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How Does Human Resource Management Contribute To An Organisation’s Effectiveness

Question

What you need to do:
Using the AHRI MRM model (refer to https://www.ahri.com.au/about-us/model-of-excellence (Links to an external site.)), how does HRM contribute to an organisation's effectiveness? Through your literature reviews provide examples of how HRM is effective and ineffective in organisations and explain why in both circumstances using evidence.

Information concerning effective HRM (Lawler, E. (2012). Effective Human Resource Management: A Global Analysis. Palo Alto: Stanford University Press.)

Information concerning ineffective (or failing HRM)

Assessment Task 2 will be assessed against the following criteria - each criterion is equally weighted:

  1. Key issues relating to the question have been developed
  2. Analysis and synthesis of relevant HRM literature in peer-reviewed and quality newspaper articles such as the Age, Sydney Morning, New York Times, Wall Street Journal, McKinsey, Deloitte, BBC, ABC podcasts, Quality blogs,
  3. Ideas and assertions cited or quoted in text and substantiated through use of high quality academic material
  4. Clear written style (spelling, grammar, syntax etc.) and appropriate Harvard style referencing.

Answer

Human resource is one of the biggest investment any company makes and getting the correct resource is one of the most difficult tasks. Even though capital connotes cash, goods, valuables which help a company earn profits, yet these things become worthless if their is no manpower who would utilise this capital to generate income. Thus, there came in the term known as human resource management (HRM) which is a procedure that enables employment of people, providing them adequate training, paying them for the work they perform, formulating policies with regards them and formulating strategies as well so as to maintain them, hence cutting down on competition. The term HRM has undergone many changes since the past two decades from a mere administrative role to a more premeditated one which is significant and imperative for the success of a company (Schramm, 2012). The narration below details about how HRM contributes to the effectiveness of an organization along with discussing its ineffectiveness as well in some situations. The Australian HR Institute (AHRI)has adopted a Model of Excellence which is a graphical depiction of what HR practitioners are expected to know, what they are expected to do and what their peers expect them to be with regards performance and capabilities. The essay would also highlight the fact that what is performance management and how a work life balance helps for better employee relation thereby impacting the effectiveness of an organization. Lastly it also describes the unethical treatment of 7 eleven wherein the HRM ended favouring the employers hence being dishonest towards the employees. The said incident is proof to the fact that HRM is criticised for becoming a compulsory and an important part of the shareholders profit making machine by ensuring that the workers are actually turned into slaves who are working at their own will. The ethical dangers of HRM would be on augment so much as human relations and the resources rooted within humans are cared for just as commodities.

The contribution of HRM to an organization’s success cannot be ignored. There lies a positive correlation between the development of the manpower of an organisation and its performance as per various literatures. Any company can achieve its goals through teamwork and the same can be a success only if the same is shared via awareness, employees’ capacity and the proficiency held back by the company by providing appropriate training and developing a surrounding which encourages the people to work for the company and not to achieve individual goals. A company expands its capacity to produce goods which in turn gives a bright future but this bright future is highly dependent upon the competency of the employees. The effectiveness of HRM will reflect in the way it helps the company to achieve the strategies it formulates (Schuler & Jackson, 2014).

HRM has ensured that employees are considered as a vital corporate asset. For ensuring that the workforce is a feasible one the senior staff have to understand the worth of having a suitable human resource strategy in place. The mixing of HRM with the overall strategy of an organization is a rarity but at the same time indispensable within organizations who work on a larger scale. Most of the firms find it difficult to convert the HRM into the strategic functions and in turn end up concentrating upon the clerical part of the job. The result is that the individual departmental managers find it impossible to inculcate changes within their staff and hence fail to deliver the desired output. Hence the importance and contribution of HRM to the effectiveness of an organisation is a hidden secret which most of the companies fail to recognize and nurture.

