Human Resource Management and Organizational Performance - Coursework Example

Human Resource Management and Organizational Performance Many a scholar has emphasized the fact that an organization’s human resource is the most valuable resource that the business has. Indeed it may be stated with high confidence that without a human resource, the business is as good as dead or is equivalent to a one man/show. While this is the case, it is worth noting that the human resource may build or crush an organization. Alternatively stated, when a company has a good human resource, there are high chances that it will perform better than its counterpart in the same industry that has an ineffective human resource assuming all other conditions are favorable. The truth in the success of the organization that has a good human resource holds for as long as the employees are well managed and remain highly motivated. Briefly stated, human resource management is an important organizational function as it contributes massively to the performance of the company. This paper is dedicated to discussing how HRM impacts on the performance and success of the organization. Human Resource Management Practices Human Resource Management (HRM) is the function that is concerned with issues related to workers in the organization. More specifically, it focuses on such issues as recruitment, communication, hiring, training, compensation, benefits, employee motivation, wellness, safety, training, and administration (Ulrich 1996: 16). In other words, human resource management has a lot to do with the recruitment and management of employees, establishment of an organizational culture, and provision of direction and leadership to the workforce. It is also the function of HRM to ensure that the company complies with regulations and policies that relate to labor and employment. In real life, human resource management influences a lot of what the employees of an organization experience throughout their employment life cycle. The human resource manager is in this respect charged with the responsibility of branding the company positively in the public domain so as to attract the right or talented employees (Agarwala 2003: 178). When the company needs more employees, the human resource function engages potential employees in the recruitment process and finally hires the right staff. Once the right staff have been employed, it is the human resource function that oversees their training, development and integration into the company system. The work of the human resource function does not end with the training and incorporation of employees in the system. HR has to oversee performance appraisals and ensure that employees are appropriately rewarded on the basis of their performances, loyalty to the organization, and level of experience (Agarwala 2003: 181). As previously noted, demotivated employees are as good as ineffective workers. Taking this into consideration, human resource managers have to ensure that their employees are well motivated through rewards, compensation, and benefits. The human resource function administers employee payments and benefits if it chooses not to outsource this function. In many cases, employees express their grievances through their trade unions. The HR function of the organization is, in this respect, charged with the responsibility of liaising with employee trade unions, and engaging with government bodies in ensuring that workers rights are upheld and respected (Agarwala 2003: 184). In addition to these traditional roles, human resource management plays an important role in the making of strategies related to the management of workers. For example, the human resource function of the organization may decide that some of the non-core functions of the organization be outsourced to other parties or organizations as a way of reducing production and operational costs. In addition, HRM may engage expatriates as a way of ensuring that the company gets the help and direction of well trained and highly experienced individuals. The strategic role of HRM is also often quite evident when it comes to dealing with mergers and acquisitions. The function has to tackle several factors into consideration before making a decision on whether or not to retain some or all of the employees of the acquired company. Once it has made such a decision, it has to ensure that the workers who are retained are the best for the company and that they are well compensated. The HR function also has to discipline errant workers and deals with issues related to retirement and firing of ineffective workers. Relationship between HRM and Business Performance It is evident that the business environment changes rapidly and organizations have to move fast in response to these changes. Some of the changes that businesses have to contend with in the market today include globalization, changing investor demands, product-market competition, investor demands, and market deregulation, just to name a few (Becker & Gerhart 1996:779). In order to remain competitive in the business environment, organizations have to continuously evaluate and change their outlook. More specifically, they have to find ways of improving productivity, coming up with new innovative products, improving quality, and reducing costs. Studies indicate that different features of human resource management systems like are linked to employee productivity and, therefore, to the performance of the business as noted by (Gerhart, 2005). Some of the features of HRM that have a link with organizational performance include innovative practices, training programs, compensation and benefits, hiring, recruitment, and performance evaluation (Balas 2013:2). In this respect, several