Importance Of Hrm Policies And Practices

Published Date: 02 Nov 2017

Introduction

Before one can discuss on the subject of effective Human resource policies and practices (HRM policies and practices) for an organization, one need to understand what it is. To put it simply, a policy is a prescribed statement of "a principle or rule" that an employee must pursue. Each policy addresses an issue vital to either the organization's mission or operations. On the other hand, practices refer to organizational activities for managing the a group of people and ensuring that they are engaged towards organizational goals (Schuler & Jackson, 1987; Schuler & MacMillan, 1984; Wright & Snell, 1991). In every organization we find that there are a number of important factors that an it needs to address. First, it needs to ensure profitability to satisfy the shareholders, while at the same time produce quality products or services to its customers. Then, it needs to consider its responsibilities to the community by being environmentally-friendly and by getting involved in community activities. Moreover, an organisation also needs to ensure that it provides a desirable working environment for its employees. This is by quoting from Gardner and Palmer (1997). where according to them competitiveness can be achieved by integrating "cultural, structural and personnel techniques"

Importance of HRM Policies and Practices

In any organization we find that the Human Resource Management is the most important asset and it is also a source of achieving competitive advantage. According to Khatri (1999), and quoting from his study , he said that "one of the most important factors providing flexibility and adaptability to organizations is the people". However Rundle (1997) argued that it would need further clarification by giving a comparison and quoting that "that people (managers), not the firm, are the adaptive mechanism in determining how the firm will respond to the competitive environment". While other scholars have pointed out on the fact that it is more difficult to manage people than to managing either technology or capital (Barney, 1991; Lado and Wilson, 1994). In the next section, we will critically discuss on the proposal that organizations that have effective HRM policies and practices can support business strategies and contribute to their improved performance.

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HRM policies and practices improve performance

We begin with the argument on the importance of human resources policies and will now consider its inpact on the business strategies and performance of the organization..Why is this so? It is so fundamental to any organization because they provide the structure for human resources department and procedure for employment activities. Without human resources policies, it would be extremely difficult for an organization to either justify employment or business decisions. The establishment of such policies will be able to help an organization , both internally and externally, t in order to fulfil the requirements for diversity, ethics and training. Apart from that, an organization can show its commitments to the current regulation and corporate governance of its employees. For example, in dismissing an employee, an organization has to follow procedures that are in harmony with the requirements of employment law.. Other normal considerations, that are necessary include those provisions within the employment contracts and collective bargaining agreements. Thus, having an HR Policy that sets out obligations, standards of behavior and document disciplinary procedures, is now the standard approach to meeting these obligations.

The other important aspect is that HR policies can be very effective for not only supporting but also building the required organizational culture. For example its recruitment and retention policies might include such values as a flexible workforce, compensation policies. It may do this by offering a 48/52 pay option whereby employees can take an extra four weeks holidays per year and receive less pay across the year. We have therefore highlighted some of the benefits that an organisation can use to better provide its employees.

As we mentioned earlier, human resource policies are the formal rules and guidelines that organisations incorporated in order to hire, train, assess, and reward their work force. These policies are then, organized and disseminated in the form of an employee manual or large posting. By doing so, it is possible to eliminate any misunderstandings between employees and employers about their rights and obligations in the business environment. [1] The recognition of this necessity may occur when the management realizes that an increasing amount of time is being devoted to human resource issues. It can be said that time gained here could be devoted to production, marketing, and planning for growth. Thus, the benefits can be realised quickly. It is often found that without an effective, consistent, and fair human resource decisions, it is more time consuming to make decisions. This can be true by a lack of written, standardized policies and procedures. Moreover, its is very important that when such issues concerning employee rights and company policies come before the courts, it is often rely company policies. For most part, it can be either written or verbal, it can be considered as being a part of an employment contract between the employee and the company. Therefore, a company would be at a disadvantage position if it is without those clearly written policies.,.

In their daily operations, it is particularly important that companies do implement and maintain fairly their applied human resource policies.. This is especially so for Small businesses and business startups where they cannot afford to lose valuable time and resources on drawn-out policy disputes or potentially expensive lawsuits. For example, a business owner who takes the time to establish sound, comprehensive human resource management policies will be far better equipped to succeed over the long run than will the business owner who deals with each policy decision as it happens. We do find that an ad-hoc style tends to produce inconsistent, uninformed, and legally questionable decisions.. What then would affect worker’s productivity? Such human resource policies that are inconsistently applied or based on faulty or incomplete data will inevitably led to worker morale, deterioration in employee loyalty, and increased vulnerability to legal penalties. To overcome the problems that we pointed out personnel management policies must be fairly applied . It is highly recommended that small business enterprises produce and maintain a written record of its HR policies and of instances in which those policies came into play.

