The Impacts of Human Resources on the Performance and Motivation of the Employees - Literature review Example

Introduction HRM is a broad topic in organizational world. It is difficult to define it in few words because of the various functions associated with it. Generally, one can define “HRM as the process of managing people in organizations in a structured and thorough manner” (Human Resource Management (HRM), 2012). According to Torrington et al. (2011), “Human resource management (HRM) is the basis of all management activity”(Torrington et al., 2011, p.4). All organizational functions start from the HR department. Some of the major functions of HRM are; recruitment, retention, allocation of suitable jobs, training and development of employees etc. It is the duty of the HRM to put the right person at the right place at the right time. In short, HRM holds the key in bringing success and failure to an organization. Employee turnover or dropout is one of the major problems facing by the current organizations. Many organizations measure the success and failures of their HRM based on the rate of employee dropouts. In other words, better HRM policies motivate the employees to continue in the organization whereas poor HRM policies force them to leave out. In the past, employees were more interested in getting decent salaries whereas at present they are not only interested in good salaries but also in getting proper work environment. HRM is responsible for providing better work environments to the employees. In short, better HRM policies always motivate employees to improve their performances and to stick with the organization for longer periods. “It is a widely accepted premise that retention and productivity of workers is a function of how well the individual is motivated” (Lord, 2002, p.3). This literature review analyses various theories related to the importance of HRM in improving employee efficiencies and reducing employee turnover rates. The impact of human resource on employee performance and dropouts Recent research has highlighted a so-called "prime building block" of HRM – the principle of "AMO". There must be sufficient employees with the necessary ABILITY (skills, knowledge and experience) to do the job; there must be adequate MOTIVATION for them to apply their abilities; and there must be the OPPORTUNITY for them to engage in "discretionary behavior" – to make choices about how their job is done (Buchan, 2004, p.3). All human actions, irrespective of good or bad, are based on some kind of motivations. For example, a killer may have some motives or reasons for killing. Same way a student may study well to get a job or recognition in the society. In short, motivation is necessary for all human actions. The cases of the employees are also not an exception. Employees need some kind of motivation to perform better. In other words, in the absence of motivation employees may work as passive elements whereas motivation forces them to work in an active manner. HRM is responsible for injecting motivation in the minds of the employees. In certain cases, rewards can motivate employees whereas in other cases, punishments could be a better option. Since no two employees are alike, it is necessary for the HRM to use customized strategies to motivate the employees. Employee motivation strategies should be used based on the needs and the nature of the employees. Fair treatment of employees with respect to opportunities and promotion is necessary to motivate the employees. No employee should feel that the organization or HR department is treating them with prejudices and biases. All employees should get equal opportunities irrespective of their skin colour, race or gender. “Equal opportunity employment refers to the approach of the employers to ensure the practice of being fair and impartial in the employment process”(Equal employment opportunity, 2007). Organizations should develop a strong relationship with the employees to motivate the employees for better performance. HRM is the bridge between the organization and the employees. The strength of this bridge determines the organization’s ability to motivate the employees. Paauwe & Boselie (2005) pointed out that “HRM practices should focus particularly on employee development, the encouragement of learning and knowledge management” (Paauwe & Boselie, 2005, p.79). Compared to the employees in the past, modern employees are more interested in learning. They are particular in career prospects. So they value training and development very much. It should be noted that organizational principles and the business strategies, culture and environment are changing day by day because of the advancements in science and technology. Training is the only way for the employees to get proper awareness about these changes and fine tune their skillsets. According to Marchington & Wilkinson (2005) “Training and education are not only seen as the way of helping individual to become more adaptive in their work, but also of providing more knowledge and skills” (Marchington & Wilkinson, 2005, p.52). For example, it is not necessary that an employee, who joined an organization around 30 years before, has any computer knowledge. It is the duty of HRM to provide enough computer training to that employee so that he may not face any problems in executing his works in this modern computer oriented business world. It should be noted that in the absence of computer training, that employee may struggle to complete his duties in proper manner. In short, an employee’s performance is directly linked with the training given to him by the HRM. Verma (2005) also stressed the importance of training on employee performance and motivation. If markets were perfectly competitive, firms would be able to arrive at an optimal mix of HRM and workplace policies. Management failure results, at least partially, from ambiguities in short- versus long-term goals. Depending on how these goals are defined, management