Human Resource in Success of a Business - Essay Example

The notion that human resource management is vital to the underlying success of a business is one that has been explored in a wide variety of businesses and in various contexts. This exploration dates back to the late 1980s to the early 1990s and has been embodied in a change in terminology when referring to the manpower of an organization. In the past, the department which managed employees was referred to as the personnel department. This has been changed to human resources and highlights the importance of the employees in the success of a business. Essentially, it points directly to the contributions of the employees with regards to the underlying bottom line of the company by delineating employees as an invaluable resource. In order to fully understand this notion, it is necessary for us to operationally define human resource management. Simms (2002) offers one of the most clear and concise definition of human resource management when he indicated that human resources management was: the term increasingly used to refer to the philosophy, policies, procedures, and practices related to the management of an organization’s employees. Human resources management is particularly concerned with all the activities that contribute to successfully attracting, developing, motivating, and maintaining a high-performing workforce that results in organizational success (Sims 2002). Human resource management includes many interrelated and independent areas. These areas include: Benefits Compensation Training and Development Employee Relations Human Resources Information Systems (HRIS) Labor Relations Selection and Placement Recruiting Retention Occupational Safety Equal Employment Opportunity Diversity Issues Policy Development Arbitration and Mediation (Burke & Cooper 2004) One of the primary functions of human resource management is to improve knowledge, skills and attitudes that enable employees to perform current and future jobs in order to help organizations achieve success. (Rothwell & Kazanas 1994). In fact Philip and Shaw (1998) stated that an integral part of human resource management needs to be that of training the employees and equipping them to deal with the rapid change in technology. This is tied into many other human resource functions such as recruitment, retention, creation of new positions, work systems and performance management systems. These systems would need to be aligned with the organizations missions and goals. Alignment would ensure that the training offered is what is required to achieve the mission and goals of the organization. Training is a very broad term that has many definitions and uses in the literature. Training is the process of getting the right knowledge, skills and abilities at the right time, in the correct way and in the correct priority order to an employee. The training process is aimed at preparing individuals to perform current and future jobs (DeSimone & Harris 1998). DeSimone and Harris, further defined training as a process of providing knowledge, skills and abilities so that individuals can use them for specific jobs. In other words, when offering training, the programs should ensure that the training provides the expertise required for the job. Training should enhance the work done by people and then add value to business organizations. Furthermore, training can provide the employees with valuable skills to ensure that an organization remains competitive and ensure its success. It is felt that training inputs such as the trainee characteristics, training design, and work environment affect individual learning, retention, and the ability to transfer what is learned. Furthermore, trainee characteristics and the work environment directly affect training transfer. It is therefore important in business enterprises to ensure that the organization culture is conducive to learning. This can be done as business organizations link business strategies and training together in order to facilitate business success and ensure the business remains lucrative (Gilley & Maycunich 1998). According to Noe (1999), training is a programmed endeavor that enables employees to gain competence in skills, knowledge and attitudes in order to apply them to their jobs. Noe (1999) further stated that many companies have adopted the so-called "high-leverage training," which links strategic goals and objectives. These companies use structural design methods that ensure training is effective and can be compared with training programs of other organizations. Continuous learning is encouraged through "high-leverage training" and when this occurs the organization is referred to as a "learning organization." Swanson and Holton (2001) defined training and development as "a process of systematically developing work-related knowledge and expertise in people for the purpose of improving performance" (p. 204). The authors maintain that training often focuses on new employees and development is planned action by organizations to increase knowledge and expertise of people beyond their current job. Training is related to organizational effectiveness because through training, human resource acquires skills and knowledge and utilizes the acquired knowledge to improve performance and thus organizational effectiveness is achieved because goals and objectives can be realized. As the human resources absorb the knowledge, skills, or abilities acquired through training, there should be effective application of these capabilities to the job. In fact, training a competent, knowledgeable workforce would be a challenge because organizations would require a workforce that was flexible and work would be "knowledge work." The workforce would be expected to be more involved in workforce decisions and would want their skills as resources to be utilized. Further, business strategies would be dependent on a human resource that was versatile. Dependence on human resources clearly indicates that there is a relationship between human resources management and the effectiveness and success of an organization as a whole. Much of this has to do with the fact that through the function of organization development and human resources management reinforcement strategies can be developed. These strategies prove to be conducive to the proper functioning of the organization. Essentially, optimal performance is realized if the employees performance is linked to the