HRM Influence on Organisational Performance
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Published: Wed, 14 Mar 2018
Armstrong (2006) defines Human resources management as “planning, organizing, directing, controlling of procurement, development, compensation, integration, maintenance and separation of human resources to the end that individual, organizational and social objectives are achieved.”
Drucker (2001) stated “Human Resources Management is concerned with the people’s dimension in management. Since every organization is made up of people, acquiring their services, developing their skills, motivating them to higher levels of performance & ensuring that they continue to maintain their commitment to the organization are essential to achieve organizational objectives. This is true, regardless of the type of organization – government, business, education, health, recreation or social action.”
Taking a look at the world of human beings is a rewarding experience. Today, in any organization humans are treated as precious resource. They are called as assets of the organization as they bring success & prosperity. Human resource deals with human resources employed in a business unit. It is an approach to the management of people in an organization. HRM is relatively a new term for what was called as personnel management (baidu.baike.com).
An Organizational Performance includes multiple activities that help in establishing the goals of the organization, and monitor the progress towards the target. It is used to make adjustments to accomplish goals more efficiently and effectively (managementperformance.com, 2010).
Organizational Performance is what business executives and owners are usually frustrated about. This is so because, even though the employees of the company are hard-working, and are busy doing their tasks, their companies are unable to achieve the planned results. Results are achieved more due to unexpected events and good fortune rather than the efforts made by the employees (managementperformance.com, 2010). However, for any business to be successful, functions must be defined and accomplished. It is important for an organization to develop strategies that should be designed around the skills that would enhance the performance of the organization. Organization Performance can be achieved by using some of these approaches, if used with a strong focus, comprehensively, on achieving the results of the organization, could increase the performance of the organization. Best Practices, Quality circles and Process control can also be used to achieve similar goals (managementperformance.com, 2010).
The purpose of this assignment is talking about how human resources management practices will influence the performance of an organization. I am going to research some evidences, provide literature reviews and through analysis to introduce how human resources management practices will influence organizational performance.
To what extent does human resources management practices influence the performance of an organization?
I choose this research question because of the research will contribute to knowledge of the effects of human resources management by testing the performance effects of adopting human resources practices in some organizations.
More recently efforts have been made by HRM theorists to try to establish a causal link between HRM and performance. This has led to a growing number of studies which examine the potential contribution that good human resource policy can make to improving organizational performance, so much so that ‘the impact of human resource management on performance has become the dominant research issue in the field (Guest, 1997).
Importance of Study
According to the HRM strategy theorists (Tyson, 1997), “the aims of the HRM strategy process are typically concerned with devising ways of managing people which will assist in the achievement of organizational objectives. In addition, one can hope to see within the strategy-formation process the ‘official’ version of how senior management believes these policies, practices and philosophies will contribute to organizational performance.”
With the help of our knowledge of human resource management practices and philosophy you can avoid making many mistakes. More important, it can help ensure that you get results-through others. you could do everything else right as a manager-lay brilliant plans, draw clear organization charts, set up modern assembly lines, and use sophisticated accounting controls-but still fail as a manager (by hiring the wrong people or by not motivating subordinates, for instance) (Brewster, 2004).
On the other hand, many managers-whether presidents, generals, governors, or supervisors have been successful even with inadequate plans, organization, or controls. They were successful because they had the knack for hiring the right people for the right jobs and motivating, appraising, and developing them (Brewster, 2004).
In today’s businesses, the right approach and management of the organization’s employees can greatly affect the company’s overall performance. A strategic approach in Human Resource Management is vital especially in growing companies. Starting from right staffing to maintaining performing employees, human resources management is a key in developing not only the employees, but the whole organization itself (Carter, 1997).
Thus, the researches of human resources management hold an importance for all members of an organization.
Armstrong (2006) state “Human resource management is defined as a strategic and coherent approach to the management of an organization’s most valued assets – the people working there who individually and collectively contribute to the achievement of its objectives.”
Performance, in the context of organization, is not only a broad concept which has been used synonymously with productivity, efficiency, effectiveness, and more recently competitiveness; it has also been a subject of study for social scientists from a wide range of disciplinary perspectives (Harrison, 1997).
It is widely accepted that human resources management can help firms improve organizational behavior in such areas as stuff commitment, competency and flexibility, which in turn leads to improved organizational performance. In addition, findings from a number of empirical studies that have been conducted to research the relationship between human resources management and organizational performance indicate that high commitment and high involvement human resources management practices have a positive impact on organization performance (Kaman, 2001).
