Organizational
performance
Human
resources are usually valued as the most important source of any organization.
Each organization also needs other resources, i.e. material, finance, or
information, but capable and motivated employees are indispensable to achieve
expected organizational performance.
Organizational
performance refers to an organization’s results, including operating results
(productivity, quality, efficiency, etc.), market results (sales, market share,
customer satisfaction, etc.), and financial results (costs, revenues, profits,
etc.). There is considerable evidence that achieving expected organizational
performance is determined by achieving desired employee performance which
refers to employees’ working results and behavior, determined by employees’
abilities (knowledge and skills to perform agreed work) and motivation
(willingness to perform agreed work), which enable an organization to achieve
expected goals (MyBib, 1970)
HRM
best practices
There
is little agreement as to which HRM best practices can be considered as
strategic in an organization (Paauwe, 2004; Marchington & Grugulis, 2000).
However, there is a broad consensus that there is a positive link between HRM
practices and firm performance (Wattanasupachoke, 2009; Tessema & Soeters,
2006; Wright et al., 2005; Bjorkman & Fan, 2002; Singh, 2003a; Bae &
Lawler, 2000; Huselid et al., 1997; Harel & Tzafrir, 1999; Huselid &
Becker, 1996; Huselid, 1995; Arthur, 1992).
Huselid’s
(1995) groundbreaking study established that a set of human resource practices,
also known as high-performance work systems (HPWS) were strongly related to
turnover, accounting profits, and firm market value. Since then, many studies
have shown a similar positive relationship between HRM practices and various
measures of firm performance such as productivity and quality in the auto
assembly plants (MacDuffie, 1995), accounting profits in the bank sector
(Delery & Doty, 1996), employee productivity, machine efficiency, and
customer alignment and its link with quality manufacturing strategy, and
profitability (Guthrie, 2001). The literature review in this study includes
only those studies covering multiple HRM practices because the focus is on the
HRM system as a whole that promotes overall firm performance. The review on
measurement of organizational outcomes (productivity, quality, and service) and
capital market outcome (sales growth) is based on Dyer & Reeves’s (1995)
and Delaney & Huselid’s (1996) studies.
Delery
& Doty’s (1996) seven best practices (i.e. training, participation,
employment security, job description, result-oriented appraisal, internal
career opportunities, and stocks/profit sharing) approach to examine the
validity of HRM practices and their effects on company performance among the
465 Chinese enterprises. The findings showed that training, participation,
resultoriented appraisal, and internal career opportunities were identified as
the “core” of HRM practices that positively affect both product/service
performance and financial performance. findings are consistent with the results
study done by Shipton et al., (2005). On the other hand, Gooderham et al.
(2006) conducted a similar study using a factor analysis of 80 different HRM
practices on its relationship with organizational performance among the
European firms. The study shows that training monitoring, share-options,
evaluation of Human Resource Department, profit-sharing, group-bonus, and
performance related pay have a statistically significant impact on performance.
Furthermore, Ngo et al.’s (1998) findings indicate that firms that provide more
structural training and development create more new products, have more
satisfied employees and higher sales. Fey et al. (2000) also finds that
non-technical training, high salaries and promotions based on merit will have a
direct positive impact on firm performance among the managers while job
security among the non-managerial employees.
Universalistic
perspective focuses on the ‘best practices’, which implies that firms will be
better off if they identify and adopt ‘best practice’ in the way they manage
people (Boxall & Purcell, 2000). In other words, some human resource
practices are always better than others (Rose & Kumar, 2006)
Bjorkman, I., & Fan, X.C. (2002). Human resource
management and the performance of Western firms in China. International Journal
of Human Resource Management, 13(6): 853-864.
Boxall, P., & Purcell, J. (2000). Strategic human
resource management: Where have we come from and where should we be going?
International Journal of Management Reviews, 2(2): 183-203
Delery, J.E., & Doty, D.H. (1996). Modes of theorizing
in strategic HRM: Tests of universalistic, contingency, and configurational
performance predictions. Academy of Management Journal, 39(4): 802-835.
Fey, C.F., Bjorkman, I., & Pavlovskaya, A. (2000). The
effect of human resource management practices on firm performance in Russia.
International Journal of Human Resource Management, 11(1): 1-18
management Journal, 46(6): 740-751. Delaney, J., &
Huselid, M. (1996). The impact of HRM practices on perceptions of
organizational performance. Academy of Management Journal, 39(4): 949-969
Dyer, L.D., & Reeves, T. (1995). Human resource
strategies and firm performance: What do we know and where do we need to go?
International Journal of Human Resource Management, 6(3): 656-670.
Guthrie, J. (2001). High-involvement work practices,
turnover, and productivity: Evidence from New Zealand. Academy of Management
Journal, 44(1): 180-190.
Huselid, M.A., & Becker, B.E. (1996). Methodological
issues in cross-sectional and panel estimates of the human resource-firm
performance link. Industrial Relations, 35(3): 400-422
Marchington, M., & Grugulis, I. (2000). “Best Practice”
human resource management: Perfect opportunity or dangerous illusion?
International Journal of Human Resource Management, 11(6): 1104- 1124
MyBib. (1970). MyBib – A New FREE APA, Harvard, & MLA
Citation Generator. [online] Available at: https://www.mybib.com/#/projects/aJelQN/citation
[Accessed 25 Aug. 2022].
