Do Certain Combinations of HRM Practices Lead to Superior Outcomes for Organizations - Essay Example

Running Head: HUMAN RESOURCE MANAGEMENT Human Resource Management (Name) (Course) (University) Date of presentation: Lecturer: Do Certain Combinations of Human Resource Management Practices Lead to Superior Outcomes for Organizations? The importance of human resource practices to the success of organizations has generally been overlooked. In the past, organizations in many countries focused on cost containment, structural change and market mechanisms as the core sources of competitive advantages and did little to address the impact of human resource practices (Van Lerberghe, Adams & Ferrinho, 2002). In the recent years, it has been recognized with a lot of concern that getting human resource management practices right has to be the central focus of sustainable managerial practices. According to Guthrie (2001) this is partly in response the need to upscale capacity development and organizational performance. Essentially, appropriately skilled and well motivated workers are crucial to the success of organizations. Arthur (1994) has explained that different combination of human resource policies is an important incentive for increased employee turnover and productivity. High employee turnover is positively related to manageable labor costs. A number of researchers have theorized that some combinations of specific human resource practices lead to superior organizational performance. Accordingly, considerable progress has been made in researches about which practices should be combined to constitute effective human resource. Guthrie (2001) have reckoned that highly performing human resource practices should be able to offer employees high levels of motivation and competence and the ability to contribute to an organization’s overall performance. Since workers are the central focus of human resource management, it is imperative that human resource systems should consist of only those practices that help employees increase their productivity. Nevertheless, the specific practices and actual methods used to manage human resources can be a constraint or facilitator in accomplishing the goals of sound organizational performance. An empirical research by Huselid & Becker (1997) on the relationship between human resource management and organizational performance showed that there is a direct, positive correlation between people management practices and business performance. The research further showed that the correlation is cumulative: the more effective the human resource practices, the better the results. A similar finding has been reported by Huselid & Becker (1997) who reports positive statistical relationship between adoption of certain human resource management practices and increased business performance. A key lesson from these two empirical studies is that by investing in development of human resource policy and practices, organizations can make a positive and significant contribution to improved performance. Guest, Dewe & Conway (2004) has noted that there are two broad perspectives on the manner in which human resource practices contribute to improved business performance. These are ‘best practice’ and ‘bundles’. Best practice refers to specific human resource practices which when indentified and implemented can lead to improved business performance. Bundles are a specific set of human resource practices which can generate higher organizational performance when implemented under specific consideration and with specific objectives. However, the most effective combination of the bundles will generally depend on the firm context in which they are used (Martinez & Martineau, 1998). Different human resource practices and strategies are said to be bundled when they occur in mutually reinforcing and complete sets (Dyer and Reeves, 1994). The idea behind bundling of human resource practice is that the process creates opportunities to enhance employee motivation and performance capability. Moreover, bundling creates a range of opportunities for employees to gain relevant skills and enhance motivation and job satisfaction. Dyer and Reeves have further noted that a combination of different human resource practices should produce greater organizational performance than any of the individual practices which make the bundles. This is because of the synergy effect of the combined practices. However, different combinations produce different results. One of the most important empirical studies on the relationship between human resource practices and business performance is that by (Caulkin, 2001). In his research, he identified seven characteristics, which he purports to characterize all organizations producing profits through people. These characteristics are: i. Emphasizing on providing employment security and job satisfaction ii. Extensive training of employees iii. Selective hiring of new employees iv. Reduced status distinction and barriers v. Awards and compensation linked to performance vi. Decentralization of decision making vii. Extensive sharing of financial and performance information throughout the organization The above characteristics indicate that it is purely the organizational context that differentiates on the effectiveness of human resource practices. Diallo, Zurn, Gupta & Dal, (2003) have concurred with this view by noting that human resource practices and measures of organizational performance are unique to organizations. As such, the effectiveness of specific human resource practices can only be measured with indicators that are organization specific. An empirical research study by Guest, Dewe & Conway (2004) has supported the positive influence of human resource bundles on firm performance and employee motivation. These results have also been proven to be valid in both developed and developing countries. Human resource bundles influence employee skills and contribute to acquisition and development of an organization’s strategic human resource capital (Huselid, 1995). A combination comprising of such important practices such as recruitment and selection procedures which facilitate screening of a large pool of applicants can provide a valuable effect over the type of skills that new employees need. Other practices such as provision of ongoing training to employees, mentoring and coaching are also important human resource practices, which can have positive outcomes for an organization. How Work-Life Balance Programs