The benefits that effective HR practices can bring to an organisation

Human resources are the most important resources of an organisation because they are responsible for controlling and coordinating all the other resources of the company to achieve organisational objectives. Innocenti et al (2012) suggest that human resources are an important source of competitive advantage. Given the importance of competitive advantage, it follows that human resource (HR) practices should be effective in order to benefit the organisation. The business world has evolved from the reliance on physical tasks and work design to a new era of knowledge and skill based job performance, and technology-based human resource management. Organisations are utilizing a lot of resources to support human resource practices as a way of boosting competitiveness and developing employees.

Several researchers suggest various impacts of HR practices to organisations – lower job satisfaction and affective commitment (Innocenti et al, 2012); leads to reduced problem and situation uncertainty (Cannings and Hills, 2012); enhances effective adjustment to global business environment (Choo et al, 2010); drives optimal value from employees and increases competitive advantage (Inyang, 2011); increases employee needs satisfaction and higher HRM outcome (Marescaux et al, 2013); and improved decision making effectiveness (Parker and Caine, 1996). This clearly shows that there are arguments that support the benefits of HR practices and those that oppose.

Research by Rynes et al (2002) shows that managers fail to implement human resource practices due to lack of awareness about the existing research findings about the issue. The study also found out that there is a big gap between research findings and HR practitioner beliefs concerning human resource practices. Managers do not have knowledge about the impact of practices such as: how to choose employees, how to motivate them, and how to implement effective performance management. Despite the gap between knowledge and practice about human resource practices, human resource practices offer significant benefits to organisations.

1) Improving Iverall Organizational Performance

Generally, effective human resource practice improves organisational performance. Effective human resource practice increases organisational performance. Cannings and Hills (2012) suggest that the audit of HR practices promote rather than undermining organisational performance. HR audit is intended to reshape HR practices in order to align them to the business. This shows that effective human resource practices improve organisational performance. Human resource practice allows managers to bring together several skills and knowledge of individuals in order to create unique ideas and produce innovative products and services that will improve the overall financial performance of the organisation. Indeed, the performance of an organisation largely depends on the ability of human resource management to manage human resources using appropriate human resource practices in order to allocate resources effectively.

2) Improving Productive Knowledge and Skills

Human resource practices also offer productive solutions in order to improve the organisation’s performance (Cannings and Hills, 2012). For instance, training and development of human resources can be used to improve the knowledge and skills of employees and enable them to produce quality goods and services for the benefit of the organisation. Implementation of productive solutions requires the services of skilled and trained employees. Furthermore, HR practices enhance efficient utilization of individual abilities, leading to great opportunities of future stability and effective change management. All these benefits generally enhance organisational performance.

3) Improving Employees’ Value to the Company

More specific benefits of HR benefits can be seen through the work of Inyang (2011) who suggests that human resource practices drive employees’ value and enables the company to achieve competitive advantage. This study observed that human resource practices play a significant strategic role in organisations. Inyang argues that human resource function practically builds human capita in order to promote success in an organisation’s operational and managerial activities. Training is an essential HR practice for enhancing employee performance. A properly and continuously trained and developed workforce leverages the company in order to achieve a competitive edge against competitors in the market. In the competitive business environment, employees play a crucial role in creating unique value for customers through customer service and innovative production. In this case, human resource practice enhances effective competition management of employees to realize competitive advantage.

4) Sustainable Competitive Advantage

As organisations seek opportunities for growth and higher performance through globalisation, integrating HR practices in their business strategy leads to sustainable competitive advantage in the global market. Choo et al (2010) carried an interview on HR manager of Park Royal on Beach Road and found out that HR practices are used by multinational companies to achieve positive outcomes in the global market. “Mr. Leong uses HR practices like selection and recruitment, and performance appraisal to align the employees to business outcomes” (Choo et al, 2010). Human resource function is used for the development of competent managers to run international business effectively. The competitiveness of an organisation in the international market depends on its ability to implement effective human practices such as recruitment, development, and motivation. Transformational HR practices such as strategic planning, organisational development, and knowledge management are considered as differentiating factors for sustainable development. One of the motivating factors for multinational corporations to use human resource practices as sources of competitive advantage is because development of human capital can neither be imitated nor replicated in other organisations.

Competitive advantage of an organisation is developed when the human resource practices of the organisation can effectively achieve the following: add value to the organisation; develop rare skills among employees; create inimitable combined human investments in employees; and encourage human capital that cannot be easily substituted. These outcomes can be achieved by multinational corporations because the impact of globalisation causes them to look for sources of competitive advantage. International human resource practices provide such competitive advantage.

5) Achieving Need Satisfaction for Employees

The performance of an organisation can also be achieved by human resource practices through basic need satisfaction. Presence of HR practices in organisations results in higher basic need satisfaction because HR practices ensures that the talents, interests and expectations of individuals are taken into consideration during job performance in the workplace (Marescaux and De Winne, 2013). Career planning and development assures employees of their career security, reduces the problem of external control and consequentially increasing autonomy satisfaction. Training also allows for autonomy satisfaction by increasing one’s internal control through the acquisition of knowledge and skills. Direct employee participation in decision making encourages direct employee involvement, giving them the thought that the organisation is concerned about their interests and they achieve autonomy satisfaction. Development appraisal is the process of giving employees positive and negative feedback about their performance. It enables employees to attain autonomy or needs satisfaction because it encourages participation from the employees and a feeling of control.

6) Improved Work Engagement and Commitment

Marescaux and De Winne (2013) claim that the feeling of autonomy and needs satisfaction achieved through developmental and empowering human resource practices leads to improved work engagement, higher affective commitment and lower employee turnover. Employees stick to their current organisation if they have autonomy satisfaction because they expect the achievement of desirable outcome. However, the presence of soft HR practices without proper implementation may not be successful in enhancing desirable human resource outcomes. Human resource practices such as compensation and recognition  are important in motivating employees and improving their commitment, engagement and involvement in the company in order to achieve positive business outcomes.

7) Effective Decision Making

Human resource practices also promote effective decision making and allows organisations to survive through complex planning processes. Human resource practices such as development and training enables employees to develop knowledge and skills that can be used in decision making. Most decision making and problem solving processes involve quantitative techniques that require mathematical knowledge. This causes the tools of decision making to become inapplicable. The analytical power of decision makers is mainly achieved through human resource practices.

Negative Effects of Human Resource Practices in An Organization

Although human resource practices are widely considered to be beneficial to organisations, some researchers have found that they have negative effects on organisational performance.

“HR development practices on the positive work attitudes of older employees questions existing practices as they are not able to effectively influence the whole workforce population, as they are mainly tailored according to younger employees’ needs and expectations” (Innocenti et al, 2012: p.738).

This lower effect of human resource practices result from the fact that they are targeted on younger population who are quick to learn and able to adjust to changing development needs in the human resource function. This limits job satisfaction and affective commitment among the older population. This was explained by the social exchange theory which explains that the promotion of retirement increases the value that older people will place on the organisation.

Conclusion

This article clearly shows that HR practices especially development and training practices lead to improved organisational performance as a result of increased positive impact on various aspects of employees. HR practices lead to the development of knowledge and skills that can be used by employees to leverage the organisation and run it effectively to achieve competitive advantage. Such knowledge and skills can also be used to promote effective decision making at workplace, leading to improved strategic performance in the organisation. HR development and empowerment practices also enable employees to develop autonomy satisfaction, leading to improved work engagement, higher affective commitment and lower employee. However, training and development affects older populations negatively if they are mainly targeted for young people. This can be corrected by avoiding discrimination when implementing HR practices in the organisation.

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