Is It True HRM Would Do Little for Company Performance and Would Be Widely Unpopular with Staff - Literature review Example

Is it true HRM would do little for company performance and would be widely unpopular with staff? Contents Introduction 3 Discussion 3 HR practices and organization performance 3 HR practices and employee well being 7  Conclusion 7 References 9 Introduction The department of human resource management has long been a neglected one in the context of organizations. The human resource practitioners have long held the desire to prove the value addition that they do for the rest of the organization. Peter Ducker stated that personal managers of an organization constantly worry about their ability to prove that they add value to the organization or rather contribute to the enterprise. The counter argument that is put forward by most scholars in the area focussed on the fact that the Hr personnel are unable to describe their contribution to the value that they add to the enterprise. Thesis statement: The following essay tries to find the justification of the statement that HR peoples do actually contribute to company performance and are popular with staff as well. The statement is analyzed through the views of different scholars in this field who have done significant research in the area. Discussion Amongst the criticism that has pointed to the direction that Hr practices do not add value to an organization there has been several studies that have tried to estimate the value that Human resource practices contributes towards the organization. There has been lot of studies in this field by researchers who have tried to prove through their work that human resource practices do actually contribute value to the organization. HR practices and organization performance Huselid as a conclusion to his studies states that there are certain human resource practices which he reported to as high performance work practices that are directly related to the better performances by the firm. Through his research Huselid concluded that the company’s investment in these practices which he referred to as high performance work practices are associated with lower turnover of the employees of the organization, greater productivity and better performance in financial terms. He found in his research that the results are consistent across different measures of firm performance and also consistent across industries. He states that the firms which invest in high performance work practices reap substantial benefits. He found that if there is an increase in high performance work practices by one standard deviation then decrease in turnover is by 7.05%, increase in sales revenue of $27,044 per employee. Increase in market value and profit is $18,641 and $3,814 per employee (Huselid, 1995). These results suggest that the firms can really benefit by the way of investing in high performance work practices. The results also indicate that the firm should make consistent investments in high performance work practices rather than making one time investments (Combs, Liu, Hall and Ketchen, 2006). The firm’s investment in high performance work practices will also have an impact on the employees in the form of higher wages and other benefits. Higher levels of investments in high performance work practices lead to lesser employee turnover and higher employee morals (Wall and Wood, 2005). This explains as to why high investment in high performance work practices leads to less turnover and better financial performance. There have been other researchers too in this field who have tried to find out the influence of the human resource practices on organization value (Storey, 2007). A particular group of researchers in this field Birdie, Clegg and others studied the relative merits of strategic human resource as compared to the other approaches such as integrated manufacturing, lean production as an essential contributor or determinant of the organizational performance. The strategic HRM functions that have been considered to contribute towards organizational performance are teamwork, training, empowerment etc. The researchers studied the relative merits of two different though processes that is one that emphasised on Human resource practices and other that emphasized on other performance indicators by studying 308 companies over a period of 22 years (Birdie, Clegg, Patterson, Robinson, Stride, Wall and Wood, 2008). The researchers found that as stated in the theory of strategic human resource management the factors like training, performance related benefits did indeed improve the performance of the organization. In contrary to these findings the researchers also found that none of the operational practices did actually relate to productivity. According to Wright, Gardner and others who examined the relationship of HR with the firm practices found in their studies that HR practices of a firm are strongly related to the future performance of the firm. They state in their study that past studies in this field have demonstrated a positive relationship in between Human resource practices and the performance of a firm (Wright, and et.al, 2005). Their study shows that HR practices are strongly related to both future performance and past performance of a company. The researchers state that although the results of their research can be interpreted to support the motion that Hr practices are part of high performance of an organization they do not necessarily lead to the conclusion that hr practices leads to high performance (Clinton, and Van Veldhoven, 2013). The researchers state that the data of their research which suggests a positive relationship of Hr practices and firm performance over time may suggest a dual causal relationship. What this means is that the firms might invest in greater hr practices and the greater investment pays off in higher performance. There may be other effect too. There may be a third variable that might affect both the human resources and the performance variable. For example the leaders of the organization may treat people well as well as drive higher financial performance. Delery and Doty in their research paper focuses on strategic human resource management. They reflect of the theories of strategic human resource management in their research paper. The primary purpose of their paper as stated by them is to demonstrate that unlike popular belief strategic human resource management is not a theoretical wasteland. The