Key point 1
HRM practices can improve organizational performance by increasing employee skills and abilities (Patterson, 1997). Patterson (1997) stated that ‘HRM practices can influence employee skills through the use of through comprehensive training to develop current employees’. Nadler (1986) stated that training and development of employees, it has been widely argued, is essential to organizations which seek to gain competitive advantage through a highly skilled and flexible workforce as a major ingredient for high productivity and quality performance.
Marchington (1996) concerning the deployment of (the maintenance) skills thus bears a strategic importance in the competitiveness of an organization, and previous research findings have warned us of the penalty of insufficient training.
Harrison (2005) stated that “In the field of human resource management, training and development is the field concerned with organizational activity aimed at bettering the performance of individuals and groups in organizational settings. It has been known by several names, including employee development, human resource development, and learning and development.”
Training can be used in a variety of ways, including orienting and informing employees, developing desired skills, preventing accidents through safety training, supplying professional and technical education, and providing supervisory training and executive education (Cherrington, 1995).
Key point 2
Quality has been a central theme in HRM in which product or service quality is widely seen as an important way of improving organizational performance by attracting and retaining satisfied customers (Deming, 1986). In theory, quality management initiatives, incorporate the values of the ‘soft’ model of HRM in which superior performance is achieved through effective leadership (Deming, 1986)
Some writers of HRM and performance take the approach that stated that ‘organizations adopting high-involvement management in alignment with total quality management should outperform all other organizations and there is an interactive effect between the adoption of high involvement management and total quality management on performance’ (Wood, 1999).
Knight (1995) stated that “Quality management, or more accurately its managerial plausibility, is at least in part a reflection of the necessity for large corporations to find new and innovative ways of competing constructively, and of managing a fragmented workforce”.
Knight (1995) stated that‘Quality … needs to be extended to all aspects of an organization’s activities, not just the standards associated with finished products. It is here that the distinction is said to lie between quality initiatives and total quality management as a way of running an organization’.
Key point 3
Wilson (1994) points out “Human resource management strategies may be an especially important source of sustained competitive advantage for organization.” Although traditional sources of competitive advantage such as natural resources, technology, economies of scale, and so forth, create value, the resource-based argument is that these sources are increasingly easy to imitate, especially in comparison to a complex social structure such as an employment system. If that it is, human resource management strategies may be an especially important source of sustained competitive advantage for organization (Wilson, 1994).
Nowadays, human resources management is a common belief in both the business and the academic world that the human resources of an organization can be a source of competitive advantage (Beer, 1985)
MacMillan (1983) suggested one way often overlooked is through their human resource management practices. HRM practices enable companies to gain a competitive advantage in two major ways: One is by helping themselves and the other is by helping others. So there appears to be a significant benefit from having HRM considerations represented in the strategy formulation stage rather than only in the implementation stage.
Summary of Literature Review
In summary, different human resource practices should be coherent and complement each other. HRM practices can improve organizational performance by increasing employee skills and abilities. HRM can improve quality of products and productivity. Beside, HRM strategies can be an especially important source of sustained competitive advantage for organization.
Analysis for point 1
HRM practices can enhance employee skills and abilities so that improve organizational performance. Training is a management tool used to develop skills and knowledge as a means of increasing an individual’s and ultimately an organization’s current performance in terms of efficiency, effectiveness and productivity. Employee development, training theorists argue, is another management tool, but the investment is mainly made for the future performance of the individual and organization, and is connected to organizational objectives for the future. The tool is used to enhance the skills and abilities which the individual needs to be able to move along with the organization and to pursue a career in line with its evolving needs (Steedman and Wagner, 1990).
A more highly skilled workforce may increase productivity by producing a higher level of output or by producing output of greater value. A skilled workforce can also improve the firm’s functional flexibility since they are much easier to retrain due to their relatively broad knowledge base of multi-skills. A technically competent workforce will also give management confidence in utilizing new technology and provide employers with more scope for rapid adjustment to changes in production methods, product requirements and technology. In today’s intensified international competitive climate, ‘efficient production even of technically unsophisticated products benefits from technically advanced machinery operated by a workforce with a high level of skills’ which is in turn ‘a pre-condition for successful selection of appropriate machinery and its efficient utilization’ (Steedman and Wagner, 1990). Finally, a force of well-trained and responsible office workers can improve their company’s productive efficiency through maintaining good relationships with customers and suppliers, organizing smooth flows of production materials and keeping correct records to ensure that the products are delivered in time and to the customers’ satisfaction.