However, as is said business ethics is applied in this management system as well as ethics not something only related to external factors but also internal to the company such as behaving in an ethical manner with the staff for which HRM is expected to play a very important part. The ethical issues that may be noticed in the employment relationship comprises of ethics of unfairness and favouritism and the staffs’ rights and duties are most often witnessed in the business ethics context. Most of the time the employees are ill treated and defencelessly crooked to severe weakness. The most dreaded example of failure to maintain business ethics can be understood from the case study of 7-Eleven wherein employees were exploited to the extent that reports confirm about the fraudulent activities being conducted with regards the wages as well. The situations are so worse that if the employees retaliated to the wage fraud then the bosses would terrorize them with banishment (Ferguson & Danckert, 2015).

Important HRM practice and procedures help the businesses to deal with human resource issues in a tactful manner even if there lies various internal and external hurdles. If HRM is well managed then the business houses are able to prioritize their entire business policies accordingly. The changing business scenario has ensured to make human capital one of the most prized assets simply because the modern day organizations have understood that the employees are well involved in the operations of the company as well as take many important decisions. Further to this more than 50% of the total budget of a company is billed to the human capital, therefore improper management of the same would lead to the fall of a company (Feffer, 2017).

HRM performs the function of managing the talent i.e. it ensures to employ and retain the best staff possible and thereby is considered to be the most prior objective. Nowadays, corporates have started to take various steps to retain productive manpower by providing them various incentives, personalised career programs, mentorship programs as well as supple work engagements along with concentrating upon diversification and maintain balance between personal and professional life. HRM also conducts performance management wherein it not only manages the contribution of a person towards the success of the company but also in developing the employee as an individual (Gomez-Meiji et.al. 2007). Thus this step enables an employee to be self motivated towards achievement of the organizational goal. However without the existence of an effective HRM system, there would be no one who would understand the needs of the employees and work towards the same. Thus talent is one area wherein HRM can prove its worth to an organization as its contribution to effectiveness of the corporate house. Talent is the main problem at the top level i.e. senior personnel and the board of a company. The main benefit of proving worthiness in this segment is that it automatically guides towards conversations related to organizational design, performance appraisal system, strategy, and policy and change management (Lawler, 2014). Talent thereby can enable HR to play a larger role which takes into consideration organizational effectiveness as well. The cost of opting for this or that contender will have repercussion for the prospect appraisals of new and existing employees. Distinguished performance assessments will have supply repercussions for prize supervision and where needed, stipulation for adequate training and development as well. Further to this, there has been connotations over the past decades whether money plays any role in motivating the employees to perform better. The present day critics are of the opinion that money is not the motivating factor anymore for people to perform well or else it can also be portrayed as it motivates individuals to concentrate upon money only and not performance (Rowley & Jackson, 2011).

HRM’s contribution to the effectiveness of an organization can be understood through one of the most sought after example of the human resource being practiced at Microsoft Corporation. Microsoft follows the business strategy wherein it impresses upon openness approach that incorporates convenience into product plan, research and development, testing, implementation and control. Most striking part of this company was that when it was hiring people, Bill Gates was specifically looking for talent over experience and he has always believed in the fact that the effectiveness and efficiency of its developers is the key to success of Microsoft and also if twenty of its best employees leave the company then it would not be what it is presently. Thereby, it can be rightly said that Microsoft is one such company who has always placed its human capital above all and has also understood the importance of HRM to the success of the organization (Byremo, 2015).

However, in some circumstances HRM contributes to the ineffectiveness of an organization specifically in organizations which are not very large in size as installation of a separate management system for the HR calls for a lot of cost. There are various hurdles which makes the role of a HR highly ineffective. HRM is a system which manages human resources so they cannot be treated as machines and hence there does not lie any specific method of managing the entire resource. Each human has to be handled individually as they possess differentiating characteristics. It is here where the HRM if does not deal with the employees personally can lead to ineffectiveness within an organization. If the HR is not able to differentiate between good and bad resource and ends up rewarding the employee who is worthless and does not contribute anything to the organization then it may lead to destruction of a good resource. This is just one of the many reasons as to why implementation of HRM is yet not effective for all entities. Many employees prefer to work at their own pace, neglecting the fact that time is money and it should be judiciously used (Caliskan, 2010). And if HRM intervenes within the same then many tend to take it negatively thereby obstructing the effectiveness of HRM within organisations’.

