Despite the fact that the field of human resource management is central in contemporary organisational practice, HR managers tend to have a relatively harder time than their colleagues when it comes to budget approval. Guest (2011) suggests that the reason for such challenges is that there has been little empirical evidence supporting or illustrating the connection between HRM efforts and performance.
Consequently, unlike other departments that can tabulate detailed evidence of return on investment, HR is often at pains to explain exactly how their efforts are improving performance (Boselie, Dietz & Boon 2005). In his article, Guest explores some of the challenges encountered in trying to establish a congruent HRM theory with the intention of creating a model or set of models that can be used to navigate the underlying complexities of the field.
These efforts have resulted in, among other things, the emergence of human capital management (HCM). The new field is concerned with gathering and analysing data that can support the notion that HRM is a strategic and value-adding aspect of an organisation (Armstrong & Taylor 2014). In addition, the discipline has had to make radical changes in an attempt to justify its contribution to overall performance. One of the most common methods of doing this is the introduction of measures and metrics to determine the effectiveness of HRM practices (Guest 2011).
They serve a dichotomous role as they provide both management and the workers with tools to evaluate performance. However, despite the efforts put into research on a suitable theory, the questions of how to determine the contribution of HRM to performance remains open (Guest 2011). The main role of HCM is to guide managers in handling HR with emphasis on competitive advantages achievable through investments in strategic HR assets (Wall & Wood 2005). Ideally, although it may not be possible to connect the HR investment directly to an organisation’s bottom line, their tasks can be deconstructed such that they are rewarded based on measurable performance (Armstrong 2006).
The use of personal data has been found to be a particularly useful way to monitor and gauge the effectiveness of human resource, and this has spurred investment in “big data” by employers (Levenson 2014). Employers can draw relatively objective conclusions about issues such as job design, capability and attitude by gathering various pieces of performance and personal information about their employees over long periods. Using various metrics, organisational managers can also determine the levels and types of motivation needed to elevate the performance of their staff.
One of the tools that can be applied in the analysing of data to link HR and the organisational performance is the balanced scorecard (Coe & Letza 2014). Through it, managers can strategically measure performance by considering the linking perspectives that constitute it. The metrics can take the form of business, innovation, learning and customer perspectives, among others. Ultimately, while scorecards are not the panacea for resolving the disconnect between HR performance and results, they come close to providing a basis for much needed objective evaluation.
In conclusion, Guest’s position that there has been no specific success in establishing the relationship between performance and HRM is technically correct. However, when one takes into account some of the proposals for evaluation and using data and related metrics to measure effectiveness, there is evidence that in the near future, the connection may become more obvious.
Armstrong, M, 2006, A handbook of Human resource management practice. Kogan Page, London. Web.
Armstrong, M., & Taylor, S, 2014, Armstrong’s handbook of human resource management practice. Kogan Page, London. Web.
Boselie, P., Dietz, G. and Boon, C, 2005, ‘Commonalities and contradictions in HRM and Performance’. Human Resource Management Journal, vol. 15. no.1,pp. 67–94. Web.
Coe, N & Letza, S, 2014, ‘Two decades of the balanced scorecard: a review of developments’, Poznan University of Economics Review, vol. 13, no. 1, pp. 63-75. Web.
Guest, D, E, 2011, ‘Human resource management and performance: still searching for some answers’, Human Resource Management Journal, vol. 21, No. 1 pp.3-13. Web.
Levenson, A, 2014. ‘The promise of big dater of HR’, People and Strategy. vol. 35, no. 4 pp.23-26. Web.
Wall, T & Wood, S, 2005, ‘The romance of human resource management and business performance, and the case for big science’. Human Relations, vol. 58, no. 4, pp. 429–462. Web.