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Developing Human Resource And Its Impact On Organisational Performance

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Discuss a systematic literature review to identify how does developing HR has an impact on the performance of the organisation?


Literature Review

This report will discuss a systematic literature review to identify how does developing HR has an impact on the performance of the organisation.

In the modern age, human resource department forms an integral part in any organisation. The organisations have started realising the unique influence of HR department on the functioning of the organisation as the business environment has become highly competitive and complex. These days’ organisations compete with each other to acquire the best talented resource available(Alagaraja and Shuck, 2015). This situation has resulted due to dearth of talented employees in the market. This scenario of the business has made it necessary for companies’ to retain the talented pool of candidates by keeping them motivated and provide them job satisfaction. Organisations have realised that satisfied and dedicated workforce can help the organisation to achieve its goals effectively and take the success of the organisation to a very high level. Effective human resources can help the firm to gain competitive advantage over its competitor. Thus, the importance of adopting appropriate HR policies have been realised as an effective and efficient HR can positively impact the organisational performance.

The human resource department has many strategic roles to play within the organisation. They are required to be a participant in formulating the mission and vision of the organisation. They are also responsible for addressing the grievances of the employees; manage the industrial relation with the workers and trade unions, carry out unbiased and timely performance appraisals, undertake various activities to keep the employee motivated and add to the intrinsic value of the job(Baptista and Leitão, 2014). They are the ones who need to take initiative to break monotony at work and handle any conflict. They are responsible of recruiting right kind of people in right numbers at right time. They need to assess the training needs and then arrange for training to ensure the personal growth of each employee. He needs to ensure proper flow of communication within and outside the organisation. Therefore, it can be said that the role of HR manager has become extremely challenging in recent days. An HR manager requires having several skills, all at once. Few of the important skills are, leadership qualities, innovative, good inter personal skills, negotiation skills, conflict management, planning and analytical abilities, problem solving and decision making skills etc.


In an era of rapid globalisation and fluctuating economies coupled with intense competition and diverse needs of the consumers, the companies need to push its performance levels by reducing costs, improving their quality, enhancing its productivity and brining in innovative products quickly (Bridger, 2013). It has been an area of research to identify its impact on organisation performance. There are a number of literatures available which concludes that there is a significant impact of developed human resource on organisational performance and on employee turnover and it results in improved financial performance of the organisation. It has been proved time and again that if an organisation takes care of its employees then the employees also takes care of the organisation in return. If the firm treats them well and provide ample opportunity for personal growth for them, then they are willing to walk that extra mile to achieve phenomenal success while reaching their goals. Organisations can achieve its goals only through the efforts of the employees(Cheung-Judge and Holbeche, 2013). And to do so, they need to ensure that they create a sense of belongingness and pride among its employees. Therefore, it necessitates the firms to undertake employee development programs.

Employee Development does not only mean providing training to employees. Training the employees is just a part of employee development. Training helps the employees to enhance their skills and gain new knowledge which will help them to perform their current job in an effective manner. Employee development includes a range of activities. It is not only focused on the job, instead it aims towards the overall development of the employees. It focuses on the improving those skill and behaviours that will enable them to attain effectiveness in the long run (Georgiades, 2014). This will ensure that the firm will be able to gain a competitive advantage over its competitors.  Development activities range across various categories. The various dimensions are as follows:

  • Voluntary Vs Involuntary: some organisation incorporate development activities in its HR policies and encourages it employees to take part in various training programs, job rotation programs. The organisation provides them coaching and mentoring opportunities as a part of employee development program(GrublienÄ— and UrbonaitÄ—, 2014). This is called voluntary efforts taken by the organisation for employee development. Potential employees, who are expecting promotion, voluntarily participate in such activities. Few employees participate in such programs to enhance their knowledge and experience. They engage into self directed learning’s and other look for opportunities to hone their skills.

  • Formal Vs Informal: Formal development programs are organised by the company which is targeted towards the development of precise skills and behaviours and to add the specific knowledge base. Such programs may include job enrichment programs or planning a lateral move for the potential employees (Jaremczuk and Mazurkiewicz, 2014). Informal activities are not particularly designed by the organisations, but they provide opportunities for those employees who are willing to learn. Employees might participate in extracurricular activities, organised by the company, to enhance their skills and knowledge which can be used at the workplace.

  • Current Vs Future oriented: this dimension identify the degree to which the knowledge and skill of the employees will be enhanced, which will help them to improve performance in the current job, if the development activities are undertaken. Also it determines how well they will be prepared for future challenges or changes that might occur in their current job (Javed, Balouch and Hassan, 2014).

