The Essay On Human Resource Management's Value For Organizations.

The Role of HRM in Decision-Making

Question:

Discuss how Human Resource Management can make a difference by adding value to an organisation.
 

The human resource department has multi-faceted responsibilities, which range from recruitment, training, and employee development to compensation. However, the business dynamics and the global competitive pressure have forced most organizations to re-examine all business aspects to assess the value they create and their profitability. Therefore, a critical evaluation on how human resources operate within an organization is essential in understanding the value it adds to an organization. This essay aims at analyzing how human resource management can make a difference by adding value to an organization through decision-making, creating satisfaction, strategic planning, being a change agent, being employee oriented, and administration.

According to Andresen and Nowak (2014), the tremendous evolution in human resource management has made it a vital managerial element in decision making. Contemporary research study findings reveal a bond between HR strategies and activities and the overall business performance. The model below provides an illustration of how HRM is involved in the decision-making process.   

The model above indicates that early integration of HR activities and strategies in the organizational decision-making impacts more value on the decision outcomes. The perceived value of HR becomes evident by integrating into different areas that relate to human resource management. Value-driven HRM, which is involved very early in decision-making, creates value through the influence it causes on the company’s strategic decisions, depicting opportunities, and protecting company values (p.19). Therefore, it is critical to indulge HR when making a decision at this stage because of the ability in understanding varied personalities. HRM as an intelligent toolbox is early involved in decision-making. At this stage, HR plays a critical role in preparing employees for all changes expected to take place in an organization by breeding a new organizational culture that matches with the anticipated changes (p.20). However, at this stage, HR does not take an active role in decision-making but rather acts as an object that facilitates effective implementation of decisions.

The executive HRM reveals what most HRs in organizations go through being involved after the top management make major decisions. Therefore, it plays the role of messengers by conveying information to employees (p.20). However, effective execution of decisions under this stage requires integration of most activities in the previous stages to ensure efficiency in the long run.

Reactive HRM happens when HR acts as a mediator in situations where most decisions yield unexpected outcomes (p.21). The value creation under this stage is by being swift in handling problems even if it late.

A balanced scorecard, which was popularized by Kaplan and Norton (2013), provides an overview of what organizations require succeeding. The authors argued that businesses must meet and satisfy the needs of customers, employees, and shareholders and that there is an unbreakable bond among the three stakeholders. The balanced scorecard concept proved to be a success in companies like Eastman Kodak and Sears. The HR practices shape employee attitudes, which determine service delivery to customers. The ultimate effect is consumer satisfaction and retention. More so, the positive customer attitudes towards the company products and services influence shareholders to invest in the company. The shareholders’ and customers’ satisfaction is a motivation to employees because it opens up room for an increase in remunerations, bonuses, and serves as a platform for employee development and growth. To build on the balanced scorecard concept, Becker, Ulrich, and Huselid (2013) came up with the HR scorecard, which makes it possible to measure and depict the impact of HR practices on organizational well-being.

The Balanced Scorecard Concept

Daft and Samson (2014) purported that “the strategic role of HRM is to drive organizational performance” (p. 401). The traditional management approach gave little attention to the HR, which has turned to be an important part of organizational well-being in the twenty-first century. HR reports determine strategies lied down by the top management because not only does it support the strategic objectives but also integrates organizational plans to realize the target performance. The authors further argued that value creation using the strategic approach manifests itself in the ability to involve all organizational managers in managing the human resources and recognizing employees as a powerful asset. Therefore, HR tackles the strategic issues by hiring the right people to overcome the competitive business nature, encourage innovation and improve on quality. 

