Relevance and Contribution of HR to Organisational Success - Essay Example

?Relevance and contribution of HR to organisational success and effective change management Introduction Modern business management considers human resource as an important operating asset and gives specific focus on human resource empowerment. Human resources, or synonymously human capital, can be simply defined as the group of individuals who constitute the workforce of an organisation. Since human capital play a crucial role in an organisation’s market competitiveness, large firms possess separate division for managing their human resources. Human resource management (HRM or simply HR) refers to all activities relating to the management of an organisation’s human capital. Armstrong defines human resource management as a “strategic and coherent approach to the management of an organisation’s most valued assets – the people working there who individually and collectively contribute to the achievement of its objectives” (cited in Stolt, 2010, p.2). This paper will critically evaluate the relevance and contribution of HR to organisational success and effective change management. Contribution of HR to organisational success In the today’s competitive business environment, HR plays a pivotal role in determining the organisation’s operational efficiency and profitability. As Wright (2003) believes, many of the corporate scandals over the last few decades can be attributed to the failure of HR. A number of studies have indicated that HR evidently contributes to organisational success. Importance of service sector has been steadily increasing for the last two decades and hence the economy tends to be more service based. Hence, it is essential for organisations engaged in service sector to keep their workers motivated and productive. According to Valencia (n.d), there is a close connection between employee motivation and employee productivity. Studies point that financial incentives and other employee benefits are the best ways to keep employees motivated. A firm’s HR management deals with all types of employee benefits including healthcare, retirement, dependent care, college tuition, and worksite accident claims (NC Department of Health and Human Services, 2012). In addition to employee benefits that are mandated by law, organisations voluntarily provide their employees with some additional benefits. For this purpose, HR managers explore employees’ actual family needs and thereby make the firm’s employee benefits packages flexible enough to help the company save money (Reference for Business, 2012). Even in manufacturing and traditional industries, competitiveness has become one of the major determinants of organisational success and therefore firms in these sectors frame strategies that facilitate economic and effective use of their resources. It is evident that human capital is the most important resource of an organisation and hence effective HR strategies would assist the firm to make its employees more productive. Increased productivity would directly contribute to an increase in revenues and thereby profitability. In the view of Cohen et al (n.d), HR is a better strategy to ensure the firm’s long term sustainability. Evidences suggest that improved HR would be beneficial for an organisation to eliminate unnecessary costs resulting from production wastage, employee motivation programs, and rigorous sequence of quality checks (The Strategic Human Resource Management Model, n.d). HR system aids an organisation to ensure that its training programs are designed on the basis of focused and topical methods (Management study guide, n.d). Deb (2006) opines that effective human resource management may be a potential way to encourage employee creativity and thereby seize more expansional opportunities. When an employee is allowed to use his creativity, he may get the feeling that ‘it is my organisation’ and such an employee’s view would directly contribute to organisational productivity. In order to ensure organisational success, there must be a better linkage between the organisation’s long term objectives and human resource strategies. In other words, employees should get a detailed understanding of the firm’s goals and objectives so as to effectively structure their way of working. Here, HR can play a central role in utilising employee potentials to add value to organisational objectives (Workinfo.com, n.d). In the words of Wei (2006), well structured HR practices may assist an organisation to improve its strategic management activities. It is obvious that HR management maintains detailed employee information and job vacancy details (ibid). Using employee records, an organisation can effectively distribute its duties and responsibilities among employees based on their skills and experience (Herbst, n.d). Effective job distribution is necessary to shun work monotony and thereby facilitate job satisfaction, which in turn may benefit the organisation to reduce operating costs and improve organisational productivity (Queensland government, 2012). In addition, the practice of keeping job vacancy details may be helpful for an organisation to recruit new employees timely and thereby avoid any decline in total productivity. As Peterson (2010) points out, modern HRMs give great emphasis on information technology with intent to improve information flow within and between organisational units. Saariluoma (2006) opines that effective up and down information flow (or communication) is vital in order to facilitate strategic management operations. Continuous up and down communication aids a company to easily identify