Human Resource Impacts on Organizational Performance

Subject: Management
Pages: 6
Words: 1416
Reading time:
6 min
Study level: College

Recent decades have shown that many companies are coming to a realization that people indeed are the most valuable asset. That means that it is the personnel that makes the organization successful and competitive and helps achieve its strategic objectives and high levels of productivity. Becoming aware that a firm cannot succeed without people and prudential organization of the working process made human resource (HR) the key to organizational performance.

HR department is responsible for delivering may organizational objectives. The first major organizational objective of the HR function is building organizational ability through people. It is the very comprehension that employees are the most valuable asset of the company. The HR function here is to define what are the positions that are needed to achieve the organization’s objectives, what skills they require, and find the people that best meet the criteria. So, the HR is responsible for recruitment and selection and employee relations and communications to carry out this organizational objective (Mishra et al. 90). Recruitment and selection is hiring people that will help the company succeed. Employee relations and communications is about creating the atmosphere of trust and openness in the relations between workers themselves and with HR in particular as well as discipline so that the employees are willing to work at the maximum of their potential and feel free to provide the HR with the feedback on the initiatives of this department and their effectiveness.

Another organizational objective of the HR function is developing careers and skills. In this case, HR is responsible for training and development of the personnel. It means that the department provides new employees with the comprehension of the organization’s culture and, if needed, assists in developing skills necessary for meeting its requirements. What is more, it helps with leadership training or professional development (Mishra et al. 90). The primary point here is that HR does everything for the growth of the employees so that they become more skilled and productive thus improving the company’s performance.

Furthermore, HR manager’s duty is to make performance management work for both the business and its people. It should be said that performance management is “a systematic process for improving organizational performance by developing the performance of individuals and teams” (Armstrong 618). HR function here is to adapt the strategic objectives of the company to the job descriptions of every employee. Moreover, the workers not only should understand what their tasks are but also know what are the results of their work, i.e. they should receive feedback and reward (Ashdown 7-8). So, it works for the people because they know that they will be rewarded as well as it works for the organization because the employees are willing to do their best to improve the company’s performance.

The objectives mentioned above have evolved in the contemporary business environment. Bearing in mind that HR manager is seen as a strategic partner in achieving the organization’s objectives (Rao and Krishna 666), the functions of the HR department have move to strategic human resource management. That said, all the tasks performed by this department are complex strategies whether it be supporting corporate delivery and performance objectives or promoting employee engagement. It means that carrying out every function is a set of thoroughly planned steps including the initial resources, the process of transforming them, and the expected outcomes. It is intricate enough to be called a strategy. What is more, organizing the work of people, especially in large teams, HR managers may face various challenges such as discrimination, harassment, diversity, etc. They should be ready to deal with every of similar roadblocks at once without taking much time for developing decisions (Khan and Khan 37). That means that they should have a prepared plan for responding to any possible situation that may stumble the continuous flow of the working process, i.e. have a strategy.

It is of significant importance to remember that not only the employees need to know the results of their work; HR managers are not an exception. It is where the need for evaluating the contribution of the HR function and practice derives from. There are several arguments that prove that assessing HR function is essential. First of all, it helps understand whether the processes that are being used are effective so the company might want to redesign its HR policy if the results of the evaluation are less than optimal. Second, it shows whether the practices performed by the human resource manager correspond with the strategic objectives of the organization and thus estimate the chances for improving the company’s performance. Third, evaluating HR function detects whether the atmosphere in the organization is healthy and free enough, however, with the level of discipline necessary for reaching the maximum productivity of the employees and offers the ways for changing it for the better. Fourth, no one should ignore the fact that HR department is the subject of investment, so, periodical control of the results of its activities will show whether the funds are used effectively and is there a need for attracting more finances or, by contrast, cutting the expenditures on the HR management system. Finally, evaluation of the human relations practices and policies being an insight-driven function will emphasize their necessity in the eyes of the employees and the organization’s senior management (McLean 24) stressing that HR is a crucial element in improving performance and reaching the organizational objectives.