Lead to Superior Outcomes for Organizations The concept of work-life balance is based on the notion that personal life and paid work life should be seen more as complementary elements of meaningful life than as competing priorities. Essentially, work life balance is all about developing and maintaining supportive and healthy work practices, which enables employees to strike a right balance between personal and career responsibilities. Such practices help strengthen employee loyalty, which in turn leads to improved productivity. According to a research study in the topic by Guthrie (2001) employees are likely to experience increased job satisfaction when they are given opportunities to attend to their personal issues while at the same time maintaining a stead control of their career commitments. Work-life balance arrangements are an important recognition of the difficulties that employees may have. These difficulties may cause problems in balancing between personal commitments and job obligations. These programs are also a good mechanism for reducing work absenteeism and increasing a company’s ability to retain and motivate high performing and experienced employees. However, ill-considered flexible work-life balance plans can have deleterious impacts on the company and its employees. One of the major factors that influence work-life conflicts is the amount of time an employee spends at the workplace. In fact, the high levels of work-family conflicts reported by employees are as a result of long working hours. Work-life balance programs attempt to reduce the amount of time that employees spend in work so as to reduce these conflicts. Drawing on work-life balance programs, Jille and Terry (2000) have explained that work-family human resource policies are an important human resource approach that leads to strategic, competitive advantages. Such policies create unique advantages and resources that cannot be easily imitated by competitors and hence give firms competitive edges in organizational performance. Jille and Terry (2000) have, however, noted that the effectiveness of work-family human resource policies is dependent on the relationship between specific bundles adopted and the desired outcomes. In the recent years, work-life balance has become a critical issue for human resource heads in many organizations in the recent years. The importance of such programs arises from the need for employees to make necessary changes in their work programs so as to attend to personal needs. For this reason, human resource people in many organizations across countries are trying to make policies which can support balance between work and personal lives of employees. This can help increase retention of valuable workers. Guthrie (2001) recommends that organizations should take care of the changing needs and roles of their employees and make necessary changes in the manner in which they do their businesses. Moreover, it is in the benefit of organizations to make their work arrangements more flexible so as to make employees comfortable and more loyal. In the long run, this has the effect of increasing the commitment and morale of employees, which help decrease levels of work-related stress. Because of the increasing importance of work-life balance to organizations, employees are being considered very important stakeholders in the affairs of many organizations and, therefore, it is the responsibility of organizations to take care of the needs of their employees. In today’s fast-paced business societies, organizations seek options that can positively impact on bottom-lines of their businesses, improve employee morale and help attract employees who can keep pace with workplace trends. Work-life balance programs such as flextime arrangements offer opportunities for employees to work under minimum pressure and attend to family and social issues, which are essential in stress management. Regarding time management, employees often face difficulties getting involved in many competing activities. Carving out time for personal and work duties is extremely important. Flexible work programs help employees program their activities in ways that make them face responsibilities with renewed energy and a sense of purpose (Arthur, 2003). In order for work life balance policies to be effective and produce the desired results, employees should be able to use them. While organizations may implement various work-life balance programs, they often experience difficulties implementing the policies due to lack of communication and training of employees. In some cases, the management fails to develop the necessary infrastructure for aligning work-life policies with corporate culture. In implementing work-life balance programs, it is important for managers to identify ways of reducing employee work load. Heavy work load is an important factor that causes conflicts between work and private life commitments. In light of this consideration, it is imperative to involve employees when implementing work-life programs. Conclusion The presence of human resource bundles is associated with positive performance outcomes. Some of these practices include flexible work arrangements and work-life balance programs. Firms which employ a wide range of work-life programs enjoy increased levels of organizational performance, revenue growth and market performance. These programs help motivate employees, which in turn helps increase job satisfaction and employee productivity. Because of the increasing importance of work-life balance to organizations, employees are being considered very important stakeholders in the affairs of many organizations and, therefore, it is the responsibility of organizations to take care of the needs of their employees. In today’s fast-paced business societies, work-life balance programs impact positively on bottom-lines of their businesses, improve employee morale and help attract employees who can keep pace with workplace trends. References Arthur, J. B., (1994). Effects of Human Resource Systems on Manufacturing Performance and TurnoverAuthor(s), The Academy of Management Journal, 37(3) (June, 1994), pp. 670- 687. Arthur, M. (2003). ‘Share Price Reactions to Work-Family Initiatives: An Institutional Perspective’, Academy of Management Journal, 46, pp. 497-505. http://connection.ebscohost.com/c/articles/10817616/share-price-reactions-work-family-initiatives-institutional-perspective Becker B., (1996). 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