Human Resource Management How Human

Human Resource Management

How Human Resources Management Adds Value to an Organization

The basis of competitive advantage for any firm is its human resources and their unique skills and the ability to coordinate them together to achieve greater goals and objectives (Porter, 1990). Dr. Micheal Porter of the Harvard Business School has been writing on competitive advantage for decades and comes to the conclusion in his research that the most lasting competitive differentiation between nations are its unique human resources (Porter, 1990). Likewise (Barney & Wright, 1998) have stated that using their Resource-Based View (RBW) of organizations that human resources predict a firms' ability to compete and stay financially viable over time. Global auto manufacturers Toyota for example credits their use of Human Resources Management (HRM) processes and systems with the stability of their global supply chain, the Toyota Production System (TPS), a model of lean manufacturing emulated throughout several industries (Liker, Hoseus, 2010). The intent of this analysis is to define how Human Resources Management (HRM) adds value and positively affects an organization.

HRM's Contributions to Organizations

Often organized into the areas of recruiting or acquiring employees and their talents, developing them, defining compensation programs that are market-competitive, and then optimizing the match of employees with organizational needs, HRM systems often follow a lifecycle-based approach (Pilenzo, 2009). The organization of HRM from this standpoint is optimal as it emulates the path employees make through organizations as their careers progress. It also gives organizations the necessary flexibility of aligning their employees to the most important strategies and initiatives underway. In this way the lifecycle-based model to managing all HRM strategies makes a foundational contribution to the competitive strength of any enterprise (Pilenzo, 2009). In effect this framework becomes essential to the fulfillment of a firms' strategic plan over time (Ulferts, Wirtz, Peterson, 2009).

In the area of recruiting and acquiring talent, the strategies for recruiting and applicable tracking, services procurement and working with websites including Monster.com to recruit are all in this first phase. This is vitally important to any organization as advanced skill sets including Six Sigma process expertise for example, which is so critically important for attaining internal process efficiencies, must be sought out and recruited to firms actively (Zu, Fredendall, 2009). Six Sigma Black Belts are highly trained and specialized process efficiency experts whose skill sets can be used for redefining business processes to make them more efficient and also more customer-centered. As a result, these are in high demand. HRM systems and strategies are critical for recruiting and retaining this level of expertise. Second, HRM is critically important in this area for on-boarding new employees as well once they are recruited (Snell, 2006). on-boarding not only provides benefits and company policy information, it is also critically important for managing the expectations of new employees and informing them about the culture of the organization as well. on-boarding, when done well, can transform a promising new employee into someone who has passion for their work (Zigarmi, Nimon, Houson, Witt, Diehl, 2009) and internalizes the objectives of the company as well so they excel.

The developmental stage of the lifecycle approach to HRM includes setting objectives, defining coaching and assessment shared objectives and completing employee performance reviews. It also includes in many organizations the opportunity for employees to participate in e-learning programs to augment and strengthen their skills (Morris, Wright, Trevor, Stiles, Stahl, Snell, Paauwe & Farndale, 2009). The contributions of HRM in this area include continually updating the skills of employees so they are more and more competitive in their roles and responsibilities in addition to defining opportunities for job enrichment (Herrbach, Mignonac, Vandenberghe, Negrini, 2009).

In the compensation phase of the HRM lifecycle the development of appropriate pay and reward strategies is defined. This phase also includes the definition of market-competitive base salaries, merit increases, benefits, bonuses and incentives. It is also the area where benefits are budgeted for and offered. Many practitioners and managers both see this as the most critical phase of the HRM lifecycle for retention as a result (Ulferts, Wirtz, Peterson, 2009). In fact it is the development of jobs that have a wider span of responsibilities and link personal achievement to the attainment of challenging goals rather than making pay purely dependent on minimal levels of performance (Pilenzo, 2009). HRM can help employees find challenge and meaning in their work by using the strategies in this phase of the lifecycle with intelligence. The role of salaries and benefits in terms of giving employees a sense of autonomy is also critical not only for employee satisfaction and the marketing of a company to potential employees as world-of-mouth is one of the most powerful recruitment tools there are in companies today thanks to the Internet (Wickham, O'Donohue, 2009).

The next HRM lifecycle stage is optimization, or the aligning of individual employee skills and the needs of the organization overall. This is especially seen in fast-moving, highly technical fields where specialized skill sets are critical (Zu, Fredendall, 2009). Optimization is also retention yet it is more than just paying more salary or offering more benefits. It is redefining a job's role to make it more challenging and enriched for the person doing it. There is also the potential of giving and getting 3609 degree feedback during this phase as well, an invaluable assessment approach to ensuring employees and managers share common expectations and perceptions of the company's direction (Pilenzo, 2009).