Human resource to improve organisational performance

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As indicated above, a unifying theme of all HRM approaches is the belief in the critical importance of human resource utilisation in determining organisational performance. However, when it comes to the question of how these resources can best be utilised, two distinct approaches have developed. The 'hard' approach sees people as resources just like any other resource possessed by the organisation, the objective being to maximise their benefits and minimise their costs to the organisation. This goes hand in hand with an emphasis on profit as the so-called 'bottom line'. Some examples of the kind of approach taken by proponents of hard HRM will illustrate this emphasis on human resources as costs and on bottom line profits. Hard HRM might emphasise the desirability of changing work practices so that fewer people could produce the required amount of goods or services. This would be seen as to the benefit of the organisation since surplus employees could be laid off to reduce costs. Full-time employees cost more than part-time ones, so that a shift to more part-time workers would also be advantageous from a hard HRM perspective, as would outsourcing. The latter involves contracting work out to agencies, giving the organisation flexibility to increase or decrease numbers of employees as the need arises without redundancy or other costs. These few examples should have given the reader the flavour of the 'hard' approach to HRM.

Despite the fact that ideas and techniques derived from human resource management (HRM) have been adopted in a large number of organisations world-wide, the emergence of HRM as a field is a relatively recent phenomenon whose origins can be traced back to the early 1980s. Indeed, because HRM is still in its formative stages, there are controversies about what exactly is meant by the term itself, about precisely what should and should not be included within the scope of HRM, and even in some instances about the true benefits of some of its proposed approaches and techniques for organisations and the individuals employed in them.

Because there is no unanimously agreed definition as to what actually constitutes HRM and precisely how it differs from previous approaches to the management of people in organisations, no attempt will be made to provide a comprehensive definition of the term here. However, one way to look at HRM is as a set of loosely related ideas, concepts, and techniques held together by the common underlying premise that, within any organisation, maximisation of the utilisation of human resources is crucial to maintain and enhance competitiveness in a world where those who do not compete successfully simply do not survive. According to this view, unless organisations can make full use of the potential of their employees, not only will they perform poorly, but their very existence will be threatened in today's highly competitive world.

The 'soft' approach to HRM, on the other hand, emphasises the human, rather than the resource, element of the equation. According to this view, people have enormous potential to increase their contribution to the organisation if the conditions can be set up to release this potential. In this sense people should be seen as qualitatively different from other resources. If the organisation can harness employees' reserves of creativity and energy, maximise their skills, and enhance their commitment then this will provide the key competitive advantage that is required. The emphasis here is much less on people as cost items and much more on how to increase their productivity by enhancing their ability to contribute to the organisation. Consequently, proponents of 'soft' HRM tend to focus on methods of enhancing motivation and capability, such as reward management, training and development, and so on.

1.2

Traditionally, within large organisations at least, responsibility for human resource matters lay within the personnel function. A typical list of personnel management functions carried out in organisations would be very wide and would include advising on activities such as: recruitment and selection, performance appraisal, training and development, payment and pension systems, industrial relations, and so on. These are all critically important functions which are capable of being carried out at two levels. At an operational level, all of these have to be conducted as a part of the organisation's everyday activities. However, most also have a strategic element, in the sense that they can be integrated into the overall objectives of the organisation. Take the example of training. At the operational level, the personnel department would be responsible for administering and running courses. At a strategic level, a relevant issue might be the question of how much should be invested in training, given the direction in which the organisation is going and what it wants to achieve.