Further to this, since HRM is a new concept to management, it is yet not fully developed to cater to the requirements of staff at all levels. Hence poor or little knowledge may sometimes become dangerous for the efficiency of the businesses which were running well prior to the introduction of HRM within the system. The top management are more concerned about personal developments, hence ignoring the requirements of the organization, due to which they tend to give less attention to the issues raised by the HRM managers.

Since, HRM is a new concept, the same is still at its nascent stage and thereby demands more attention towards development of leadership styles for HRM managers. They have to understand that every decision made by them or rather any policy implemented by them would have long term repercussions on the company and hence for the same, these managers have to be well-updated with the requirements of the firm as each firm has its own unique needs and goals. It is a myth that HRM is responsible for only providing training to the other staff of the company (Abadesco,2015). For making the entire process of HRM effective for the organization, they are first and foremost required to be well-trained to cater to the changing business scenario. They have to be trained to be able to differentiate between theory and practical. They have to be well trained to be able to deal with the senior management tactfully so that the overall goal of the organization is not defeated else the entire cause for the installation of HRM is found to be a waste (Business Mantra, 2017). Thus if they fail to do so, HRM proves to be ineffective and expensive too for an organization.

When a company forms a separate HRM team within the organization then it prefers to be dependent on them for recruitment of adequately skilled staff who would be able to contribute to the progress. However, if the entire HRM lacks that capability, then it would also lead to ineffective recruitment. If they do not plan the hiring process adequately, then it would ensure employing of incapable staff. HR is expected to be practical in its approaches as stated earlier and if not it may also lead to impacting the reliability of the existing workforce as well (Brito & Oliveira, 2016).

The effectiveness of HRM is not only limited to the achievement of the goals of an organization but also to the adherence of various employment laws. The HRM would function ineffectively if it fails to comply with some of the basic laws such as Equal employment opportunity laws, the Consolidated Omnibus Budget Reconciliation Act and the Family and Medical Leave Act. It takes years for an organization to build its reputation and brand and if HRM fails to plan the legal issues related to employees well then it may hamper the goodwill as well (Gopalakrishnan, 2012). For example, if HRM does not have a well planned anti-harassment policy in place and such an issue occurs then the results of the same can be very fatal for the health of the company. Thus just ensuring to have a HRM in place without ensuring the system to take care of such critical issues would lead to greater ineffectiveness to an organization (Scott,2017) .

Further to all this, a work life balance is a must as it is one of the most important motivating factor for improving the motivation of the employees, helps to lesser staff turnover, lesser absenteeism, stress reduction of the employees and stimulating new and better talent resource to join the organization. Not only this but a healthy relationship between the employee and employer is a must as it would ensure long run commitment and honesty. The main areas which the said relationship focuses upon is performance management, work life balance and secure work environment. The ‘work-life Balance 2000’ baseline study was conducted by the Institute for Employment Research, University of Warwick and IFF Research and the said study summarised that there is a huge requirement from the staff for the adaption of a work life balance. They also disclosed that organizations choose to provide anxiety psychoanalysis for the private consequences of long working hours.

Last but not the least, nowadays organizations also feel that installation of a HR software within the system is good enough for the HR managers to work with. They fail to understand that the entire system of dealing with human beings takes into account their emotional quotient also which can never be captured by any system or software. The same has to be made understood to the senior staff by providing them training and top management resists such trainings. HRM should manage the same strategically (Saha & Gregar, 2012).

