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Role of the Human Resource Manager in Deciding the Relationship between Rewards, Motivation and Performance

Executive Summary The following study was conducted to analyze the role of Human Resource Management practices within the organization and their impact on the performance of the employees, the reward system and the motivation level of employees to perform their duties effectively. This study also measured the relationship between these above mentioned HR practices and the organizational performance for the development of the competitive advantage for the company. This study was based on the secondary research method including books, journals, online articles and the related materials respectively. The findings of the study suggested that the Human Resource Management is the most importance system within the organization which is the key component behind the success of the company in the markets. Human Resource Management works as a bridge between the top management and the employees to communicate and understand. The findings also suggested that the effective HR practices, like proper reward and recognition system, job enrichment, competitive pay scale etc., guarantees the high level of employee performance and the satisfaction. The satisfied employees then perform their particular tasks to maximize the profits of the firms. On the basis of the study findings, conclusions and recommendations were made. The recommendations suggested that the HR department must be aligned with the organizations all other departments and its strategies.

Table of Contents

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Introduction .. Human Resource Management

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Conclusion . 13 Recommendations . 15

References .. 16

Introduction The organizations working in the markets are one of the major employers of people after the government departments. These organizations have predefined set of rules, regulations and policies that must be followed to obtain the desired results. The people working in these entities are regarded as assets of the company and deemed very important for the success of the company. It is therefore crucial for the company to manage and retain these people in the organization for as long as possible. From the last decade or so, there is a rising trend in the companies to develop a specialized department for the personnel management. This department which is responsible for maintaining and managing the effective employee relationships is called Human Resource Management (HRM). This term has received lot of important and recognition in both UK and USA. It was first appeared in the writings of the academic scholars in late nineteen century (for exampleTichy et al, 1982,Fombrun et al, 1984, Beer et al, 1985 etc.) which was readily adopted by the managers in the countries like UK and USA. Human Resource Management is defined as the function within a company that specializes in the activities related to the recruitment, selection, training, management, and providing directions to the people; employees, workforce, working within the company (Heathfield, 2011). The importance of HRM cannot be denied. Almost every business unit and business function is linked with the HR department of a company. HRM has a strategic importance as well for the management of people, organizational culture and the environment. The effective human resource management helps the employees to perform its duties and tasks effectively at right time in right direction.

It plays significant role as a facilitator between the company and the employee relationships, jobs, motivation, and performance. The effective HRM guarantees the workforce collaboration and performance but in the absence of effective HR, there, sometimes, exists organizational and employee related conflicts that can take severe position; increased ratio of employee turnover, declining performance, labor union issues etc. The research on the importance of Human Resource Management has grown many folds over the past few years. This study is based on understanding and evaluating the role of Human Resource Management and the HR managers in deciding the relationship between company and employees with regard to rewards, motivations, recognition and performance in an organization. Keeping in mind the importance of Human Resource Management and all the implications related to the management of people within an organization, this study was conducted to obtain the importance of Human Resource Managers for facilitating the positive and long term relationship between the organization and employees with reference to rewards, recognition and performance.

Human Resource Management Large numbers of people do not appreciate the Human Resource Department and its approach towards the enforcement of rules, regulations and policies in the company. There are instances in the organizations when the people think and believed that HR department in their company is the most evil department which is a kind of bureaucrat that imposes unnecessary policies and rules on them and therefore, required to be changed. The most common criticism regarding the Human Resource Department is related to the performance appraisal; pay related issues, and working hour issues etc. Many people are found criticizing that the performance appraisal system in their company is the most eroded system which is mostly useless. No matter what people believe, but the Human Resource Management is a necessary component of an organization due to the varied reasons especially related to the regulations imposed by the government for workforce, labor issues, legal requirements etc. and therefore HR must take precautionary measures to comply with the performance standards. Human Resource Management is a legal collaboration between the organization and the employees working there to comply with the latest industry standards as well as the rules, policies and practices assigned by the company. HRM is defined as designing management systems to ensure that human talent is used effectively and efficiently to accomplish organizational goals (Mathis and Jackson, 2007). Towers (2007) explained that Human Resource Management is now days considered as a field of study that views the workplace management in the more innovative way then the traditional way of managing people. The latest trends in the organizational cultures represents that the HR managers are now forced to develop and express the human resource goals and 6