organizational strategy (Broad & Newstrom 1992). The Importance of Human Resources Management Strategy Development Human Resources Management strategy refers to the process of building an agenda for the management of human resources function (Gilley & Maycunich 2000). In this case, the main department is being forced by the business environment to look for new solutions of being more efficient and effective. Because organizations are part of the larger system to remain competitive, the organizations have to adapt to the changes. Thus the human resources management function has to be designed to improve organizational performance and effectiveness. This will impact the underlying success of any organization. Performance improvement is evidence of the extent to which performance improvement interventions or change initiatives have impacted organizational effectiveness. Therefore, human resources management can be held accountable for: (a) the extent of skills transferred to the individual and workplace, (b) group performance improvement, (c) the extent to which learning impacts operational change, (d) growth in client relationship, and (e) the number of performance contracts concluded in a given period (Robinson & Robinson 1996). Therefore, in developing the human resources management strategy, measures have to be incorporated into the strategy to evaluate performance. These strategy measures usually include customer-based measurements such as on-time delivery, product quality, and new product introduction. Amongst the people-based strategy measurements are employee satisfaction, absenteeism, and labor turnover. The optimization of all of these measures is the role of management in general, but if the human resources management professional is providing effective intervention, then he/she should make a significant contribution towards them. The human resource management function needs to shift from a department to a strategic unit that is held responsible for achieving results in operational units. This requires a shift in the thinking of human resource management professionals. The human resource management professionals need to become consultants/project managers on a project-by-project basis, responsible for designing, managing, implementing, and evaluating performance. The practice of human resource management then focuses on learning transfer strategies (organization learning) rather than training activity (Gilley & Maycunich 2000). Most businesses operate in rapidly evolving environments where different scenarios come into play according to economic and foreign policy shifts. One only has to look at how business activity and stock market performance is affected when there is conflict. Given this changing environment, it is only natural that the human resource management imperative will change. Therefore, the human resource management strategy must develop with changing scenarios, otherwise it will cease to be relevant to the organization. Human resource management strategy is formulated after understanding the competitive environment, the resource base, the potential in the organization and also the organizational culture. During human resource management strategy development, the values of the client that make stakeholders committed to the corporate goals are understood. This means that the human resource management strategy will enhance the strategic capability of the organization for the future because the internal and external environments, which impact present and future business success, are understood. In other words, the formulation of the human resource management strategy is in response to the business needs of the organization. Although this is the ideal scenario, in practice it does not always happen. Ultimately, the human resource management strategy developed will depend on the type of business strategy the business adopts. However, the strategy adopted should lead to organizational effectiveness and performance partnerships with: (a) clients from different business functions, to deliver better service, (b) managers and supervisors, with the aim of improving performance through management development, and (c) business leaders/decision makers, to create supportive organization and management systems (Gilley & Maycunich 2000). Given the importance of the employees that form their intellectual capital businesses have no choice but to develop human resource management strategies. It should not be seen as an option, but a "must have" for businesses to remain competitive. High Performance Organizations One of the goals of a business is to be a high performing organization in order to survive in the business world. High performance organizations have the following characteristics: provide quality work at lower costs; achieve significant results for the money spent; provide good value to the customers and stakeholders, deliver products and services on time; and achieve recognition for provided services (Warner 2001). With these concerns there is a need for the development of a human resource management strategy, which has an agenda for long-term direction for planned learning activities to unleash human expertise. This would implement organization change for the purpose of improving performance, non-employee development, and employee education and training. The relationship between corporate strategy and human resource management strategies corporate strategies can be defined as strategies that address what the business or multi-business will be and how resources will be allocated. At the corporate level, the strategy focuses on "what business the organization is in." When businesses are diversified within the organization, then the unit has its strategy focusing on "how are we going to compete?" Some scholars call this the competitive strategy (Byars 1984). When there is alignment between the corporate strategy and the human resource management strategy, (e.g., planned learning), the organization benefits more. This is because the human resource management practitioners begin to think like their clients. They know they have to account for the resources provided to their units. Human resource management professionals know that their interventions and initiatives have a cost, so there is a need to think strategically about the best options at affordable costs and yet be able to meet the clients needs (Gilley & Maycunich 1998). The need for accountability should make the human