Human Resource Management and Performance

1 Human Resource Management and Performance Introduction Different organizations have different approaches to the management of their human resource (Brown & Heywood 2005). Human resources management has a bigger role to play today more than ever before. According to Ulrich (1999), HR is experiencing changing expectations and so its role. Firstly, it should be a partner with both line and senior management in the course of strategy execution, so that it helps management to move from planning in the boardroom to the customer in the market place. It should also become an expert in the way it organizes work for execution through delivering administrative efficiency for the purpose of cost reduction and quality improvement. In the third role, it should be employees’ champion through vigorously representing their concerns to top management.

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2 Fourth, it should be the agent of continuous transformation and help shape culture. This is when compared to the traditional role of a regulatory watchdog and handling paperwork during hiring and firing (Ulrich 2008).

In the current scene, there is more downsizing, reengineering, consolidation and delayering to improve the efficiency of the organization. It means that the profitability equation is changing through other methods than increased production and cutting cost. It is becoming more and more necessary to increase efficiency. There are also increased mergers, acquisitions and joint ventures. Technology is fast changing and this too changes the ways in which organizations work. The significance of intellectual capital has rapidly increased with the consideration of knowledge as a competitive advantage.

The new role of HR Due to these changes, the organization function of management is the key to success. In the new business arena, the most important aspects that will create a competitive advantage are learning capacity, employee competence, speed and agility of responsiveness.

Guest (1987) argues that the change of personnel management to human resource management was to re-conceptualize and reorganize personnel roles and describe in a new and effective way, the work of personnel departments. Human resource management must be completely integrated into strategic management and emphasis laid on full but humane utilization of these resources.

In relation to performance one of the goals of human resource management is quality.

This in turn has a number of interrelated dimensions. Quality of staff depends on the roles of recruitment, development and retention of staff that has great skills, adaptability and ability.

Performance on the other hand is tagged to goal setting techniques so that the standards are

3 easily identifiable and agreed. In order to maintain high quality, there must be considerable attention to the processes of recruitment and selection, training, appraisal, and also goal setting.

Human resource management can also enhance good performance through creation of good job designs (Paauwe 2009).

Selection The performance of staff depends on its quality, which is a product of how it was selected (Barbara 2005). Deficiencies in the selection process can lead to gross losses in the performance of the organization. Most companies regard technical competence and previous work experience as the most crucial aspect of a job candidate. Interpersonal skills are also accorded priority since they are directly related to personality and attitude which is a key to success of any individual.

The practices and theories applied by the managers of each organization are not predetermined but are often dictated by several factors like type of organization, its size, the level of education of its workforce, the culture of the people in it and many other relevant factors. In general, human resource approach used seeks to meet mainly the needs of the organization and those of its people. In the latest major research, there is an ongoing research project by Sophie De Winne and Prof. Dr Luc Sels on HRM and firm performance and funded by he Fund for Scientific research. The project is ongoing and is an analysis of effect of intensive HRM on company performance. They are working to test if application of HRM best practices strengthens financial performance whether individual HRM practices have a great influence on company performance and the nature and intensity of HRM effects on financial performance is influenced by contingency factors (Ulrich 2008).

Appraisals

4 Modern appraisal may be looked at as a structured and formal interaction between a supervisor and subordinate. It could take the form of an interview that comes at periodic intervals with an aim of identifying strengths and weaknesses as well as potential areas of improvement.

When done objectively, they could be used as the basis of promotion, training, lay offs, transfers payment and more. As is often the case, supervisors have been known to ignore the evaluations they do and rather reward subjectively. This is a killer of motivation. The type of information supervisors should elicit when making such decisions should be of standards that are not questionable or be seen to selectively lean on subjective attributes of the subordinates. According to McNaman (2011), performance appraisal is the most crucial aspect of organizational life (McNaman 2011).

Rahman (2006), in her question, “to what extent has performance evaluation been of importance to organization?” She argues that even though performance is a result of combinations of several works attributes (Rahman 2006).

One important thing HR managers should remember is that the evaluation areas must be related to the work they are doing. The HR department should prepare a checklist of questions that form the guideline of any evaluation so that all employees are evaluated on the same basis.

Employee training This is giving of employees the skills they need to excel in the current job demands.

Employee training is done for the purpose of acquiring more skills that will help save time, money or gain a competitive advantage. It can either be on-site or off-site. On-site training takes place within the precincts of the organization and often involves more experienced employees of the organization. Off-site training takes place outside the boundaries of the organization and often involves experts that are not part of the organization. There are many such service

5 providers today whose work is provide training to organizations for a fee. Off site training could involve sponsoring an employee for further studies to gain knowledge or expertise in an area that an organization finds important for its growth (Tutor 1986).

On-site training is commonly done through shadowing. Shadowing is where a less experienced employee spends a period of time with a seasoned expert while observing how the job is done. New employees are often taken through such training. It is less expensive as it does not involve external trainers and helps to retain organisational culture. Job shadowing could either be implemented on a new hire immediately on joining the organization or at a point after orientation in a classroom setting.