activities with high degree of specificity to help the workforce understand and undertake these roles. Moreover, these managers are also required to provide the human capital and resources required by the organization to complete the tasks and projects successfully. He further specified that the Human Resource Management techniques, if properly employed and practiced gives the understanding of the organizational goals and the operational capabilities of the company as a whole. These days many companies are in a continuous process to find ways and practices for the better performance of the company in terms of its products and services. This has increased the level of competition in the domestic and global markets for the companies. The companies are now forced to conduct internal audits and evaluation of the existing resources and the resources required by them to obtain maximized results and gain competitive advantage over the counterparts at large (Barney, 1991; Hamel and Prahalad, 1994). This internal evaluation and examination has increased the attention of the firms to use the employees of the company or the human resource capital as a competitive advantage over the competition(Huselid, 1995; Lado& Wilson, 1984; Miles &Snow, 1984; Schuler & MacMillan, 1984; Wright, McMahan, & McWilliams, 1994). The effective human resource practices are deemed to be the source of competitive advantage to the company which supports and aligns the organizational resources and competencies to maximize the value to the firms (Wright et al, 2001). Many researchers have argued that the strategic human resource management plays very important role in the identification and alignment of resources for benefitting the organization in order to achieve competitive advantage (Snell et al, 1996; Wright et al, 2001).

In the todays business scenarios, the management of company employees and the right approach employed in the company can have great impact on the overall performance of the company. It is important for the growth oriented companies to build strategic advantage in the human resource of the company to excel further which can take start from the right staffing and ends at managing the employee performance. Thus Human Resource Management is a basic motivator and a force behind the development of the employees as well as the organization (McNamara, 1997). According to Becker and Huselid (1998) there is a strong link between the HR practices and the performance of the company. Therehas been great deal of research in the last decade to examine this linkage. The research has proven that the HR activities and practices are the most crucial component which is deemed important for the organizational performance, success and the competitive advantage in the markets. HR managers are not only responsible for the management of the employees but also they are effectively taking part in building the organizational culture. The studies conducted on the organizational performance have come to a conclusion that the organizational culture plays significant role in the performance of the company. The model presented by Kotter and Heskett (1992) specified that there is a positive link between the organizational culture and the performance of the company. They further explained the importance of the alignment of culture and performance, according to them, the strong organizational culture can benefit the employees in aligning their values with that of organizations. The strong organizational culture also enhances the level of employee motivation in the organizations. The HR managers in the organization keeps checks on the goals, strategies and practices adopted in the company for the development of the standards required for their achievement. The continuous scrutiny of the HR team helps them find out the current and potential problems or 8

bottlenecks in the company as well as the underperforming employees. They have immediate access to the information related to employee issues and performance problems and is readily mediated to avoid inconvenience at greater scale. The HR managers are also engaged in the identification of the processes and techniques that can be helpful for the company to improve the quality of products, timely delivery and manufacturing standards (Price, 2007). The prior access to the potential issues helps the management and the employees to communicate with one another to resolve their problems. According to Price (2007), the HR manager facilitates the communication among the top management and the employees. The bridging between both the parties by HRM can establish long term relationship between them and the increased the level of trust and the understanding. Many United States based companies are forced to employ the range of activities related to the performance enhancement to improve the level of their performance in the global markets (US Department of Labor, 1993). Such practices have influenced the organizations way of doing things and its performance. The excellent organizations are defined as the organizations that employ these performance improvement practices in their business units (Peters and Waterman, 1982). These practices include employee recognition, participation, empowerment as well as employee job training, rewards, and positive motivation at workplace (Pfeffer, 1994). It is widely believed that the people working within the organization are important resources to the companies and are crucial to the success (Peters and Waterman, 1982; Pfeffer, 1994). The research conducted by Delany and Huselid (1996) suggested that the progressive human resource management practices, for example, proper staffing, on job training, recognition, competitive pay etc., are strongly related to the performance of the company.

The scholars have always taken two main perspectives when studying the relationship between the performance and the HRM. The first approach in their study is based on the systematic approach. The research in recent years through this perspective was based on the separate research and understanding of Human resource practices and the performance of employees. Recently, the research has moved to the study the performance of employees and the practices of HR as a collective process (Arthur, 1992; Huselid, 1995; Huselid& Becker, 1996; Huselid, Jackson, & Schuler, 1997). The second approach taken by the researchers is based on the strategies adopted by HR in the organization (Ferris et al, 1999). In this approach the researchers try to examine the relationship between the competencies of the organization and the practices of Human Resource Management (Miles & Snow, 1994; Wright & Snell, 1991).This approach studies the overall strategies adopted by the HR of a company with comparison to the organizations competitive advantage. There are many ways of measuring the relationship between the HR practices and the performance of an organization. The employee performance is based on the effective system of rewards, recognition and compensation. The research conducted by Gerhart and Milkovich (1990) asserted that there is a significant link between the HR and the performance of the company based on one single HR practice: Compensation, and/or selection (Terpstra&Rozell, 1993). Barney (1995) suggested that the better results can be obtained by combining the companys strategies with the HR policies as a whole. Another way of measuring and managing the impact of HR practices on the organizational practices is to develop a set of best practices to be performed at every level of organization to measure (Pfeffer, 1994, Schmidt et al, 1981). The major role of HR management is to implement the organizational strategies. There are certain models developed by the researchers that explain the level of HR intervention in the 10