Thus on a concluding note, it is very evident that HRM has gained importance in the past few years and still needs to be developed. It although contributes to the effectiveness of an organization, but only after its worth is understood else the entire setup would be a costly affair. Further to this, the prospects of HRM is not limited to only hiring of good endowment but a situation of finding a vital talent that would mark the line between the corporate being effective or non-effective. If the human resource department can locate the major areas which need talented personnel and thereby endow with articulate, well-developed plans for acquiring, nurturing and overseeing crucial talent, it has entered the gateway towards becoming a main strategic player with regards the organizational effectiveness. Practicality is more ethereal for the success and acceptance of HRM by all. There can be no set rules which could make HRM worthwhile for an organization. Thereby the role of an HR manager is to strive towards achievement of the organizational goals basis the feedback they receive from employees at varying levels, hence sharing the accountability for organisational effectiveness as this has a great implication on the profitability and the future stability of any organization.

References:

Abadesco,E.V., (2015), Strategic HRM: Building organizational capabilities, Available at http://business.inquirer.net/202970/strategic-hrm-building-organizational-capabilities (Accessed on 13th March 2018)
Brito,R.P. & Oliveira,L.B., (2016), The Relationship Between Human Resource Management and Organisational Performance, Brazilian Business Review, vol.13, no.3, pp. 90-110.
Business Mantra, (2017), Barriers to Effective Human Resource Management, Available at http://www.businessmantraa.in/barriers-effective-human-resource-management/ (Accessed on 13th March 2018)
Byremo,C., (2015), Does HRM lead to improved organisational performance? Available at https://www.duo.uio.no/bitstream/handle/10852/49030/Cathrine-Byremo-2015---HRM-and-Organisational-Performance--Does-HRM-lead-to-improved-organisational-performance-.pdf?sequence=1 (Accessed 13th March 2018)
Caliskan,E.N., (2010), The Impact of Strategic Human Resource Management on Organisational Performance, Journal of Naval Science and Engineering, vol.6, no. 2, pp.100-116
Ferguson,A & Danckert,S., (2015), How 7-Eleven workers are being ripped off in Australia, Available at https://www.stuff.co.nz/business/world/71582978/How-7-Eleven-workers-are-being-ripped-off-in-Australia (Accessed on 15th March 2018)
Feffer,M., (2017), HR Can Boost Your Company’s Efficiency, Available at https://www.shrm.org/hr-today/news/hr-magazine/0517/pages/hr-can-boost-your-company-efficiency.aspx (Accessed on 16th April 2018)
Gopalakrishnan, G., (2012), Issues that influences the effectiveness and efficiency of a human resource management in an organization, International Journal of Economics and Management Sciences, vol.1, no.6, pp. 65-70, Available at https://www.omicsonline.org/open-access/issues-that-influences-the-effectiveness-and-efficiency-of-a-human-resource-management-in-an-organisation-2162-6359-1-056.pdf (Accessed 13th March 2018)
Gomez-Meiji,L., Balkin, D.B., & Cardy, R.J., (2007), Managing Human Resources, 5th Edition, Pearson International Edition: New York
Lawler, E.E., (2014), HR Should Own Organisational Effectiveness, Available at https://www.forbes.com/sites/edwardlawler/2014/02/11/hr-should-own-organizational-effectiveness/#3d0cef831e46 (Accessed on 13th March 2018)
Rowley,C & Jackson, K., (2011), Human Resource Management, Routledge: New York
Saha,N & Gregar,A., (2012), Human Resource Management: As a Source of Sustained Competitive Advantage of the Firms, Available at https://pdfs.semanticscholar.org/550c/fa20486a556308a59f358d6be3e739e20fba.pdf (Accessed on 16th April 2018)
Schramm,J., (2012), Effective HR Practices Drive Profit, Available at https://www.shrm.org/hr-today/news/hr-magazine/pages/1112focus.aspx (Accessed on 16th April 2018)
Schuler,R., & Jackson,S.E., (2014), Human resource management and organizational effectiveness: yesterday and today, Journal of Organisational Effectiveness : People and Performance, vol.1, no.1, pp. 35-55
Scott, S., (2017), Negative Effects of Poor Human Resource Planning, Available at https://bizfluent.com/info-12025863-negative-effects-poor-human-resource-planning.html (Accessed on 13th March 2018)

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