may focus on some policies and not on others. A good example would be investment in training which may receive a bigger emphasis in organizations with longer term objectives than in organizations with short-term objectives (Verma, 2005, p.419) “A number of studies have shown that results of training affect overall performance of an organization such as productivity, turnover rate, absence rate and organization commitment etc” (Lin et al. 2011, p.927). As mentioned earlier, in the absence of proper training an employee may struggle to execute his duties properly. Such failures may bring punishments to them from the HRM department. Repeated punishment and lack of motivation in the work force such employees to leave the organization as quickly as possible. Modern organizations are working with rapid pace and in the absence of proper training employees may struggle to keep in pace with it. Instead of giving training, if the organization tries to punish the employees for such mistakes, the ultimate outcome could be employee dropouts. Many organizations have the habit of using internal recruitments as an option to fill the vacancies. “Internal recruitment is the cheapest and the quickest method of recruitment”(Recruitment methods, n. d). Even though internal recruitments have lot of benefits, it can create lot of problems also. Psychologically, it is difficult for an employee to work under another employee who once worked with him in similar status. The frustrations of the employees will be doubled if the promoted employee may have same or less experience than others. These frustrations and agonies often end up in employee dropouts. In short, internal recruitment methods should be used judiciously by the human resource managers. "The most effective retention strategy is a great manager - it's not an HR policy or process ". Our job in HR is to find how to help select, promote, develop and create the capabilities for great managers. People join great companies they leave bad managers" (Personnel Today, 2007). It is not necessary that the reputation of a company may reduce employee dropouts. In fact HR managers decide whether an employee should continue or not in the organization. It should be noted that some of the biggest organizations have higher rate of employee turnover whereas some of the smallest organizations have smaller employee turnover rates. These statistics clearly suggests that neither the reputation nor the size of the organization, but the capabilities of HR managers determine the employee dropout rates. Different HR management models are currently in place in organizations. It can be broadly classified in to two different groups; Hard and Soft. These two approaches in HRM were developed by Michigan and Harvard universities in the 1980’s. “The Harvard model, drawing on human relations school emphasized communications, team work and the utilization of individual talents whereas the Michigan model is a more strategic approach with a unitarist outlook, which endorses management's views” (Gill, 1999, p.2). No employee would like to work in an organization which is following autocratic style of management. All the employees like to work in democratically managed organizations. Harvard model is more democratic in nature whereas Michigan model is more autocratic in nature. So in order to avoid employee dropouts, Harvard model of HRM seems to be the best option for the organizations. Conclusions This research explored the impact of human resources on performance and motivation of the employees. Employee turnover is a big problem in majority of the organizations and this research concluded that human resources can a play major role in reducing employee drop outs. This research was conducted mainly using secondary data or qualitative data from previous researches. One of the major HRM functions is to motivate the employees so that they may improve their performances and avoid the thoughts of leaving the organization. Organizations use different strategies to motivate the employees and to reduce employee turnover rate. Building a strong relationship between the organization and the employees is necessary to reduce employee dropout rates. HRM should give more emphasize to training and developments so that the employee may not face any problems in executing their jobs. Democratic style of management will help the organization to increase its relations with the employees and to reduce employee turnover rates. References Buchan J. 2004. What difference does ("good") HRM make?. Human Resources for Health 2004, 2:6. EBSCOHost. Equal employment opportunity. 2007. [Online] Available at: http://recruitment.naukrihub.com/employment-opportunity.html[Accessed 24 May 2012] Gill C. 1999. Use of Hard and Soft Models of HRM to illustrate the gap between Rhetoric and Reality in Workforce Management, [Online] available at: http://mams.rmit.edu.au/d4lhtsmk45c.pdf [Accessed 24 May 2012] Human Resource Management (HRM). 2012. [Online] Available at: http://www.managementstudyguide.com/human-resource-management.htm [Accessed 24 May 2012] Lin Y., Chen S., & Chuang H. 2011. The Effect of Organizational Commitment on Employee Reactions to Educational Training: An Evaluation using the Kirkpatrick Four-level Model. International Journal of Management Vol. 28 No. 3 Part 2 Sept 2011 Lord R.L. 2002. Traditional motivational theories and older engineers. Engineering Management Journal Date: September 1, 2002 Marchington, M. & Wilkinson A.  2005. Human resource management at work CIPD Publishing, 2005 Paauwe J & Boselie P. 2005. HRM and performance: what next? Human Resource Management Journal, Vol 15, no 4, pages 68-83 Personnel Today. 2007. Vodafone does not regard staff retention as an HR policy issue [Online] available at: http://www.personneltoday.com/articles/2007/03/13/39651/vodafone-does-not-regard-staff-retention-as-an-hr-policy.html [Accessed 24 May 2012] Recruitment Methods, N. d. 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