From an HRM perspective, most, if not all, people management issues should be considered from a strategic as well as an operational perspective. A key issue which now arises is the extent to which, in the past, traditional personnel management has operated at a strategic level. A number of writers have suggested that the role of personnel in the past in most organisations has been operational and reactive, rather than pro-active and strategic (Torrington, 1995, Hendry, 1995). An example of the reactive nature of personnel management can be seen in the field of industrial relations, an area which greatly pre-occupied personnel managers in the UK in the seventies. As Hendry (1995) points out, the majority of personnel managers during that period spent most of their time fire fighting. A dispute would arise and personnel's job would be to react to it and solve the immediate problem. What rarely emerged from personnel departments was a strategy for dealing with industrial relations problems. To take another example, in the field of training and development, although personnel departments frequently have large training and development budgets and are responsible for running a wide variety of training courses, rarely does one find a coherent strategy linking training to the organisation's underlying objectives. Again personnel's role is seen as operational, rather than strategic. We saw above that there was a view in the eighties that radical changes in the way in which human resources are managed would be needed to increase competitiveness. Presumably, personnel managers, with their specialist knowledge, would be well placed to initiate and influence these changes. Yet Evans and Cowling (1985)in a study of British personnel managers, found that they were not generally initiators of major change. Nor were they given a large role in advising on the form such changes should take.

1.3

The mission of HRM is to maximise the utilisation of human resources. A key issue is, of course, how this is to be achieved. There are a number of approaches which can be taken here, but many of them have their origins in theories and research findings in the field of organisational behaviour (OB). OB is the study of human behaviour and experiences in organisations. An example of the link between OB and HRM is in the area of employee motivation. Many HRM interventions are designed to increase employee motivation and commitment, and OB has provided rich insights into the nature of both of these phenomena. The same can be said for the management of rewards. As we shall see later in this text, the introduction of team working, which is another popular HRM innovation, has its origins in classical OB studies of autonomous work groups. Many HRM theorists stress the importance of culture change in managing people more effectively, and this is another area where many of the building blocks relating to both theory and practice come from OB. Many other examples could be given, but these should suffice to make the point that much of HRM relies on prior work in organisational behaviour.

2.1

The next stage is to consider which selection tools the recruiter has at his disposal and how these relate to the qualities needed for the job in question. In this context a selection tool is simply something which is capable of providing relevant information about the desired qualities in candidates. The initial process of deciding which selection tools are likely to be most useful is based on a number of considerations and this is discussed below. However, for the moment, let us assume that this initial choice has been made. A selection matrix is then constructed comparing possible selection tools with the qualities being sought. An example of what such a matrix might look like for the post of management trainee is shown in Figure 5.2. In the interests of brevity, the qualities shown in the table are presented as dimensions, but in a real life recruitment situation recruiters would also be given a list of the job behaviours or competencies which make up each dimension. Some of the selection tools shown in the table, in particular the interview, will already be familiar to the reader, while others such as ability tests and simulations may be less so. Briefly, ability tests, which can take a variety of forms, typically provide a numerical score for a person on one or more aspects of mental ability. In the case of simulations, candidates are placed in situations which are designed to mimic certain elements of the job. For example, aspects of team working might be simulated by asking candidates to take part in a group discussion. Ability tests and simulations are described in more detail below.

Figure 5.2 A selection matrix for recruiting management trainees

Each mark in the table indicates that a behavioural dimension is capable of being assessed by a particular selection device. From this the recruiter can decide which dimensions will be evaluated by each selection tool. Thus, in the above example, the interview would be used primarily to obtain information about interpersonal behaviour, commitment, and flexibility.

2.2

Muchinsky (1986) has pointed out that validity is only one of four factors which should be considered when assessing the usefulness of a particular selection technique. A second factor is fairness. To be useful, a technique must not discriminate unfairly against individuals. Unfair discrimination can take many forms, but two types which have assumed prominence in many countries are those relating to ethnic origin and sex. Quite apart from considerations of equity, a device which puts some individuals at an unfair disadvantage as a result of their sex or ethnic background will have low utility since some potentially high performers will be rejected while others whose potential is less, will be accepted. Moreover, basing selection decisions on information gathered using such a technique would also be illegal in many countries. A third consideration in terms of usefulness is cost. Other things being equal, a device which is inexpensive to develop and use is likely to be superior to one which is more costly. Costs in this context should not just be measured in direct money terms; opportunity costs in terms of managers' time are equally, and sometimes more, important. Finally, there is what Muchinsky calls applicability. Some selection devices have low applicability in the sense that they are only suitable for use with a narrow range of jobs. Those with high applicability can be used across a wide range of jobs. Clearly, provided the other three criteria are met, it is better to have high than low applicability.

