The Relationship between Employee Engagement and Organsiational Performance - Coursework Example

The Relationship between Employee Engagement and Organsiational Performance By [Presented to] of INTRODUCTION An explicit definition of contemporary Human Resource Management is problematic as there is no specific framework agreed that defines it in a clear manner. The HR functions across the world are quite flexible but often lack in vision and insight that can transform the face and reputation of organizations. There is a number of definitions, models and theories for HRM examining the roles and functions of HRM in the competitive business and ever changing social environment. However, HRM is affected and driven by internal and external factors that need to be understood and analyzed in order to ascertain key issues that may thwart the progress of organizations. Organizations need to change their priorities along with responding to socio-economic factors that are beyond the control of HR practitioners. Marchington and Wilkinson (2008) defined HRM as the management of employment while Storey (1992) defined HRM as process recognizing employees as a resource worth considering and investing by focusing on commitment and mutual value generation. On the other hand, Caldwell (2001) stated that HRM is based on cost reduction by identifying employees who are flexible requiring little learning and development. On the basis of the above discussion, it can be said that generic HRM is based on the employment and management of key resources that can lead to value creation in a cost effective manner. However, contemporary HRM is affected by socio-economic issues that often test the overall HRM practices. The discussion aims to investigate the complex issues in contemporary HRM by focusing more on socio-economic issues offering challenges to HR practioners. The discussion underpins relevant literature to seek answer for the key issue revolving around socio-economic issues posing as a great challenge for contemporary HRM that is yet to be defined and understood fully in the current business environment. LITERATURE REVIEW Torrington et al. (2008) defined the term HRM in two different ways; generic and distinctive approach. The generic HRM is defined as the body of management activities including four primary objectives: staffing, change management, administration and performance. On the other hand, distinctive approach is based on specific philosophies aimed to facilitate people oriented organizational activities. Guest (1987) defined generic HRM as a specialist and professionally driven management tool that is often short term, bureaucratic and centralized. On the other hand, distinctive or contemporary HRM is associated with line management that is often long term in nature leading to the maximum utilization of sources and resources. Legge (1995) in the critique of the distinctive and contemporary HRM stated that it is more rhetoric than reality and supports shift in the employment relationship largely because of the external factors. Bach (2005) further added that employment relationships are often affected by internal and external factors and socio-economic factors play an important role in it. This clearly shows that there is no clarity over the definition of contemporary HRM but all these academicians agreed that both generic and contemporary HRM are affected by socio-economic issues and thus posing a key challenge in the management of sources and resources. Purcell and Ahlstrand (1994) believed that many organizations have been shifting away from the management of jobs to management of people within organizations to gain global competitive advantages. Beardwell and Clarke (2007) identified five major models of HRM as planning management, people management, employment relationship management, structure/system management and roles management. In this discussion, the idea is to discuss the relationship between employees’ engagement and organizational performance being affected by socio-economic factors. Dernovsek (2008) defined employee engagement as initiatives being taken by employees to help organizations to succeed in the competitive business environment through dedicated approach and efforts. Robinson, et al (2004) stated that employee engagement is the involvement of employees with enthusiasm for work that often results in better organizational performance. Furthermore, Fernandez (2007) stated that employee engagement is the positive attitude held by employees for their organization’s values and objectives that is created by effective relationship between employers and employees. Coffman (2000) stated that there is a positive relationship between employee engagement and organizational performance as engaged employees are more likely to help organizations through their dedicated approach and efforts. Meere (2005) conducted a survey on 360000 employees from 41 companies of 10 different countries and found that operating and net profit drastically reduced with low engagement of employees. Clifton (2008) stated that employee engagement is closely linked to the organizational performance but also requires organizations to form sustainable relationship with employees. On the other hand, Vance (2006) believed that every organization has different ways of engaging their employees to enhance organizational performance. However, motivation and compassionate behavior always help organizations to engage their employees to perform well along with putting their best foot forward in achieving the proposed goals and objectives in a systematic and enthusiastic manner. On the basis of the above discussion, it can be said that employee engagement leads to better organizational performance but organizations need to maintain good relationship with employees in order to win their confidence and loyalty resulting in better engagement and better creation of value and thus enhancing the overall organizational performance. It is important to understand socio-economic differences along with treating employees equally and compassionately to enhance their and organizational performance. Employee