that a certain bundle of HR practices bears the potential to contribute to enhanced employee attitudes and behaviour, ultimately decreasing the degree of absenteeism and workforce turnover. In the last two decades, a number of publications have explored the links between HRM and performance (Guest et al 2003, p. 294). Organization performance encompasses indicators such as financial performance and excellence and productivity, as well as outcomes in aspects such as competence, commitment, and flexibility.

Enhanced organizational performance refers to enhanced employees attitudes and behaviours, minimized degree of absenteeism and labour turnover and enhanced degree of productivity, quality and customer service (Armstrong 2012, p.56). Ultimately, enhanced organizational performance has the capability of generating higher levels of profitability. Literature Review Human resource management (HRM) deals with the personnel policies and managerial practices and systems that control the workforce. HRM details a strategic and coherent approach of an organization’s most dear assets-the employees, who personally and collectively add to the attainment of the organization’s set objectives.

Human resource correlate with business performance, especially “best or high performance” HRM practices, whose goals is to enhance employees’ abilities and motivation (Sturm 2007, p.3). Nevertheless, the correlation tends to be relatively minute in statistical terms, besides the fact that literature does not agree on the reason why, on implementation, some human resource practices fail. This raises a critical question as to whether human resource systems bear the capability to create a competitive edge by themselves, or they must be continued or reinforced by with other variables.

Performance in the context of the organization applies and is synonymous with productivity, efficiency, effectiveness, and competitiveness. HRM theorists have attempted to establish a causal link between HRM and performance. High performance human resource practices bear a positive effect on organizational learning, which impacts positively on organizational performance. Nevertheless, it has been complicated to institute a direct linkage of human resource practices on business performance (Lopez, Peon and Ordas 2005, p.147). As a result, there has been growing interest in studies examining the potential contribution of effective human resource policy in aiding enhancement of organizational performance.

This has made the impact of human resource management on performance an essential research issue in the field of HRM. Similarly, there has been a continual search