There are different methods that can be used for evaluating the contribution of the HR such as, for example, the balanced scorecard and the effective metrics. The balanced scorecard is a technique for assessing the performance of an organization. However, if we assume the HR department is also an organization, it may be used for evaluating its effectiveness. The specificity of this approach is that it involves four dimensions: the customer (client) perspective, the financial perspective, the internal work-process perspective, and the learning and growth perspective (Cunningham and Kempling 195).

The customer perspective is about the level of the client’s satisfaction with the product or the service of the company. In the case of evaluating HR contribution, the customers are the senior management of the organization, the stakeholders, and the employees while the goal is to determine whether they are satisfied with the work of the human resource department. The financial perspective includes any financial data available. When it comes to HR, it may relate to the costs of hiring or conducting trainings, costs of turnover, investment in the HR department, etc. The internal work-process perspective concerns the operations used by the organization to achieve its objectives. Speaking of HR, it might be about the processes exploited to motivate the employees or performance on the reports, i.e. the effectiveness of any tasks conducted by the HR manager. Finally, the learning and growth perspective has to do with any possible ways to increase the level of the workers’ professionalism so that the organization has the guarantee of preserving its competitive positions in the long run. As of the HR department, it is the efficiency of its training and development functions.

Another method for evaluating the contribution of the HR policy to the organization’s performance is the effective metrics. This approach involves two groups of categories based on the major functions of HR department. For example, first-tier metrics include the general success of the HR in enhancing the employees’ productivity, the workers’ eagerness to respond to the HR initiatives, different indices of recruiting, retention, costs and senior management satisfaction. Furthermore, second-tier metrics focus on such determinants of the HR policy as the effectiveness of the development and growth practices, the employees’ perceptions of the compensation and benefits initiatives, the overall atmosphere in the organization, etc. (Ramaiah and Raut 695-697). So, this method is more comprehensive than the balanced scorecard, as it offers more determinants that might obtain more in-depth evaluation of the HR contribution to organizational performance.

The research has proved that HR practices are a crucial tool for improving the organization’s performance and that assessing its contribution is vital if the company strives for the high level of productivity and competitiveness in the long run. The newly gained knowledge can be transferred into the working practice not only from the perspective of the HR functions and their importance but also from the point of the possibility of self-assessment of the human resource manager effectiveness, as a lot has been learned about the methods of evaluation of the HR contribution to the organizational performance of the company.

Works Cited

Armstrong, Michael. A Handbook of Human Resource Management Practice. 11th ed. 2009. London, United Kingdom: Kogan Page. Print.

Ashdown, Linda. Performance Management. London, United Kingdom: Kogan Page. 2014. Print.

Cunningham, J. Barton, and Jim Kempling. “Promoting Organizational Fit in Strategic HRM: Applying the HR Scorecard in Public Service Organizations.” Public Personnel Management 40.3 (2011): 193-213. Print.

Khan, Anas, and Riad Khan. “The Dual Responsibility of the HR Specialist: … for People Issues and Strategic Management.” Human Resource Management Digest International 19.6 (2011): 37-38. Print.

McLean, Gary N. “Examining Approaches to HR Evaluation: The Strengths and Weaknesses of Popular Measurement Methods.” Strategic HR Review 4.2 (2005): 24-27. Print.

Mishra, RK, Shulagna Sarkar and Punam Singh. “Integrating HR Functions for Sustainability.” Drishkiton: A Management Journal 4.2 (2013): 85-99. Print.

Ramaiah, T. Sita, and RA. Raut. “HR Metrics for a Multinational Corporation.” International Journal of Entrepreneurship & Business Environment Perspectives 2.4 (2013): 694-697. Print.

Rao, Venkat, and Jayarama Krishna. “Alignment of HR Practices with Organizational Strategies.” Indian Journal of Industrial Relations 50.4 (2015): 666-679. Print.