pitfalls in its operations and resolve those issues immediately. Furthermore, application of improved IT technologies may be beneficial for an organisation to reduce its work complexity. In addition, IT based HR practices reduce the chance of clerical errors to a great extent. HR management can be a key factor in setting organisational policies, processes, and procedures since this concept assists the top level executives to get a clear view of the firm’s workforce (European Union, n.d). Evidences suggest that HR has a crucial role to play in making decisions regarding mergers and acquisitions. HR databases would be of great help to assess whether the organisation has sufficient workforce strengths and capabilities to accommodate a business expansion. Similarly, an efficient HR strategy would enable the firm to effectively address its outsourcing needs. In the words of Greer et al “among advantages of HRM outsourcing are decreased costs, a better focus on HRM issues directly tied to the company’s success, and higher quality customer service” (Rowley & Jackson, 2011, p.166). HR contribution to change management As discussed earlier, the HR plays a pivotal role in achieving continuous improvements in individual performance and organisational capability. Hence, management experts view that HR processes that enhance continuous organisational improvement can facilitate organisational change also. Scholars say that HR professional have a key role to act as change agents in order to promote organisational transformation and culture change. According to Caldwell (as cited in Armstrong, 2009), HR change agents in four dimensions are transformational change, incremental change, HR vision, and HR expertise. HRM can have a great influence on change implementation process and post implementation phase. An organisation, which is performing organisational change, will be very much concerned about future; developing plans to do things differently; stop doing ways activities have performed in the past; and managing its execution (The University of Adelaide, n.d). Hence, HR strategies are very crucial in effectively managing a particular change environment (ibid). In order to successfully deal with a change management process, it is necessary to effectively integrate the organisation’s HRM policies with its strategies and strategic change process. While performing change management; training, employee relations, and compensation benefits may not be mere operational issues for HR department. In contrast, they greatly influence the way in which employees are likely to respond to the strategic change. Scholars opine that HR managers may often involve in initiating change and hence they have also the responsibility to keep in pace with each phase of the change. Well planned HR strategies may be helpful for the organisation to develop capabilities necessary to address the changes that are likely to remain as the part of the organisational culture. This is possible through the ongoing learning process performing to identify the change impacts. HR functioning is a vital ingredient in enabling organisations to make corrections and additions to the implemented change. Furthermore, HR management may be able to enlighten employees about the significance of the planned change and make arrangements to allow employees to actively participate in the change implementation process. HR supports “developing processes for involving people in planning and managing change and communicating information on proposed changes – what they are, why they are taking place and how they will affect employees” (Armstrong, 2009, p.439). Moreover, the HR department specifically ensures that the firm’s all employees are adequately motivated to undertake the change. Thus, the HR management can assist an organisation to ensure cooperation from the part of employees while executing a change. In addition, the HR management may recruit new employees to match the firm’s change management needs with its workforce potentials. Through this policy, HR can prevent productivity decline which is likely to happen at the time of implementing a change. It must be noted that the role of HR is not to carry out the change but to help get the change done. It is clear that HR managers are in close contact with an organisation’s human resources and therefore they can easily point out possible points of resistance to the proposed change (Change Management Learning Centre, 2005). In addition, HR practitioners can help promote information flow and understanding that may help to overcome the identified points of resistance (ibid). Scholars opine that effective HR strategies would benefit an organisation to prepare its employees at different levels to adapt to the planned change. HR contributes to change management by implementing right tasks, structures, systems, and process to address the change. Likewise, HR can systematise learning and development programmes necessary to enable employees to adopt new behaviours and acquire different skills. Some organisations like Fidelity and IBM have appointed ‘people managers’ with intent to enhance employee empowerment. Such HR strategies may be beneficial for firms to develop a potential change environment without taking much effort. Since HR managers are in close touch with employees, they can easily identify efficient workers and designate those workers to take change initiative. HR tools like reward and recognition can also have a great role to play in managing the planned change efficiently. Impacts of professionalism and personal ethics The element of professionalism notably influences HR practices in