Engagement and Related Theories Merkle (2005) stated that there are two important theories of employee motivation developed by Mc Gregor: Theory X and Theory Y. Theory X states that employee dislike work and are inherently lazy. As a result of this management believes that employees need to be supervised and controlled in order to derive value from their skills. On the other hand, Theory Y states that employees may be self ambitious and self driven and require little motivation. They are always motivated and fulfill their roles and responsibilities in an expected manner. However, Conaty and Charan (2011) believed that employees motivation and demotivation is dependent on the management of organizations. It can be said that Mc Gregor’s ideas and assumptions on employees and their attributes are based on personal understanding that can be easily challenged considering the current business environment. Employees can be motivated when they are treated as assets and when they are treated in an equal manner (Ulrich, 1997) Lutans (2011) stated that contingency theory is a behavioral theory that states that there is no best way of managing an organization or people or to make decisions as final course of action and decision is dependent on internal and external factors. Morgan (2007) stated that organizations are dependent on many external factors like technology, society, consumers and employees. All these factors affect the operations and functions of organizations. Woodward (1995) stated that socio-economic factors play an important role in the decision making process of organizations as these are external factors and contingent in nature. Often, these factors change and thus compelling changes in the operational and functional structure of organizations. Thompson (1997) believed that contingency theory states the significance of socio-economic factors in the management of human resources with different people from different social and economic background offering social and cultural challenges to the HRM of organizations. On the basis of above views, it can be said that contemporary HRM is affected by socio-economic issues and contingency theory justifies it to an extent. Bailey (1994) stated that system theory is based on self correction through feedback that includes understanding of human behavior leading to human learning processes. Snooks (2008) believed that system theory helps in restructuring systems along with offering and receiving feedback that is important for the growth and development of organizations. Rugai (2011) supported the statement by believing that feedback is an important aspect of human resource management and helps in understanding employees and other stakeholders. However, Owens (2004) believed that with socio-economic differences, feedback may motivate or demotivate employees considering cultural and social barriers in understanding feedback. Overall, it can be said that system theory is an important part of HRM in knowing employees and other stakeholders based on feedback system but requires understanding of social and cultural factors. At the same time, Cervone et al. (2006) stated that intrinsic and extrinsic motivation plays an important role in diminishing socio-economic influence to an extent by offering equal treatment and motivation tools to everyone. Jones (2008) believed that in spite of socio-economic differences; employees can be understood on the basis of streamlining their behavior and attitude towards professional goals and objectives. Weightman (2008) believed that goal setting theory also helps in offering goals to employees along with guiding them to achieve their personal and professional goals. At the same time, Thomas (2004) believed that goals setting theory is based on the understanding of people skills and behavior that often helps in analyzing socio-economic factors in a logical way. On the basis of the above discussion, it can be said that employee engagement can only be enhanced through setting goals, motivating them along with guiding them in the compassionate manner by respecting differences and positive attributes. Summary On the basis of the discussion based on analyzing key issues pertaining to contemporary human resource management; it was found that employee relationship management has emerged as one of the key issues being affected by a number of factors and socio-economic factors being one of those. On the basis of literature underpinning, it was found that in order to strengthen employee relationship management, it is important to understand socio-economic factors along with implementing discussed theories to an extent. This will help in addressing key issues pertaining to contemporary human resource management. BIBLIOGRAPHY Bach, S. (2005) “Managing human resources: personnel management in transition”. Oxford: Blackwell. Beardwell, J. and Claydon, T. (2007) “Human resource management: a contemporary approach”. 5th ed. Harlow: FT/Prentice Hall. Bailey, K.D. (1994). “Sociology and the New Systems Theory: Toward a Theoretical Synthesis”. New York: State of New York Press. Conaty, Bill, and Ram Charan (2011) “The Talent Masters: Why Smart Leaders Put People before Numbers”. Crown Publishing Group Cervone, D.; Shadel, W.G.; Smith, Ronald E.; Fiori, Marina (2006), "Self-Regulation: Reminders and Suggestions from Personality Science", Applied Psychology: an International Review 55 (3): 333–385 Caldwell, R. (2001). ‘Champions, adapters, consultants and synergists: the new change agents in HRM’. Human Resource Management Journal, Special Issue, 11, 3, 39–53. Clifton, James K. (2008) “Engaging your employees: Six keys to understanding the new workplace “2002 SHRM Foundation Thought Leaders Remarks. Society for Human Resource Management Coffman C. (2000) “Is Your Company Bleeding Talent? How to become a true “employer of choice”. The Gallup Management Journal, 2000. The Gallup Organization, Princeton, NJ Dernovsek D. 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New York, NY: Oxford University Press Weightman, J. (2008) “The Employee Motivation Audit”, Cambridge Strategy Publications. Read More