Ngo, H.Y., Turban, D., Lui, C.M., & Lui, S.Y. (1998).
Human resource practices and firm performance of multinational corporations:
Influences of country origin. International Journal of Human Resource Management,
9(4): 632-652.
Paauwe, J. (2004). HRM and performance achieving long
term viability. Oxford: Oxford University Press
Rose, R.C., & Kumar, N. (2006). The influence of
organisational and human resource management strategies on performance.
Performance Improvement, 45(4): 18-24.
Shipton, H., Fay, D., West, M., Patterson, M., &
Birdi, K. (2005). Managing people to promote innovation. Creativity and
Innovation Management, 14(2): 118-128.
Tessema, M.T., & Soeters, J,L. (2006). Challenges and
prospects of HRM in developing countries: Testing the HRPperformance link in
Eritrean civil service. International Journal of Human Resource Management,
17(1): 86-105.
Wattanasupachoke, T. (2009). Strategic human resource
management and organizational performance: A study of Thai Enterprises. Journal
of Global Business Issues, 3(2): 139-148
Wright, P.M., Gardner, T.M., Moynihan, L.M., & Allen,
M.R. (2005). The relationship between HR practices and firm performance:
Examining causal order. Personnel Psychology, 58(2): 409-446
“HR Basics: Performance Management.” YouTube, 14 Jan.
2017, www.youtube.com/watch?v=SyOZ_4rWWiY.
Foss and Lyngsie (2011) give the following reasons for engaging in HRM practices: first, to assign duties to employees and teams; second, to develop and publicize incentives for knowledge sharing, individual achievements, and benefit sharing; third, as a medium for intra-organization information sharing about practices like job rotation and knowledge sharing; fourth, to generate internal and external training opportunities for employees; and last, to carry out retention, recruitment, and promotion policies to fulfill the organization’s HR needs. The last two of these tasks are considered part of conventional HRM practice, whereas the first three are more modern HRM roles.
ReplyDeleteThank you Danushi, It is very difficult for an employee to perform well at the job place without any pre-training (Thomas N. Garavan, 1997). Trained employees perform well as compared to untrained employees (Partlow, 1996; Tihanyi et al., 2000; Boudreau et al.,2001). It is very necessary for any organization to give its employees training to get overall goals of the organization in a better way (Flynn et al., 1995; Kaynak, 2003; Heras, 2006). Training and development increase the overall performance of the organization (Shepard, Jon et al., 2003). Although it is costly to give training to the employees but in the long run it give back more than it took (Flynn et al., 1995;Kaynak, 2003; Heras, 2006). Every organization should develop its employees according to the need of that time so that they could compete with their competitors (Carlos A. Primo Braga, 1995).
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ReplyDeleteHi Rino
ReplyDeleteNice and well explained about A performance review is a two-way, individualized conversation between a manager and an employee about performance impact, development, and growth. It’s a critical component of a continuous performance management approach to evaluate and propel success for the employee, team, and the organization
Performance management has the potential to generate signifi cant value for organizations, but it is frequently ineff ective, is often viewed skeptically by employees, typically requires a signifi cant investment of resources and capital, and may actually undermine strategic improvement when implemented poorly (Aguinis, 2007, 2009; Biron et al., 2011; Pulakos & O’Leary, 2011).
DeleteHi Rinosha, An efficient and good performance management system is always striving towards a comprehensive improvement in organizational performance (Cardy,2004). High-grade performance management helps assure that the overall goals of all goals are met (Ulrich and Chandler,2016).
ReplyDeleteWithin human resource management (HRM) and allied fi elds, performance management is typically defi ned as a set of ongoing, integrated activities that move beyond isolated performance appraisals to strategically measure, manage, and develop human performance within the context of organizational strategy and goals (Aguinis, 2007).
DeleteHi Rinosha Well explained about Organizational performance , furthermore, one of the most important factors for an organization is its engaged employees, who act as the backbone of any organization that brings positive vibes such as productive ethics and accountability (Levinson, 2007: Cleland et al, 2008).
ReplyDeleteThank you Neel, Employee engagement is a widely discussed topic in the fields of organizational
Deletedevelopment, management, and industrial psychology (Jeung, 2011; Kim, Kolb, & Kim, 2013;
Mercurio, 2015) This cannot be separated from the complex management of Human Resources
(HR). The changing times require HRD (Human Resource Development) practitioners to be able
to contribute innovatively to improve the quality of individual work with various characters (Kim
et al, 2017; Sekhar, Patwardhan & Vyas, 2017) such as skills and levels of education in the
organization. This is a challenge that employee engagement must be built and maintained so that
burnout does not occur (Bakker, Demerouti & Sanz-Vergel, 2014; Hanaken & Schaufeli, 2012).
This comment has been removed by the author.
DeleteHi Rinosha ,
ReplyDeleteWell explained.One of the greatest challenges organizations face today is how to manage turnover of work force that may be caused by migration of a lot of industrial workers. This may be because of their lack of Motivation and commitment for the organization.(Prof. S. K. Singh & Vivek Tiwari, 2011).
Employees who leave on the organization’s request as well as those who leave on their own initiative can
Deletecause disruptions in operations, work team dynamics and unit performance. Both types of the turnover create costs
for the organization. If an organization has made significant investment in training and developing its employees,
that investment is lost when employee leaves (Mello, 2011). I