Motivation of human resources Whichever approach of HRM the manager uses, he should keep in mind that human beings are social beings and work best in a socially friendly environment (Frye 2004). This means that apart from looking at the individual and organizational needs, there is need to address the organizational environment. Motivation of employees in the form of incentives, fringe benefits and other benefits will be vital in making them keep focused on achieving high standards of the organizational goals (McNaman 2011).

Motivation of human resources Whichever approach of HRM the manager uses, he should keep in mind that human beings are social beings and work best in a socially friendly environment (Frye 2004). This means that apart from looking at the individual and organizational needs, there is need to address the organizational environment. Motivation of employees in the form of incentives, fringe

6 benefits and other benefits will be vital in making them keep focused on achieving high standards of the organizational goals (McNaman 2011).

Rewards These are positive stimuli that are given to recompense or reinforce good behavior.

Rewards that come along with objective appraisals are the most key in performance. She argues that rewards even when not material or not related to work ladder will be a crucial area human resource managers need to emphasize on. She continues to argue that humans are social beings that like to be appreciated and no matter what form of appreciation, there is always a positive impact (Paauwe 2009). Rewards may be given terminally after achieving set and agreed behavior or randomly. Since they are meant to reinforce or encourage good organisational behavior, rewards should be given in a manner that even other employees become motivated to achieve similar or higher attributes. Rewards must only be given to employees whose performance or conduct is exemplary. The subordinates must also be well aware of the rewarded attributes of work so as to play on even ground.

Promotion “It is the advancement of an employee’s rank or position in a hierarchical structure to take up a job that has a higher salary, job title and often responsibilities.” It is given to deserving employees who have shown merit and commitment in the organisational tasks. Promotion is dependent on an objective appraisal. During the appraisal, human resource managers should avoid being subjective when filling any comments related to employee workplace attributes.

Promotion ensures it has the right people in the right position to help achieve good organizational performance (Sechrist & Strangor 2001). Promotion will help to contribute to job satisfaction which according to Herzberg is one of the crucial aspects of recognition and

7 advancement that help in good performance. Promotion is not a haphazard task but rather a systematic procedure.

Promotion procedure Advertisement / company information system ↓ Letter of application (forms are less usual) ↓ Interview(s) ↓ Tests ↓ Assessment centre ↓ Discussion with other managers, examination of past records, appraisal reports and special reports ↓ Medical checks if nature of new job requires them Not all job entries, however, require this procedure. Some require more of a long time observation than interviews or tests. A good promotion procedure removes bias which in turn can lead to poor individual and organizational performance. The human resources manager should first solve mismatches in the work fields. He/she should also create more schemes for actively engaging in activities (Tutor 1996).

Relationship between HRM and performance

8 The guiding principle is that the firm’s human resource has implications on the firm performance and they provide the firm with a competitive advantage which is difficult to replicate (Barbara 2005). The HR management team is hence the link of the employee and performance relationship. For HRM to be suitably linked to the performance, both content and process must be integrated effectively. That is: the practices adopted (content) and the design must be aligned to the strategic goals of the organization for it to have meaningful contribution to the organizational performance (Ulrich 2008). For HRM practices to be successful in contributing in performance, they must be visible, understandable, have legitimate authority and be relevant. Visibility is the degree to which the practices are readily observable.

Understandability is the lack of ambiguity in the HRM practice content and so ease of comprehension. Legitimacy of authority is that which enables the employees to submit performance expectations as formally sanctioned behaviors. In relevance, the individuals must be able to perceive the situation as relevant to the goal they are trying to achieve (Bowen & Ostroff 2004).

The early simplistic theories that link HR to performance were based on distant indicators of financial performance. Rather, the central thinking in the modern linkage between the two is that the attitudes and behavior of employees at individual level results to the aggregated level behavior outcomes like labour productivity and turnover which in turn translate to the firm-level outcomes.

Performance outcomes of HRM can be measured or be directly observed through financial outcomes like profits, market share and sales, organisational outcomes like productivity, efficiency and quality and also on HR related outcomes like attitude and behavior impacts. The most common measure is profit followed by sales. This does not always reflect the

9 HRM impact as other factor both internal and external can influence these. For instance smart policies to manage working capital, a favorable economy and other external factors can contribute to better performance. The measure of HRM impact therefore needs to be more related to HR, like attitudes and behaviors (Wright et al 2001).

Conclusion There is no one best way of managing human resources to achieve good performance in an organization. The performance is determined by very many factors within and without that organization and they may or may not be similar in two organizations. Even when they are similar, there is still no set way of handling them considering the dynamic nature of human needs. In a fast changing world, managers who are well informed about the changes that take place within the workforce they maintain will be at an advantage of producing a better workforce and better results for the organization. The manager must, thus, be a good researcher and observer as this is the way he will keep informed.

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