studies have shown that organizations that apply the practices previously mentioned perform better than those that are inflexible in their human resource management strategies in spite of being in the same sector of the economy. Furthermore, it has been shown through studies that there are positive links between certain human resource practices and specific dimensions of economic performances of companies irrespective of their sizes. Some experts argue that the high performance practices are applied by organizations, the higher their productivity and profit levels. High performance practices in this case include incentive pay, employment security, empowerment, and participation, to name but a few (Balas 2013: 2). Other HR experts on the other hand argue that the performance of organizations that share specific characteristics depend on the effective combination of some human resource management practices. The bundling of different HR practices to form work systems and their effect on the performance of a business has also been a subject of study by different scholars. These studies have indicated a positive and significant correlation between different configurations of HR practices and the performance of the organization and on their profitability. Closely related to this is the fact that when HRM practices are applied individually, their effect tends to be less than when they are applied in combinations that take different forms as noted by MacDuffie (1995). When the practices are bundled together, they tend to reinforce the conditions that encourage and support employee motivation. Strategic human resource management has become a major source of competitive advantage for organizations. It can do this by facilitating the development of competencies that are specific to the organization. Indeed it has been noted that the superior performances of certain specific organizations are a direct result of the unique contribution of HRM (Çalişkan 2010: 109). On the other hand, it is true that human resource systems can destroy or inhibit competencies therefore contributing to competitive disadvantage and vulnerability to the organization. Many organizations have realized that all the other resources apart from the human resources are inert and are, therefore, not as important as the human resource. This realization has made these organizations put a lot of emphasis on their workers and their wellbeing. This is further reinforced by the fact that while competitors can imitate products, business practices, and equipment, they cannot imitate the human resource of an organization. Several studies have shown the positive impacts of HRM on the performance of organizations. In 1998, for example, the Workplace Employee Relations Survey which included a sample of 28,000 workers from 2,000 organizations revealed that there is a strong relationship between human resource management and both workplace performance and workers’ attitudes (Çalişkan 2010: 108). Another study conducted in 2000 involving 835 private sector organizations revealed that organizations that applied HR practices achieved higher levels of employee contribution and commitment which translates to higher quality and productivity (Çalişkan 2010: 108). Yet another study conducted by Huselid in 1995 involving 968 respondents revealed that employee motivation impacted on productivity much as employee skills, organizational structures and motivation influenced financial performance (Çalişkan 2010: 109). Conclusion Human resource management is generally concerned with the recruitment and management of employees, establishment of an organizational culture, and provision of direction and leadership to employees. As a function, HRM plays a crucial role in the success and performance of the organization. Several studies have indicated a strong relationship between different HRM practices and employee motivation, employee commitment, and employee attitudes, all of which impact the performance of the organization. In addition, strategic HRM contributes to the competiveness of the organization by giving it competitive advantage through a resource that cannot be closely imitated. Beyond any doubt, the human resource is the organization’s most important resource and as such should be taken care of well and kept motivated. References Agarwala, T. (2003), Innovative human resource practices and organizational commitment: an empirical investigation, The International Journal of Human Resource Management, Vol 14, No. 2, Publisher: Routledge, pp.175-197. Balas. 2013, The Impact of HRrM Practices on Organizational Performance: A General Model and A test For Uruguay, accessed 2 February, 2014 http://www.balas.org/BALAS_2013_proceedings_data/data/documents/p639758.pdf Becker B. & Gerhart B. 1996, The Impact of Human Resource Management on Organizational Performance: Progress and Prospects, The Academy of Management Journal, vol. 39, No. 4, pp. 779-801 Çalişkan, E.N. 2010, The Impact of Strategic Human Resource Management on Organizational Performance, Journal of Naval Science and Engineering, Vol. 6 , No.2, pp. 100-116, accessed 2 February, 2014 http://www.dho.edu.tr/enstitunet/dergi/066_Esra_Nemli1.pdf Gerhart, B. (2005). ‘Human Resources and Business Performance: Findings, Unanswered Questions , and an Alternative Approach’, Management Revue, vol. 16 No. 2, pp. 174-185 MacDuffie, J. P. (1995). ‘Human Resource Bundles and Manufacturing Performance: Organizational Logic and Flexible Production Systems in the World Auto Industry’, Industrial & Labor Relations Review,48(2): 197-221. Ulrich, D. 1996, Human Resource Champions: The next agenda for adding value and delivering results, Harvard Business School Press, Boston, Mass. Read More