resource management professionals become strategic business partners with clients from the different units. The process of becoming strategic business partners ensures that the unit can understand the clients needs and offer a better service. A key result from the alignment between the corporate strategy and the human resource management strategy is improved organizational effectiveness. This occurs when the human resource management professional develops a partnership with organizational leaders and decision-makers (Gilley & Maycunich 2000). However, when they are strategic business partners, they can account for organizational learning, performance, change management, and show how these three dimensions impact the service provided for their clients. Corporate strategies show what business the organization is in and the implementation of these strategies is facilitated by the human resource management strategy. The human resource management strategy ensures that there is maximum performance through performance improvement and the management of organizational learning and change, rather than improving an individual employees goals and skills. Human resource management strategy is therefore derived from the corporate strategy, but sometimes it is not aligned due to the lack of involvement of the human resource management professional from the onset of the decision making process. In some organizational settings, the human resource management professional acts as an observer in the strategic planning process and he/she is not directly involved in making vital decisions. Decisions are made and then handed to the human resource management professional for implementation. Any interventions offered by the human resource management professionals at this stage are often short-term and only fulfill the present needs of the organization. These operational interventions do not usually contribute to the strategic alignment of human resource management strategy and long-term corporate strategy. Examples of organizations that rely on human resource management initiative One of the most prolific examples of the necessity of human resource management as it relates to the underlying success of a business can be seen in the inner workings of Manchester United football club. Manchester United established itself as the worldwide leader within the arena of football. Not only has this company established its niche within the football arena but it has expanded far beyond athletics. Manchester United has companies which provide financial services such as financial services and travel. Without a doubt, this is a very lucrative and successful business which has garnered its market share through its superb treatment of its employees. This is evident in the fact that Manchester United has established a business by employing a strong dedication to its employees. In fact, Manchester United was built on the concept that the opinions of the employees serve to establish its image and reputation. This image and reputation, in turn leads to the underlying business success. In fact both are rare and difficult to imitate due to the long time it takes to develop them. Therefore, both have great potential to lead to a sustainable competitive advantage. With a positive image and reputation, an organization will be well positioned to achieve greater marketing communication effectiveness, attract better applicants, generate greater margins by charging higher prices, have lower marketing costs, retail employees, enjoy enhanced access to capital markets, attract investors and generate increased consumer loyalty (Rosaaen & Amis 2004). Other examples of organizations which embody the philosophy that excellent human resource management is necessary in order for a company to succeed can be found within the top firms to work for. These firms include KPMG, Barchester Healthcare, Nationwide Building Society, Morgan Stanley, Deloitte and American Express Services, Ernst & Young, PricewaterhouseCoopers, Deutsche Bank and Barclays Bank. These companies represent a wide variety of industries but have one thing in common—they realize the value of their employees and treat their employees as the valuable resources they truly are. In fact, they offer their employees many intangible benefits. Barchester Healthcare for example provides Blackberries for their staff members as well a very generous compensation and benefits package. Nationwide Building Society, on the other hand, has an excellent employee recruitment and retention program. Morgan Stanley and American Express both are reputed to offer their employees some very unique perks in exchange for their hard work. One cannot doubt the importance for these initiatives but (Tourish & Hargie 2004) purport that it is prudent for organization to communicate effectively with their employees. This communication involves the relaying of policies and procedures as well as the management of information dispensed to the employees. In relaying information to the employees and actively seeking input from the employees, an organization is sending a clear message which indicates that the employee is valued and his/her opinion counts. In so doing, the employee will work harder and longer to ensure that the company succeeds. Essentially, in assuring the employees that they are engaging in a mutually beneficial relationship the employee is motivated to protect their stake as well as the stake of the employer. Finally, we have seen that human resource management is vital to the success of a business. An integral part of this success relies on the training and competence of the employees. Employers owe a duty to their employees in order to ensure they do their jobs in a competent manner. This is done through constant institutional learning and training. At the art of this is the need to compete against other businesses within the sector. In order to compete in the technological age in which we live, business have to provide their employees with the necessary skill set, compensation, benefits and opportunities. Any compromise in these factors will effectively and efficiently lead to a loss of valuable employees which in the long run impact the profitability and success of an organization. Essentially, this sends a clear message that it is vital to treat employees as the valuable resources they are and it will be reflective in the success of the business. 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