  • Incremental Vs Frame breaking: These are the learning experiences. Incremental learning is situations where the employee is given time to clarify his role expectations and certain amount of flexibility is there for self paced learning (Lancaster and Di Milia, 2014). Here the organisation widens the job responsibility to learn from experience. Whereas, in frame breaking is a learning situation where the employee need to have high thrust for learning and risk taking ability and be prepared for failure.

  • Introspective Vs Interactive: Development activities undertaken by the organisations is also influenced by the amount of employee interaction required with the work environment (Li, 2014). If assessment centres are used then, an employee explores about his skills, values and interest. But when, job rotation is done to make the employee learn through experience, it requires him to interact with others. Thus, this becomes interactive.

Thus, an organisation makes use of a balanced mix of all the dimensions mentioned above. They choose the mix to effectively develop their employees. While discussing the dimensions, there were short descriptions of various methods that are adopted by employers to develop its employees.

There are various other methods which can be used by the organisation to develop the employees. They are as follows:

  • Employee assessment is a common method where they are provided feedback about their behaviour, skills and communication styles. These feedbacks are provided by the colleagues, the customer and manager of the employee (Saks and Gruman, 2014). This allows an individual to identify his strengths and weakness and create self awareness about where they need to improve to be more effective. Various tools used to assess employees such as performance appraisals, assessment centres and Myers-Briggs Type Inventory is most popularly used.

  • Proving a wide range of job experience by exposing them to various challenges in the job. To do this, job rotation, job enrichment, employee exchange programs, lateral moves and promotions are used. Lateral moves means that an employee moves to another designation with similar status, responsibility with similar pay. Only, this new position may have some challenging tasks which will encourage the employee to learn new skills and gain experiences (Shuck et al., 2014). The Development Challenge Profile has been created to identify the components that are required to be developed for managerial positions. Employee exchanges are a recent concept, wherein the employees are exchanged between two organisations who are customers to each other in terms of products and service. This allows the employee to gain phenomenal experience if reality and how things work outside their organisation. The employee can apply this new learned knowledge when he returns back to his own organisation.

  • Formal Educational Programs are another way of developing employees. There are programs which are specially designed for working people and it is conducted for short period by the universities and other consulting firms (Shuck et al., 2014). There are MBA programs and lectures by experts etc. Now a day there is a surge in the number of such companies who offer professional courses for the working people. Some organisations grant a leave to its employees to pursue higher studies so that when they return, they can give back excellent results to the organisation.

  • The organisation can introduce personal development plans for employees so that they are rest assured that they will also grow with the organisation. The organisations have started taking this initiative where the employer and employee generates a list of goals that both seeks to achieve within a specified period of time (Skorupinska, 2015). This encourages the employees to strive for organisational excellence while developing one self.
  • Leadership training, cross cultural training, on the job and off the job training and many other kinds of training is another method used to develop employee. These kinds of training aims at enhancing a particular set of skills of the employee.

When a company plans to engage in employee development programs, they need to communicate this to its employees. This will enable the company to get the support of the employees and they understand that the organization is concerned about their personal growth and well being (Walton and Valentin, 2014). Thus this makes it even important for companies to communicate this to the employee which will help them to develop strategy. The organisation should communicate effectively about why they want to conduct the development program. They should ask the employees that how they would like to receive the development program. The organisation shall then make sure that the sessions are based on adult learning principles. This will ensure that the participants are actively involved in the process and they are able to apply the new knowledge acquired to their jobs effectively. Applying the adult learning principle will also ensure that the program makes use of a range of learning style and that the process in goal oriented.


Thus it can be concluded that the employee development programs are essential in order motivate employees and improve their morale. This will boost their performance and increase the productivity of the organisation. In the present era, which is characterised by rapid technological advancement, it is important for companies to become a learning organisation in order to survive and thrive in the long run. This will also help the organisation to communicate its expectations that they want its employee to enhance their skills in order to keep themselves updated (Williams, 2014). This will provide the organisation to gain competitive advantage over its competitor. Employees are the ones who will produce, manage and deliver the products and services of the organisation. They serve as the face of the company as they are the first contact point of the consumers. The employee development programs can have a very positive impact on the organisational productivity and performance. It creates positive changes at the workplace which leads to environment of mutual trust and openness. These programs also make the employees responsible and accountable for their behaviour and conduct. This will help in keeping the employees focused towards the goals and ensure that they adhere to the rules of the organisation.

Thus, by studying the literature review, it can be concluded that the organisations need to provide opportunities for personal development of employees. This will yield better results in the long run, as mentioned above. The organisations have started taking initiatives to invest in employee development program.


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