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As HRM theory has evolved and developed, the belief that investment in developing and maintaining effective HRM policy and practice can make a significant and measurable positive contribution to organisational performance has come to be widely accepted.
One recent multi-sector review of research on the relationship between HRM and organisational performance reported that "more than 30 studies carried out in the UK and US since the early 1990s leave no room to doubt that there is a correlation between people management and business performance, that the relationship is positive, and that it is cumulative: the more and the more effective the practices, the better the result" (CIPD 2001).
This paper will examine this belief by looking at the factors that affect the most important performance indicator for the National Health service: Patient Outcomes. As stated in Liberating the NHS: Improving outcomes for patients "The primary purpose of the NHS is to improve the outcomes of healthcare for all: to deliver care that is safer, more effective, and that provides a better experience for patients" (DH2010).
This statement provides defined outcomes for patients against which HRM policies and practices can be measured. In essence, this paper is looking to test the hypotheses that 'good' HRM policies can lead to safer, more effective care and lead to better patient experience. In light of the current economic climate, it may be very tempting to overestimate the impact that Human Resources Management (HRM) can play in ensuring the NHS's ability to deliver healthcare for all UK citizens based on their need for healthcare rather than their ability to pay.
In order to achieve this aim, the author will examine what HRM policies and practices exist in the NHS as well as the plentiful supply of academic literature on measuring quality and performance
Over the last decade a great deal of attention has been devoted to examining the links between Human Resource Management (HRM) and organisational performance. (Wright et al., 2005).
Healthcare is a sector with some unique characteristics. Due to the complex nature of health, the incredible array of diseases and health problems, the differing needs of treatment and prevention and the breadth of skills and knowledge needed, the NHS has had to recruit an incredibly large, diverse workforce. "There is increasing recognition that health care delivery relies fundamentally on the capacity and capabilities of the workforce (QUOTE)". Therefore, one can easily surmise that delivery of health care relies upon the human capacity and capabilities of health care organisations to train, develop, deploy, manage and engage their workforce effectively. All of these concepts form the basis of all HRM theories and, possibly, explain the growing interest academics, NHS senior management, civil servants at the Department of Health (DH) and politicians in what constitutes 'good' HRM policies and practices.
Unfortunately, despite all the growing enthusiasm for HRM, there has, as yet, been no accepted definition of exactly what 'good' HRM is and as such, a number of models based have been put forward as a means of explaining how to increase organizational performance through HRM.
In its initial definition, HRM focused primarily on payroll (e.g. the timely payment of wages) and basic provisions for the welfare of workers in order to comply with statutory legislation. Frederick Taylor ("Principles of Scientific Management 1911") set out a number of techniques through which an organisation could expect increases in staff productivity. These include wage increases, job specific training, and enforcement of standards derived from work-studies. This type of HRM practice has been commonly referred to in the literature as "Personnel Management".
In the latter decades of the Twentieth century, as a result of increased economic prosperity, structural changes in the economy (moving away from secondary to tertiary sectors) and increased mechanisation in production methods, a new school of thought appeared to challenge Taylorism. Elton Mayo's Hawthorne Studies contradicted Taylor's Scientific Management approach toward productivity increase, and established that the major drivers of productivity and motivation were non-monetary factors. This was one of a number of new theories advanced. Others include Douglas McGregor's Theory X and Theory Y, Abraham Maslow's hierarchy of needs theory that recognized the concept of individuals aspiring to reach a state of self actualisation, Victor Vroom's Expectation Theory, Alderfer's ERG Theory, to name but a few. As a result of these, traditional Personnel Departments were replaced by a more dynamic Human Resource approach. This new approach considered workers as valuable resources, a marked difference from the earlier approach of considering them as mere cogs. This led to a separation of traditional Personnel Management activities from the new Human Resource function directly linked to the core business operations.
At the very tail-end of the Twentieth Century, increased free market competition at a global level and the proliferation of technology and knowledge based industries raised the importance of human resources. This has come to be known as Strategic Human Resource Management. The major change, was a reclassificationof the workforce, hitherto considered as "resources" now became "assets" and a valuable source of competitive advantage. As a direct result of this change, the HR department is actively involved in the strategic planning of company operations, and looks to meet the needs of employees in a way that benefits the company.
Despite the seemingly different approaches to HRM, in both size, priorities and functions, the basic raison-d'etre is the same for all three theories: Improving staff performance. A number of academics (eg Bailey, 1993; Guest, 1997; Huselid, 1995) have argued that HRM practices can improve company performance by:
increasing employee skills and abilities
promoting positive attitudes and increasing motivation
providing employees with expanded responsibilities so that they can make full use of their skills and abilities.
However, Richardson and Thompson (1999) summarised six key points from their review of the literature:
The claims that there is a universal best practice HR strategy "are premature".
Adopting a specified set of HR policies will not in itself lead to organisational success.
The same "bundle" of HR policies may not be universally applicable.
Virtually all current statistical analysis of HR strategies is based on "adding up a mixture of items from a somewhat arbitrary list of HR policies and practices".
More evaluation attention needs to be devoted to examining the intermediary steps between the two end points of HR strategy and organisational performance.
"How something is done is often more important than what is done" - but existing empirical studies concentrate on the latter.
What is undoubted, is that HRM practices can influence an organisations ability to meet it current and future needs. Through its various policies, it can attract and retain employees, develop its workforce to meet its current and future challenges and motivate its staff.