Human Resource Management - Essay Example

Human Resource Management: As the implies Human resource management (HRM) is the planned rational approach to organizing and managing an organization’s employees. The industrial revolution preferred machines to man, and thus focused more towards mechanization. Up until recently the focus of organizations especially manufacturing based organizations was on the latest and most efficient use of machinery. The world has changed since. Organizations now value their workforce as a resource and consider them as the greatest assets. It was this realization that lead to the birth of the term Human Resource Management. It was only the people who could lead an organization in the right direction and could individually and collectively contribute to achievement of the business objectives (Armstrong, 1992) Why is HRM necessary? At present Human Resource management is a fast evolving field that has emerged as one of the focal points of any business. It is Human resource management that addresses the theoretical and practical techniques of managing a workforce. Many people have the perception that only job of the human resource management department is to consider present or upcoming job vacancies and fill them with suitable staff. Well, that’s not entirely untrue but human resource management entails much more than hiring firing decisions. (Armstrong, 1992) HRM - adding value to the organization? HRM includes many different functions which contribute to organizational value in a variety of ways. Some of these functions also contribute by reducing risk. In this essay we will firstly examine the major HR functions and then consider the extent to which these functions add value and reduce risk. (Armstrong, 1992) Key HR functions It is important to understand that the role of HRM as a department varies from organization to organization and also between countries. For the sake of simplicity we will assume an organization where there is a significant HR department. Generally the department will be considered to have the following responsibilities: Communications Resource Management Employee Monitoring /Reward systems Training and development General administration Let us look at each responsibility separately in detail Communications One very important role of the HR department is communicating and clarifying management’s point of view to the lower levels of hierarchy and vice versa. Resource Management Resource Management refers to the recruitment and selection of employees within an organization. The importance of effective recruitment programs cannot be highlighted enough. The HR department is the entry point or the funnel which channels the most valuable resource of an organization, so it is important that it is aware of organizational needs and requirements and work in tandem with other departments. Therefore resource management remains to be HR departments’ key roles; newer concepts such as knowledge management are linked to Resource management as well. Employee Monitoring/Reward systems One important activity of the HR department is monitoring the employees’ performance. The performance of employees should be measured against the standards set by upper management for the achievement of strategic objectives. It is the job of the HR department to ensure that a minimum level of productivity is maintained and employees should be rewarded or penalized accordingly. Training and development Another important aspect is that of the human capital development. Enhancing the personal skill set/knowledge and competencies of employees, this is in turn beneficial for the company. General administration The general management issues of the employees of any organization also come under the HR department Now, there are two ways of looking at things; either the employees can be considered as an asset (Harris and Brannick, 1999) or they can be considered a liability (going with the view of “a business is only as good as its weakest employee”). Here is where the difference arises, HR can either be seen as adding value or it can be seen as reducing risk for the organization. But if we consider the impact of either value-addition or risk reduction the bottom-line remains the same i.e. to achieve organizational objectives. So, we will consider both aspects. Human Resource Management as adding value to the organization A study revealed that HRM helped improve the performance of employees in three major areas; motivation, opportunity and ability. (Appelbaum et al., 2000) Human resource can provide employees rewards, bonuses and other activities that can positively affect motivational levels. Opportunity can be provided by allowing feedback of employees on management decisions and seeking their contribution in decision making. Ability can be improved through training and development as we have discussed earlier. Another study investigated the relationship between companies that had implemented good HR practices called ‘High Performance Work Practices’ (HPWP) and financial performance. This study proved that HPWP have a significant positive impact on labor productivity and turnover and short and long term financial performance of any business. (Huselid, 1995) These researches show that HR management does indeed add value to the organization. Considering the key HR functions, the HR department can add value by recruiting the best possible employees for the organization. Such an employee will not only be suitable for the organizations culture and work requirements but when coupled with appropriate reward programs it can also result in low employee turnover, and absenteeism reduced job dissatisfaction e.t.c. Training and development as mentioned earlier are part of human capital development, the sole purpose of which is to add value to the organization. Many multi-national companies have mentoring programs for this very reason. This nurturing can eventually lead to organizational leaders. All the above mentioned points go onto show that there is a definite