2.3

The interview is probably the most widely used of all selection devices. However, it is misleading to discuss 'the interview' as if it consisted of a single standard procedure which is applied in a uniform way to all job situations. In fact, interviews take a wide variety of forms depending on the job and the organisation, the training and experience of the interviewer, the place of the interview in the selection procedure as a whole, and so on.

Interview Dimensions

Before going on to consider how the interview measures up to the Muchinsky criteria, it is worth considering the ways in which interviews can vary along different dimensions, since these variations might well have important implications for their usefulness.

Early reviews of interview validity studies, prior to the introduction of the meta analysis method, concluded that validity was low or even negligible. In fact, the first major meta analysis of studies of interview validity reached a similar conclusion with a reported true validity of r = 0.11 (Hunter and Hunter, 1984). However, in the late eighties and early 1990s the picture changed, with four major meta analyses all concluding that the interview can have quite high validity, provided that a structured format is used. Table 5.1 shows the results of these meta analyses. The difference in validity between structured and unstructured formats can be clearly seen.

Table 5.1 Summary of meta analytic studies of interview validity

 

Validity coefficients

 

Structured Interviews

Unstructured Interviews

Authors of review

r

r

Weisner and Cronshaw (1988)

0.60 - 0.63

0.20 - 0.37

Wright et al. (1989)

0.39

No data presented

McDaniel et al. (1994)

0.44

0.33

Huffcut and Arthur (1994)

0.20 - 0.57

Depending on the degree of structure

2.4

Muchinsky (1986) has pointed out that validity is only one of four factors which should be considered when assessing the usefulness of a particular selection technique. A second factor is fairness. To be useful, a technique must not discriminate unfairly against individuals. Unfair discrimination can take many forms, but two types which have assumed prominence in many countries are those relating to ethnic origin and sex. Quite apart from considerations of equity, a device which puts some individuals at an unfair disadvantage as a result of their sex or ethnic background will have low utility since some potentially high performers will be rejected while others whose potential is less, will be accepted. Moreover, basing selection decisions on information gathered using such a technique would also be illegal in many countries. A third consideration in terms of usefulness is cost. Other things being equal, a device which is inexpensive to develop and use is likely to be superior to one which is more costly. Costs in this context should not just be measured in direct money terms; opportunity costs in terms of managers' time are equally, and sometimes more, important. Finally, there is what Muchinsky calls applicability. Some selection devices have low applicability in the sense that they are only suitable for use with a narrow range of jobs. Those with high applicability can be used across a wide range of jobs. Clearly, provided the other three criteria are met, it is better to have high than low applicability.

3.1

Blum and Naylor (1968) list nine methods of job analysis. However, it is worth pointing out that no one method is necessarily superior to any other. Rather, the best method will depend on a number of circumstances, such as the nature of the job being analysed and the purpose of the analysis. Also, it will often be appropriate to use more than one method in order to get as comprehensive a picture as possible. As we shall see in later modules, job analysis can be used as a basis for a number of personnel procedures such as recruitment, training and development, and performance appraisal. However, in practice its use has probably been most widespread in connection with selection.

3.2

Performance appraisal is the name given to the process of assessing individual performance in a formal and systematic way. The need for such systems has long been recognised, and at least in the UK and the USA, the majority of large organisations have adopted such systems. For example, in data collected from 306 organisations in the UK, Long (1986) found that 82 per cent of companies used formal appraisal systems.