researchers in their research paper have demonstrated that there are three different modes of theorizing that are included in the literature of strategic human resource management (Delery, and Doty, 1996). The three different modes of theorizing that are found in the literature are Universalistic, Contingency and configurationally. After researching on this aspect through the course of their research they reach to a conclusion that all of these perspectives are viable and lead to lead to different assumptions with respect to the relationship between HR practices, strategy and organizational performance. The study also clearly links the characteristics of an organizations employment system to its performance. The study proves that there is a strong relationship in between the Hr practices and the financial performance that a company exhibits. The best practices in Human resources involve practices such as profit sharing, appraisals that are oriented towards result, greater security for the employment etc. However it does not mean that all the hr practices can be applied to all the organizations at all levels. The study indicates that there exists a very complex relationship in between the human resource management and organizational performance. Some of the practices of human resource are more appropriate under certain conditions as compared to other (Price, 2007). In another research of this kind by Guest, Michie, Conway, and Sheehan who tries to find the relationship between corporate performances in United Kingdom, the researchers state that after analyzing 366 companies they come to the conclusion that as per objective measure of performance greater human resource management is associated with lower labour turnover and high profit levels per employee (Conway, Guest, Sheehan and Michie, 2003). The study of the researchers shows that there exists a relationship between the HRM and the organizational performance but it fails to prove that human resource management is associated with improved performance. HR practices and employee well being Regarding the point that HRM is quite unpopular with the staff it is found through research that employee wellbeing that has been described in terms of relationship and happiness is compatible with performance of organization however same cannot be said about health related outcome (Van de Voorde, Paauwe, and van Veldhoven, 2012). Researchers have proved through their studies that attitudes and behaviour of workers determine the relationship of HRM and performance. It is also found that there are certain HR practices that are related to high levels of work and life satisfaction (Guest, 2002). Researchers have found a strong relationship in between the HRM practices and wellbeing. It is found that there is a strong positive relationship in between the HRM practices and employee wellbeing. It was found that there is a consistent result in the study meant that the management relationship behaviour that is related to the support and development of trust promotes employee wellbeing at work (Baptiste, 2007). Researchers have found that based on lifespan theories found that the association between development HR practices and well being weakens with age whereas the association in between well being and maintenance HR practices and that between employee performance and development HR practices strengthens with age(Kooij, Guest, et al. 2013).  Conclusion After going through the research by different researchers on this topic it is concluded that the human resource and greater investment in human resource does actually contribute to improved performance on the part of the organization. Although all the researchers in this field have found correlation in between organizational performance, some researchers are in doubt as to whether the increase in investment in human resource leads to higher organizational performance. So the statement of the director in this regard that strategic HRM is unrelated to performance and leads to decrease in organizational moral is not relevant. References Birdi, K., Clegg, C.W., Patterson, M.G., Robinson, A., Stride, C., Wall, T.D., and Wood, S.J., 2008. The impact of human resource and operational management practices on company productivity: A longitudinal study. Personnel Psychology. 61(1). pp. 467-501. Clinton, M., and Van Veldhoven, M., 2013. HRM & Well-being. Managing Human Resources. Oxford: Blackwell. Combs, J., Liu, Y., Hall, A., and Ketchen, D., 2006. How much do high-performance work practices matter? A meta-analysis of their effect on organizational performance. Personnel psychology. 59(1). pp. 501-528. Delery, J. and Doty, D.H., 1996. Modes of theorizing in strategic human resource management. Academy of Management Journal. 39(1). pp. 802-35. Guest, D., 2002. Human Resource Management, Corporate Performance and Employee Wellbeing: Building the Worker into HRM. Journal of Industrial Relations. 44(3). pp. 335-358. Guest, D.E., Michie, J., Conway, N., and Sheehan, M., 2003. Human resource management and corporate performance in the UK. British Journal of Industrial Relations. 41(1). pp. 291-314. Huselid, M.A., 1995. The impact of human resource management practices on turnover, productivity, and corporate financial performance. Academy of Man. Journal. 38(1). pp. 635-672. Price, A., 2007. Human Resource Management in a Business Context. London: Cengage Learning EMEA. Storey, J., 2007. Human Resource Management: A Critical Text. Thompson: London. Van de Voorde, K., Paauwe, J. and van Veldhoven, M., 2012. Employee well-being and the HRM-organizational performance relationship: a review of quantitative studies. International Journal of Management Reviews. 14(1). pp. 391-407 Wall, T., and Wood, S., 2005. The romance of human resource management and business performance, and the case for big science. Human relations. 58(1). pp. 429-462. Wright, P.M., Gardner, T.M., Moynihan, L.M., and Allen, M.R., 2005. The relationship between HR practices and firm performance: examining causal links. Personnel Psychology. 58(1). pp. 409-447. Baptiste, N. R., 2007. Tightening the link between employee wellbeing at work and performance: A new dimension for HRM. Journal of Management Decision. 46(2). pp. 284-309. Kooij, D. T., Guest, D. E., Clinton, M., Knight, T., Jansen, P. G., & Dikkers, J. S., 2013. How the impact of HR practices on employee well‐being and performance changes with age. Human Resource Management Journal, 23(1), pp. 18-35. Read More