organisations. In order to be recognised and respected as a main stream profession, HR needs to meet stringent standards and ethical accountability that all other professions maintain. HR mangers should keep greater level of professionalism to get respect and support from his subordinates. Management studies indicate that the aspect of professionalism significantly contributes to accountability and credibility of HR practices. HR practices may not be able to effectively motivate employees if those practices lack the element of professionalism. Professional HR practice may benefit an organisation to go in line with its established corporate governance policies. In times of executing an organisations change, professionalism can have great influence on HR practices in determining efficiency of the change management. Professional HR practices would greatly benefit an organisation to meet its long term objectives successfully. Similarly, personal ethics significantly influences HR practices in an organisation and this element is one of the key determinants of achieving HR objectives. HR mangers’ level of personal ethics determines how effectively they can keep their subordinates motivated and productive. If HR mangers are not of moral integrity, they may give increased focus on the organisation’s short term financial gains. Although such HR practices may assist the firm to improve its financial status in short run, this policy is likely to raise potential challenges to firm’s long term objectives. Hence, personal ethics directly impacts HR practices and thereby organisational sustainability. In addition, HR managers’ biased decisions may negatively affect employee motivation and empowerment; therefore, unethical behaviour would reduce the scope of HR practices. HR professional are required to take immediate decision in several situations. Under such circumstances, the element of personal ethics would markedly impact HR practices and ultimately the firm’s market competitiveness. In short, professionalism and personal ethics are integral components of HR management. Conclusion From the above discussion, it is clear that HR can greatly contribute to organisational success. HR assists the organisation to keep its employees motivated and this situation in turn may offer improved customer service. HR department deals with employee benefits to foster employee creativity. In addition, HR management recruits and trains new employees timely to keep the organisation’s productivity stable. Furthermore, HR gives specific focus on IT and this practice notably adds value to the firm’s operational efficiency and sustainability. In case of managing a change environment, HR is a better tool as HR managers can easily predict possible points of employee resistance to the proposed change. Effective use of HR techniques would help an organisation to connect its change requirements to employee interests. Finally, the elements like professionalism and personal ethics influence HR practices in an organisation to a great extent. References Amstrong, M., 2009. Armstrong's Handbook of Human Resource Management Practice. USA: Kogan Page Publishers. Change Management Learning Center., 2005. Top five reasons employees resist change, pp. 1-4, [Online] Available at: [Accessed 17 May 2012]. Cohen, E, Taylor, S & Muller-Camen, M., n.d. HR’s role in corporate social responsibility and sustainability, SHRM Foundation, [Online] Available at: [Accessed 17 May 2912]. Deb, T., 2006. Strategic Approach to Human Resource Management: Concept, Tools& Application. New Delhi: Atlantic Publishers & Dist. European Union., n.d. HR policies and procedures toolkit, Enfield College, pp. 1-37, [Online] Available at: [Accessed 17 May 2012]. Herbst., n.d. Herbst HRM: Human resource management system with full Irish payroll, [Online] Available at: [Accessed 17 May 2012]. Management Study Guide., n.d. Importance of HRM for organizational success, [Online] Available at: [Accessed 17 May 2012]. NC Department of Health and Human Services., 2012. Benefits: State health plan, Division of Human Resources, [Online] Available at: [Accessed 17 May 2012]. Peterson, J., 2010. The role of technology plays in today’s human resource management, Education for the 21st Century, [Online] Available at: [Accessed 17 May 2012]. Queensland Government., 2012. Compressed working schedules, [Online] Available at: [Accessed 17 May 2012]. Reference for Business., 2012. Employee benefits, [Online] Available at: [Accessed 17 May 2012]. Rowley, C & Jackson, K., 2011. Human Resource Management: The Key Concepts. USA: Taylor & Francis. Saariluoma, P., 2006. The importance of the free flow of information and knowledge, Human Technology, 2(1), pp. 1-3. Stolt, R., 2010. Differences and Similarities between Domestic and International HRM. Germany: GRIN Verlag. The Strategic Human Resource Management Model., n.d. pp. 1-59, [Online] Available at: [Accessed 17 May 2012]. The University of Adelaide., n.d. Leading change, transition & transformation: A guide for university staff, pp. 1-21, [Online] Available at: [Accessed 17 May 2012]. Valencia, C., n.d. Motivation and productivity in the workplace, Westminster, [Online] Available at: [Accessed 17 May 2012]. Wright, PM., 2003. Restoring trust: The role of HR in corporate governance, CAHRS Working Paper Series, pp. 1-20, [Online] Available at: [Accessed 17 May 2012]. Workinfo.com., n.d. A guide to strategic human resource planning, [Online] Available at: [Accessed 17 May 2012]. Wei, L., 2006. Strategic human resource management: Determinants of fit, Research and Practice in Human Resource Management, 14(2), pp. 49-60. Read More