Hrm and Organisational Performance
1. Abstract
It has been controversial and arguable for many years and is still on-going regarding whether HRM and organisational performance are directly or indirectly linked to each other. Some insist that it clearly has a positive impact on business performance whilst the others question that “why companies then hesitate to take the HR policies and why some of them adopt another alternative approaches?” From their point of view, it does not affect much of the organisational performance. Therefore, a company does not necessarily need to implement HR practices. In addition, there is a neutral opinion on this which addresses that the performance might reflect on it or not depending on what type of business it is.
HRM might have more impact on profits and productivity than a range of other factors such as strategy and R&D. One of many arguments on this debatement was that profitability could be better explained by HRM practices and job design rather than strategy and R&D; as opposed to merely 8 per cent from R&D, 2 per cent from strategy and only 1 per cent from technology (Patterson et al, 1997). Also, organisational performance can be analysed, not just by evaluating the firm’s outcome and profit, also labour and sales productivity, work efficiency and effectiveness of each task completed as well as competitiveness. High performance work practice can be achieved by building up workers’ trust and increasing job satisfaction and commitment. With regards to labour productivity, the firm can be evaluated in relation to whether it has optimised its labour as much of labour power as possible. This point emphasises on that well-made HR policy will help improve the organisational performance.
To prove whether HRM principles have positively affected or adversely contributed to the organisational performance, this study will review the theoretical frameworks and perspectives on HRM and organisational performance. Secondly, it also looks at how HRM strategies
It has been controversial and arguable for many years and is still on-going regarding whether HRM and organisational performance are directly or indirectly linked to each other. Some insist that it clearly has a positive impact on business performance whilst the others question that “why companies then hesitate to take the HR policies and why some of them adopt another alternative approaches?” From their point of view, it does not affect much of the organisational performance. Therefore, a company does not necessarily need to implement HR practices. In addition, there is a neutral opinion on this which addresses that the performance might reflect on it or not depending on what type of business it is.
HRM might have more impact on profits and productivity than a range of other factors such as strategy and R&D. One of many arguments on this debatement was that profitability could be better explained by HRM practices and job design rather than strategy and R&D; as opposed to merely 8 per cent from R&D, 2 per cent from strategy and only 1 per cent from technology (Patterson et al, 1997). Also, organisational performance can be analysed, not just by evaluating the firm’s outcome and profit, also labour and sales productivity, work efficiency and effectiveness of each task completed as well as competitiveness. High performance work practice can be achieved by building up workers’ trust and increasing job satisfaction and commitment. With regards to labour productivity, the firm can be evaluated in relation to whether it has optimised its labour as much of labour power as possible. This point emphasises on that well-made HR policy will help improve the organisational performance.
To prove whether HRM principles have positively affected or adversely contributed to the organisational performance, this study will review the theoretical frameworks and perspectives on HRM and organisational performance. Secondly, it also looks at how HRM strategies