Analysis for point 2
Now days, HRM’ s central theme that product or service quality is widely seen as an important way of improving organizational performance by attracting and retaining satisfied customers.
HRM practices can bring the better quality of products for organization. The truth is, quality initiatives are essentially competitiveness driven. The real test of it is its ability to satisfy customers in the market-place. The emphasis upon responsibility is not infrequently ‘directly concerned with the elimination of waste and removing the duplication of effort through changes in job design and work process. It does not necessarily extend to the enhancement of working conditions or greater control over key decisions about investment, the fundamentally hierarchical division of labor, or the organization of work (Wilkinson, 1995)
Storey (1995) stated that Quality initiatives in this sense appear to line up more closely with the ‘hard’ model of HRM which emphasizes the quantitative, calculative and business strategic aspects of managing the headcount resource in as ‘rational’ a way as for any other economic factor. Its focus is ultimately human resource management.
HRM practices improve the quality of products and productivity. Quality initiatives of HRM will enhance that effectiveness of organization and the productivity. It must be important in contributing to the performance and competitive advantage of the organization as a whole.
Analysis for point 3
Human resources management strategies is this will help ensure that a competitive advantage through HRM practices is gained and sustained. In addition to using their HRM practices on themselves, companies can also gain a competitive advantage through using their HRM practices on others. Specifically, companies can gain a competitive advantage by helping their suppliers, customers, or servicers/distributors with their practices. In this way they can secure a differential position in the eyes of their stakeholders and this is often all that is needed to get priority of attention and support in times when this is critical.
Once the strategy is formulated and the appropriate HRM thrust identified, specific HRM practices need to be developed. These practices, such as staffing and compensation, are the ones that actually create the competitive advantage for the company. In addition, selection of the most appropriate practices should be appropriate to the strategy and lead to behaviors that are supportive of the strategy; for example, if cooperative behaviors are needed among employees, then group or organizational level compensation incentives should be provided rather than an individual-level incentive system (Carter, 1997).
Currently, many companies recognize the growing importance of their human resources, but few are conceptualizing them in strategic terms-in ways to gain a competitive advantage. As a result, many companies forego the opportunity to seize competitive advantage through human resource practice initiatives. The result of effectively managing human resources is an enhanced ability to attract and retain qualified employees who are motivated to perform, and the results of having the right employees motivated to perform are numerous. They include greater profitability, low employee turnover, high product quality, lower production costs, and more rapid acceptance and implementation of corporate strategy (Carter, 1997).
Summary of analyses
In a word, HRM is a key to success business of an organization.
Combining human resource practices, all with a focus on the achievement of organizational goals and objectives, can have a substantial affect on the ultimate success of the organization. HRM practices can bring the better quality of products for organization. HRM practices can bring the better quality of products for organization. It also can bring the better quality of products for organization. Besides, human resources management strategies is this will help ensure that a competitive advantage through HRM practices is gained and sustained.
Conclusion & Recommendation
Human resources management should play an important role in the success of an organization. HRM practices can also identify the processes and the proper staffing for each of these activities, and in effect, the systems and approach in terms of the organizational front line operations can be improved to decrease manpower hours, improve quality, streamline processes, and elevate standards.
Developing not only HRM but also its employees is significant. To keep up with competition, employees should be given with a number of reasons to stay with the organization, and do their jobs exemplary well. Their continuous growth, the right compensation and benefits, and work-life balance are just some of the things that motivate employees to perform better, producing better results for the customers and ultimately, the organization.
In today’s businesses, the right approach and management of the company’s employees can greatly affect the company’s overall performance. A strategic approach in Human Resource Management is vital especially in growing organizations. Starting from right staffing to maintaining performing employees, HR management is a key in developing not only the employees, but the whole organization itself.
For a company that is already recognized in the industry and is eyeing on expansion, their status and reliability should be maintained. The leaders of the company can now focus on the products itself and expansion, and let the HR Department handle the development of the organization. Keeping an eye on the company’s long-term goals, mission and vision, the development of performance standards is essential to identify potential problems, non-performing employees and compliance to tasks and standards. Minor employee and performance problems should be seen immediately to avoid any future inconvenience and potential problems to the customers and thus become a liability to the company (Michael, 2007).
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