positive impact and relationship between HR management and its value addition capability, but the only problem is that this relationship is not quantifiable. (Hughes and Beatty, 2005) Human Resource Management as reducing risk for the organization The concept of HR management as reducing risk for the organization (as mentioned earlier) stems form the contention that employees are a liability or in other words there is cost of human capital involved. Looking at employees from human capital perspective an organization will have to reduce the risks involved by means of managing the risk in its key functions. Some researchers are of the opinion that HR professionals should make use of risk management techniques to HRM functions (Holbeche, 1999). For example, it has been repeatedly mentioned that recruitment is one of the key functions of the HR department then recruitment will also be the most risky area for an organization. If an organization makes haste in selecting employees it can end up having experts that are irrelevant to its field of operations. The effect of improper selection and recruitment can prove to be catastrophic for a business (especially for one that is in its nascent stages). Improper selection can also lead to high employee turnover as is evident from the case of Wal-Mart which had a labor turnover of 66% (in 1999) which was reduced through a focused HR strategy to 44% (in 2003) (Peterson, 2005). So, in effect reducing the risk of improper selection can also be seen as adding value to the organization. An estimate of employee turnover cost (to the organization) put the figure at 150% of the total annual salary of the position (Russell, 2005). Therefore it is imperative for businesses to hire appropriate workforce from the beginning. Even if the appropriate employees are selected, it is important to monitor their performance regularly, this is another aspect of HRM risk reduction. An unproductive and inefficient workforce poses risk to organizational competitiveness. Training and development can enhance the skills and knowledge of employees, while reward programs/ bonuses e.t.c can be used keeping in mind the stick and carrot approach. Enhancing communication between the management and workers of an organization is also necessary for risk reduction. The role of HR department in change management can serve to be a good example of risk reduction. Change management itself is part of risk management as an organization takes a risk when it tries to deviate from its current system. Though the change itself will obviously be considered to be taking place for good (adding value), it would be the HR department’s job to facilitate proper communication, job security and minimum friction between upper and lower levels of management to ensure the viability of the change (Bryson, 2003) So, to summarize it can be said that an organizations HRM department both adds value, and at the same time reduces risk while performing its core activities. The role of line manager in HRM A line manager is a person who is directly involved in activities that contribute to an organization’s output, in a team oriented organization the line manager may also be the team leader. In small organizations where the HR department is insignificant or even non-existent, the line manager will be responsible for the functions of HRM. So in that case the line manager needs to well versed with the nuances of human resource management. Even in organizations where there is a separate HR management department and a manger, the line manger will have a say in a lot of human resource issues. Recruitment: The line managers usually has the final word in the selection of candidates. Performance Appraisals Performance appraisals are conducted by organizations to assess the performance of its employees. Since line managers are the ones who interact with employees the most, they are the ones most suitable for conducting performance (which is usually the case). This performance appraisal serves various purposes of channeling human resource activities such as hiring, firing, and promoting, managing the rewards system, providing feedback, identifying training and development needs and providing job related data valuable in human resource planning. (Cherrington, 1995) If we consider line manager as a group leader in team oriented organizations, in that case the line manager has to handle the group effectively for the achievement of group objectives. The responsibility of a line manager in a group will be similar to the job of a human resource manager as one will have to take care of all the key areas of human resource management and implement and balance them with group dynamics. So, it is imperative to bear in mind importance of the role that a line manager can play in human resource management of any organization. BIBLIOGRAPHY Applebaum, E., Bailey, T., Berg, P. and Kalleberg, A.L. (2000), “Manufacturing Advantage: Why high performance work systems pay off”. Ithaca Publications. Armstrong, M (1992), “Human Resource Management: Strategy and Action”. Kogan Page Publications. Bryson, J. (2003), "Managing HRM risk in a merger", Employee Relations, 25 (1/2), 14-31. Cherrington, David J. (1995). “The Management of Human Resources”. Englewood Cliffs, NJ: Prentice-Hall. Harris, J. and Brannick, J. (1999), “Finding & Keeping Great Employees”. Amacon. Huselid, M. (1995), “The Impact of Human Resource Management Practices on Turnover, Productivity, and Corporate Financial Performance”. Academy of Management, 38 (3), 635-672. Hughes, R. and Beatty, K. (2005), “Five Steps to Leading Strategically”, Training and Development, 59 (12), 45-48. Holbeche, L. (1999), Aligning Human Resources and Business Strategy. Elsevier Publications. Peterson, C. (2005), “Employee retention: The secrets behind Wal-Mart’s successful hiring policies”, 44 (1), 85-88. Russell, D. (2005), "How Much Are Your Employees Costing You? -- Tips to improve your management style and increase your bottom line", VARbusiness, 2126, 58-59. Read More