The rapid technological advancements, globalization, variation in business practices and organizational objectives have influenced variations in the traditional business operations. A keen look at the Fortune 500 companies reveals that their survival depended on their ability to adapt to change. Therefore, HR is tasked with making sure that the organization embraces and capitalizes on change by coming up with high-performing teams and shortening the cycle times for the execution of new ideas. Furthermore, HR ensures that it eliminates the inaction created by change through motivation and pinpoints the success factors for change by carrying out strength, weakness, opportunity, and threat analysis. HR ensures that the firm is capable of handling change (Ulrich, 2013). Therefore, everything that ranges from the definition of company initiatives to development and delivery of resources in an effective manner requires keen integration in the change programs. While change can be met with great resistance especially from employees, HR ensures that it replaces the resistance with resolve (p. 152). More so, HR motivates employees by instilling excitement in change programs to minimize the effects of fear and worry.

The increase in cheap labor and the rise of technology today has encouraged most organizations to capitalize on employee efforts by redrafting the old employment contract, which was a job security. Companies have opted for contracts that lead to a transactional relationship with employees, thus paying little attention to their wellbeing provided they pay for the job done. However, Sims and Quatro (2015) insisted that such behavior has catastrophic ramification on the organizational well-being. They claimed that it was almost impossible for companies to thrive if they gave a cold shoulder to their employees. In their argument, they suggested that firms must create an atmosphere in which employees feel part of the organization. Therefore, the new HR role in ensuring it adds value to the company and employee is by ensuring that the work environment satiates their social needs. For instance, the HR organizes end of the year parties, rewards employees with vocational trips takes teams for motivational trips and allows them to form labor unions to nourish their social urges. More so, the HR department is responsible for educating all levels organizational management on the impact of employee motivation and should outline the best mechanisms of realizing it. Treating employees as an organizational asset must entail the provision of opportunities that encourage personal and professional growth and equipping them with relevant tools to assist in effective work delivery. Considered as a strategic department in an organization, the involvement of HR in decision-making is an assurance to employees that the management can consider their concern especially in situations where critical decision are made for instance retrenching, plant closure, and merger and acquisition.

According to Mathis, Jackson, Valentine, and Meglioh (2016), the administrative function of HR in most organizations revolves around information generation and recordkeeping. Through the use of technology and outsourcing services, HR is capable of increasing efficiency in processes by making the fast and cheap. HR adds value to the organization by locating and fixing most of these processes. For instance, the use of technology in screening resumes for new job applicants reduces the cycle time for identifying potential employees and hiring them. Furthermore, the use of technology allows frequent interactions between employees and their managers. Improvement in such processes increases the quality of work while minimizing costs because technology and outsourcing some of the services eliminates resource wastage and saves on time. HR is also responsible for creating, designing and implementing efficient systems that bring synergy among organizational units. By so doing, they allow the units to share the administrative services. The administrative role also manifests itself in the HR’s capability to create central points that collect, coordinate, and distribute important information, which can turn it into an internal organizational consultant. 

Conclusion

Human resource management is a dynamic business institution that requires adequate attention in understanding the evolving needs. The ability to create value in an organization depends on the degree of investments injected in this department. The above discussion provides an overview of how HR creates value from different viewpoints, which must act as a single entity to realize the benefits. Organizations must understand that HR no longer serves the simple administrative task as it was required under the traditional approach, but has increasingly become a strategic tool through the contributions it adds to the organization like staffing, training, employee development and growth, and the ability to influence the decision-making process. Giving it the needed attention facilitates remarkable contributions to the business strategy by aligning all HR functional areas with the firm’s priorities.  

References

Andresen, M. & Nowak, C. (2014) Human resource management practices: Assessing added value. Bamberg: Springer.

Becker, B.E., Ulrich, D., & Huselid, M.A. (2013) The HR scorecard: Linking people, strategy, and performance. New York: Harvard Business Press.

Daft, R.L. & Samson, D. (2014). Fundamentals of management: Asia Pacific edition pdf. Sidney: Cengage Learning.

Kaplan, R. & Norton, D.P. (2013) The strategy-focused organization: How balanced scorecard companies thrive in the new business environment. New York: Harvard Business Press.

Mathis, R.L., Jackson, J.H., Valentine, S.R., & Meglioh, P. (2016) Human resource management. London: Cengage Learning.