There are several defining characteristics of performance appraisal systems. They are formal systems with a set of rules and guidelines which must be followed in their operation. For example, the time between appraisals will usually be laid down. It might take place every six months, at yearly intervals, or occasionally even less frequently. The position of the person who is to carry out the appraisal will also be specified. Up until recently, this was usually the appraisee's immediate superior, but as we shall see later, increasingly others are being brought into the process. What is to be appraised is also determined in advance.

3.3

Some human characteristics are either part of an individual's genetic make up or are learned very early in life. Other qualities are readily developed and changed through everyday experience or through some other means, such as training programmes. A third type of characteristic is not so much related to what a person is able to do, but is more concerned with what he is willing to do in a given set of circumstances. An example of the latter is the level of effort a person chooses to put into his work. The first of these three types can be thought of as core characteristics, since they are fundamental to the person. The second type is more akin to skills, while the third is motivational in nature. These three categories are not being put forward as representing a comprehensive typology of human abilities. Nor is it suggested that abilities can always be neatly classified into only one of these types. For example, there is undoubtedly a strong core element in problem-solving ability (some people are more intelligent than others), but people's ability to solve problems can also be improved by teaching them problem-solving techniques. Word processing is basically a skill but some people, presumably because they possess some relevant core attribute, learn it more rapidly than others. Effort is a choice a person makes according to circumstances and indeed proponents of soft HRM would argue that the appropriate circumstances are those which engender commitment. On the other hand common observation would suggest that some people are inherently lazy, while others seem to put great effort into everything they do irrespective of the circumstances.

3.4

As the reader will be aware from previous modules, core abilities are only one determinant of an individual's performance. Learned competencies in the form of skills and motivational characteristics are equally important if high performance is to be attained. A well-conducted job analysis will provide comprehensive information on required skills and motivational characteristics, but the organisation also needs to have systems in place both to assess the extent to which each individual meets these requirements, and to enable them to improve these aspects of their performance. Skill deficits can be dealt with by means of appropriate training and development or by providing appropriate job experience. A number of the approaches to HRM which we have discussed in previous modules have been aimed at increasing motivation. These include performance based pay systems, increased responsibility in the form of empowerment, and so on.

4.1

Although in many ways career management is ultimately the responsibility of the individual, it is also in the organisation's best interests to take a facilitative role in the management of careers. Pay-offs to the organisation for assisting in the career management process include the following.

Gaining employee commitment is frequently seen as a prerequisite for the successful implementation of many HRM practices. One way to nurture commitment is by satisfying employees' needs. Since building a rewarding career is clearly an important need for many employees, anything the organisation can do to facilitate this process should have beneficial effects.

Quite apart from motivating existing employees, organisations need to attract high calibre recruits and those organisations which are seen to provide career, as well as job, opportunities are likely to be particularly attractive to potential applicants.

4.2

From a succession planning perspective, systems are needed to identify and nurture potential within the organisation. While there are some circumstances where vacancies are best filled from outside the organisation, many are best dealt with by promotion from within. Quite apart from the motivational effects of promoting internally, some senior positions may also require such a wide range of organisational competencies, acquired over many years and in many positions, that promotion from within is the only realistic option. The long-term perspective required here takes us beyond the medium-term concerns of performance management and management development and into the realm of career management.

The twin objectives of career management are to help individuals to fulfil their career potential to their satisfaction and to help ensure that the organisation has appropriately qualified people to step into senior roles when necessary. Some techniques of career management attempt to address both of these aims, while others are more focused on one rather than the other. Because in many ways career management overlaps with performance management and employee development, it should be no surprise to the reader that the techniques used in these areas also overlap.

Conclusion

In summary, it appears that, historically, personnel management has had only a partial role in the management of people in organisations. It has had an essential role at the operational level in, for example, advising on and implementing selection systems, payment methods, training and development programmes, welfare arrangements, and a host of other activities. It has had much less impact, however, at the strategic level. Thus its role has been seen as specialist and technical, rather than strategic. This is seen by many as a key difference between HRM and personnel management and the rise in popularity of HRM can be seen as largely a response to the need for a more all-embracing approach to the management of people in organisations.

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