In order to support the statement that HRM policies and practices enhance organizational performance we need to look at the various literature on the subject at hand.We can use the study done by scholars like Rondeau and Wager (2001). They were able to discover the relationship that existed between HRM practices, workplace climate and perceptions of organizational performance. A large sample of Canadian nursing homes was used in their studyand where they found that nursing homes, which had implemented more ‘progressive’ HRM practices and which reported a workplace climate and "strongly valued employee participation, empowerment and accountability tended to be perceived to generally perform much better on a number of valued organizational outcomes".

Another important study was done by Chand and Katou (2007) who investigated on whether some specific characteristics of hotels affect organizational performance. This was conducted on the hotel industry in India. Apart from that they were also able to investigate on whether some HRM systems affect organizational performance. In that study they found that the " hotel performance is positively associated with hotel category and type of hotel and hotel performance is positively related to the HRM systems of recruitment and selection, manpower planning ,job design ,training and development ,quality circle, and pay system"

The other example that we can use to support our argument is where there are several connections between HRM practices and the firm’s performance. This hypothesis is based on a study done by Joseph & Dai (2009)where they said that " there are significant connections" and the "strategic alignment of HRM which is also a driver for firm performance".

In another example from a study conducted by Nayaab et al (2011), on banks, they said that that "HRM practices was able to contribute to the enhanced banks performance". Furthermore, they also said that " HRM practices like training, employee participation in decision making were found to be significantly related with banks performance". Further, Osman et al (2011) did aa study on the effectiveness of implementing HR practices in a company and wanted to know whether or not these elements have a major impact towards a firm’s performance. Most significantly, and by quoting them it can be said that these findings also show that HR practices have an impact of "nearly 50 percent on firm performance". Given that, it thus supports our argument that effective HRM policies and practices can support business strategies and contribute to improved performance of the organization.

In considering aspects relating to HRM Practices and Financial Performance, we can cite Huselid (1995) who conducted a study to evaluate the link between systems of High Performance work practices and firm performance. According to him these practices have " a statistically significant impact on intermediate employee outcomes (turnover and productivity) and short and long term measures of corporate financial performance". The quotation from his study do support our argument on the performance of a company. However, it gave a different oicture with regards to Hyde et al. (2008) study. Instead they found that little support for a "positive relationship between HRM practices and firm profitability".

In Fey Carl F. (2000) study, he investigated the relationship between HRM practices and the performance of 101 foreign-owned subsidiaries found in Russia. According to him investments in HRM practices can substantially help a firm perform better. Furthermore, he was able to prove that different HRM practices for managerial and non- managerial employees are found to be significantly related with a firm’s performance.

Another supporting study that we would like to cite is that of Ngo et al. (2008) whereby they examined the SHRM (Strategic Human Resource Management) practices in China. In that study they were able to assess the impact of these practices on firm performance and employee relation climate. Ngo et al. (2008) said that SHRM "practices have direct and positive effects on the financial, operational performance, and the employee relations climate". This significantly supports our argument as proposed.

Human Resource policies and practices are able to he1p organisations achieve their "business goals and objectives" . This could be done through developing the knowledge and skills of the employees. . The quality of its human resource affects an organization' s ability to adapt to changes, and one which determines its competitiveness. One can defines competitiveness by quoting De Cieri et al. as "an organisation's ability to maintain and gain market share in its industry".

Among the points that we can use to support the proposal is that of the view propounded by Panayotopoulou and Papalexandris (2004). In their study, they both said that HRM has a more "significant influence on growth / innovation indices as opposed to financial performance". Their study therefore focused more on aspects of growth and innovation. It thus supports our point on growth too. Other scholars like Li et al (2005) examined the relationship between HRM, technology innovation and performance. In their study done in China they found that employee training, immaterial motivation and process control have positive effects on technological innovation. On the other hand, factors such as material motivation and outcome control have a negative influence on technological innovation. Most importantly, they said that " technological innovation is positively related with performance". We can safely say that organizations that have effective HRM policies and practices can support business strategies and contribute to improved performance of the organization. . These two studies have confirmed that HRM has a major impct on groth of a company.

For an organisation to have an effective HRM policies and practices that can support business strategies and contribute to its improved performance of the organization, it can be said that recruitment plays an important role. For it is during this process that the calibre and qualities of potential employees are assessed. As we are fully aware, recruitment refers to any practice or activity carried out by an organisation with the primary purpose of identifying and attracting potential employees. All the data can be sourced from internal or external sources, direct applicants and referrals, advertisements, public or private employment agencies~ electronic recruiting, or universities. As a result, it is important to implement an effective recruitment strategy to select highly- skilled candidates. According to Boxall and Purcell (2003), "recruiting candidates with inappropriate skills may prevent or stall organisational growth". However, recruitment strategy differs from selection practices. In most cases, selection involve looking at a candidate's strengths and weaknesses, whilst recruitment strategy attempts to attract highly-skilled candidates by promoting the organisation as a great place to work. As such, we need to look at training and development as an investment that adds value to an organisation by increasing employees' motivation and skills. In a recent study conducted by Soomro et al. (2011), he said that " HRM practices (training, selection, career planning, employee participation, job definition, compensation, performance appraisal) were correlated positively with the employee performance". Further it was noticed that the respondents gave highest importance to performance appraisal that followed by compensation among individual HRM practices