form of important skills and behaviors required to perform a particular task or implement the strategy. The model presented by Wright and McMahan (1992) asserted the basic impact of HR practices over the organizational strategies. According to them, the implementation of strategies impacts the policies and practices of HR management which in turn influence the behaviors and skills of the human capital in the organization. Another Model was presented by Cappelli and Singh (1992) according to their model, the strategy implementation is based on two points: 1. the responses required from the employees for a particular organizational strategy, and 2. the set of HR practices and procedures required generating those responses from the employees. Their model is similar to the model presented by Schuler and Jackson (1987). According to Schuler and Jackson, the strategy to be implemented explains the type of employee role behaviors that are required, resulting in HR practices designed to elicit those rolebehaviors which impact organizational performance. In addition, the actual role behaviorsexhibited are impacted by these HR practices. Organizations can implement various human resource practices to develop the employee skills and behaviors. These practices may involve improvement in the quality of the newly hired employees or improving the level of skills and performance of the existing employees by giving proper training to them. The behaviors of the employees can be amended by providing proper pay, recognition and reward systems. There are various theories developed in this regard to supplement the HR practices for the better performance, skills, behaviors, motivation level and the way they work (Delanay and Huselid, 1996). The research conducted by Cherrington et al (1971) relayed that there is a significant relationship between the performances of an employee to the reward system offered. Their

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research concluded that the there is a positive correlations with the satisfaction level of employees, and productivity. Theirsatisfaction level in terms of reward system to the high performers, higher will be their motivation level which will directly impact their performance level. Another research conducted by Williams (2010) assessed the impact of Human Resource Practices on the employee satisfaction, trust, commitment and their perceived performance level. The research concluded that the HR practices have very powerful impact and are deemed to be the predictors of the employee trust, satisfaction and performance. It is necessary for the HR managers to understand the ways through which the performance of the people within the firm can be maximized. For this it is required to examine the value offered by the HR or it can offer to its people. The ideal HR practices can lead to the financial success of the company in the markets (Delery& Doty, 1996; Huselid, 1995; 1996; McDuffie, 1995; Welbourne& Andrews, 1996; Youndt, Snell, Dean, and Lepak, 1996). The HR practices are important drivers for the development of employee commitment. The effective HR can impact the workforce skills and performance at large and plays very significant role in the development of human capital as assets for the firm to gain competitive advantage.

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Conclusion Due to the increasing importance of the Human Resource Management within the organization for managing the human capital and developing strategies that can sustain the competitive advantage of the firm in the markets, it is necessary to have lot more development in this field. There is very little theoretical evidence present that specifies the importance of HRM practices and the development of strategies for the firm, therefore extensive research is required in these fields (Wright & McMahan, 1992). The main focus of this paper was on the role of Human Resource Management to the performance of the organization at large. This study also focused on the relationship between the effective HR practices and the level of employee satisfaction. The study findings have shown that the Human Resource Management is the highly researched topic in the literature. The importance of HRM cannot be denied. It is responsible for managing the employees within the organization. HR management is not only related to the development of HR policies and procedures, it is also responsible for building the organizational culture. The organizational culture then reflects the performance of the employees as a whole. This means that HR is not only responsible for the development of human capital but it is also responsible for the development of organization itself.HR practices and policies hold significant importance in relationship with the performance of the company. If the ideal HR practices are employed then the firm received financial benefits as well as competitive advantage over its counterparts. The study has also listed some of the important models developed by the researchers that can be helpful for the measurement and understanding of the organizational practices and the HR

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policies. The major role of the HR department is basically the implementation of the organizational strategies and aligning the resources with the strategies to achieve the organizational goals. The resources are widely human capital of the organization. The study showed that the effective HR practices like reward system in the organization can have positive impact on the performance of an employee. The quality of work and performance of employees can be improved by providing competitive pays and training to the employees. Finally, the study findings suggested that the effective HR practices are the key to the success of an organization. The employee satisfaction is highly based on the HR practices. If the HR is doing its job right, then the employees performance will have positive trend in the organization and vice versa. Therefore it is necessary for the HR managers to understand the ways through which the performance and employee satisfaction can be improved.

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Recommendations The human resource practices are deemed to be the most important factor behind the success of an organization. The HR practices must be viewed in relation to the overall goals, policies and strategies of the company instead an alien department to be dealt outside the company. There are lots of instances where the organizations have developed HR departments but they fail to collaborate and communicate with them. It is therefore important to have a combined approach towards the HR management systems and the organizational strategies. The company can only be successful in the markets if it has effective collaboration with its employees which is only possible if effective HR practices are adopted.

Moreover, the HR managers should have the right power to practice within the organizational frame in order to obtain the maximized results. The development of employees is dependent on the effective HRM. The right level of rewards, recognition and compensation will be required to motivate the employees to perform their best for the company and the customers.

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