Though we can say that HR policies and practices are good in order to support business strategies and for growth however, companies would need to make revisions to its established HR policies on a regular basis. This is due to the fact that the regulatory and business environments do constantly evolve. When confronted with change especially like updating HR policies, the small businesses should proceed cautiously. For example, if an employee wanted to telecommute from his home one day a week, the owner may view the request as a reasonable, relatively innocuous one. But even minor variations in personnel policy can have repercussions that extend far beyond the initially visible parameters of the request. This is where if the employee is granted permission to work from home one day a week, will other employees ask for the same benefit? This is the same issue that the new Yahoo CEO recently objected to with regards to working from home. The matter can be considered with certain reservations especially to those companies operating in non- Western countries.

There is also the need to consider whether or not HRM policies and practices can be considered as being conclusive and final. For example, small business owners need to recognize that changes in HR policy have the potential to impact, in one way or another, on every person in the company, including the owner. In such circumstance, proposed changes should be examined carefully and consulted with others within the business. This is to ensure that potential pitfall can be detected earlier. . Once a change in policy is made, it should be disseminated widely and effectively so that all employees are made aware of it.

Emergence of negative issues that influence HRM

We have discussed the proposal without taking into considerations that several issues can emerge while wanting to ensure that we achieve our business strategies and growth. However, sometime they can affect the HRM policies and practices. We can often see that most departments within organizations, just as the organizations themselves, do not exist in a vacuum. In most cases, there are events outside of work environments that have far-reaching effects on HRM practices. As such, we will consider in the next section some of these events and indicate how they influence HRM policies and practices.

As mentioned previously, the enactment of the laws regulating workplace behavior has changed nearly all HRM practices. We can take that of the impact of anti-discrimination laws on firms' hiring practices. Prior to this, it was found that many firms that hired people based on reasons that were not job-related. It is different now as such practices could result in charges of discrimination. To protect themselves , employers need to conduct their selection practices to satisfy objective standards established by legislation and fine-tuned by the courts. In other words, employers now need to carefully determine needed job qualifications and choose selection methods that accurately measure those qualifications. Among them they may include the following :-

Social, economic, and technological events events that can include:

An expanding cultural diversity at the work-place

The emergence of work and family issues

The growing use of part-time and temporary employees

An increased emphasis on quality and team-work

The occurrence of mergers and takeovers

The occurrence of downsizing and layoffs

The rapid advancement of technology

An emphasis on continuous quality improvement

A high rate of workforce illiteracy

Apart from that, these events may also influence HRM practices in numerous ways. For example:

in order to accommodate the needs of families firms amy offer benefit like maternity leave, child care, flex time, and job sharing.

to assist the needs of older workers through skill upgrading and training designed to facilitate the acceptance of new techniques.

by educating their employees in basic reading, writing, and mathematical skills so as to be with rapidly advancing technologies.

In certain Western countries, we do find that the trades unions often influence a firm's HRM practices. Therefore, the result is that unionized companies must adhere to written contracts negotiated between each company and its union. Therefore, they tend to regulate many HRM practices, such as discipline, promotion, grievance procedures, and overtime allocations. However, in non-unionized companies they may be influenced by the threat of unions. For example, in order to overcome the threat, some companies have made their HRM practices more equitable (i.e., they treat their employees more fairly) simply to minimize the likelihood that employees would seek union representation.

Other factors that have had great impacts on HRM practices include that of legal, social, and political pressures on organizations for them to ensure the health and safety of their employees... In respond to these pressures they have managed to institute accident prevention programs and programs designed to ensure the health and mental well-being of their employees, like the wellness and employee assistance programs.

Conclusion

In today’s global economy there are many factors that also influence some aspects of HRM policies and practices. It is important to note that a number of companies realize that they must venture in foreign markets so as to compete as part of a globally interconnected set of business markets. From an HRM perspective, such companies are able to foster the enlargement of globally-oriented managers, consisting of individuals who understand foreign languages and cultures, as well as the dynamics of foreign market places. Additionally, they can deal with pending issues like relocation costs, selection, compensation, and training. It’s no longer local but more towards an international perspective.

Having discussed the above, we can say that HRM policies and practices do differ from one organization to another and from one country to another but most its outcome remains the same. It is therefore true to say that HRM practices leads to increase in the productivity and performance of employees as well as of the organization. In support of this statement we have managed to cite much literature on the matter used them to support the proposal.