Human Capital and Firm Performance

This assignment delves into the crucial link between human capital and firm performance. Students are tasked with analyzing various academic sources, including meta-analyses and journal articles, to understand how different aspects of human capital contribute to organizational success. Key themes explored include strategic human resource management, performance management, employee engagement, and the impact of high-performance practices on individual and organizational outcomes. The assignment encourages critical evaluation of existing research and fosters a deeper understanding of the multifaceted relationship between human capital and firm performance.

Human Resource
Management

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Purpose and the function of HRM.....................................................................................1
P2 Strengths and weaknesses of different approaches to recruitment and selection..............2
TASK 2............................................................................................................................................4
P3 Benefits of different HRM practices for employer and employee....................................4
P4 Effectiveness of different HRM practice..........................................................................5
TASK 3............................................................................................................................................6
P5 Importance of employee relation in respect to influencing HRM decision making.........6
P6 Key element of employment legislation and the impact it has upon HRM decision making
................................................................................................................................................7
TASK 4............................................................................................................................................8
P7 Application of HRM practices in a work-related context.................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Human resource management is a process to manage employees in organization. It
focusses on maximizing employee’s performance and increase effectiveness of an enterprise. It
can also increase the productivity in an organization in appropriate manner. Basically, it is a
process of hiring and developing worker in business enterprise to attain best result. In this
management manager recruit right people for right job, it provides best direction to worker to do
their work effectively. In every organization staff members are very important to attain business
objectives and HRM practices helps in give right direction to them (Six Main Functions of a
Human Resource Department). It depends on employee recruitment, training and development
which improve performance of the employee in enterprise to achieve goals in effective manner.
Aldi is big retail company which provide best service to their customers through different stores
and get more profit in best manner. Present report is based on purpose and function of Human
resource management and also include different type of recruitment methods. The below report
is based on the application of HRM practices in ALDI to maintain their employee relations and
to take effective decisions regarding their undertaken activities of business. It is one of the most
renowned retail based organisation, headquartered in UK.
TASK 1
P1 Purpose and the function of HRM
The main purpose of HRM to hire and select people in an enterprise. It increases
performance of the employees in business and define the role and responsibilities of worker
regarding their job profile. HRM focus on hiring right people for right job and develop their
skills so they can maintain their commitment and work according to the need of organization.
Managing employees is most important process in enterprise to attain high success. There is
main function of human resource management:
Recruitment and selection- It is essential and important function of human resource management.
It is a process to selecting skilled people for a particular job in an organization. The aim of this
process is to convents qualified applicant and force unqualified applicant so they can opt
themselves out (Armstrong and Taylor, 2014). Select skilled and qualified candidates for
organization is called selection process which helps in show whole roles and responsibility of the
job process in an organization.
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Maintaining good working environment- Human resource management provide good working
environment to employee to do work effectively. HRM encourage ethical work practices which
help employer in getting commitment of workers. In organization every employee wants to work
in healthy environment. Manager of Aldi company motivate their worker to perform effectively
to increase their performance and satisfaction level regarding their job profile.
Managing employee relations- Managers of Aldi can encourage HRM practice it will help them
in managing good relation with workers. All this help in maximise worker's productivity and
increase overall performance of organisation. Employees are important to every business to
achieve goals and objective so that it also important to maintain good relations with the to attain
success.
Training and development- HRM evaluate performance of employees and identify training and
development need of workers. It helps in providing training to workers and increase their skills
and make them able to survive in competitive working environment (Bloom and Van Reenen,
2011).
Orientation- This function of HRM which provide orientation program that can help to the new
joining employee to set with business environment. It includes goals and objectives which
organization is going to achieve in upcoming time. It can be long term and short term. It can help
to provide information to their new employee to attain success in an organization.
All of the function of Human resource management should deliver better results in every
business organization. With the help of HRM function Aldi can increase their activities in
appropriate manner so that can attain high success.
P2 Strengths and weaknesses of different approaches to recruitment and selection
Recruitment helps manager in invite, collect and select the best candidate for filling the
vacancy in enterprise. Managers of Aldi can use internal or external approach to hire right
candidate for right job.
1. External approach of recruitment: This is one of the most popular approach used by
almost every enterprise to fill the vacancies. In this manager invite, collect, evaluate and
select the best candidate.
Strengths
Main benefit of using this approach is that it brings innovation and fresh talent in the
enterprise. It is an economical method of recruiting candidates. It makes workplace
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environment more competitive and complex which increase overall productivity of
enterprise.
Weakness
It is a lengthy and time-consuming process of recruitment. Lot of funds are wasted in
advertisement and training to new employees. This approach fails to generate effective
results all the time. Creates conflicts among existing and new workers.
2. Internal source of recruitment: This is another approach of hiring candidates. In this
manager recruit or fill the vacancy from within the organisation (Vörösmarty and et. al.,
2010).
Strengths
It gives chance or provide opportunity to growth for existing employees. It increases morale and
commitment of workers and increase their productivity. It motivates other workers to perform
best which help enterprises in achieving its objectives and goals. This can be used by managers
of Aldi to increase morale of its employees.
Weakness
This approach fails to bring innovative and new candidates inside the enterprise. De motivates
workers who fail to achieve promotion. Manager has to take hasty decision under this and
sometimes a confusion is created before the manager to choose right candidate from many
people.
Both approaches provide advantages to enterprise in different situations. So, managers of Aldi
can use both approaches to fill vacancies.
Selection is a process of choosing the best candidate for performing duties and responsibilities of
a job.
Approaches of selection
 Systematic approach of selection: Under this approach managers choose a sequence of
steps to select right candidate for the job. It is and effective approach of selection.
 Unsystematic approach: Under this manager randomly choose a resume and compare
qualities of candidate with the job to be filled.
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TASK 2
P3 Benefits of different HRM practices for employer and employee
Human resource management practice is beneficial for the employee and employer. It can
increase effectiveness in all activities of Aldi. There are different benefits to employers and
worker in enterprise to enhance their performance at workplace in appropriate manner:
Helps in making plan- Human resource management of Aldi helps in making plan for future
work process which is define by the manager of the company (Boxall and Purcell, 2011). Best
planning process can help in utilization of resources in business process, it assists in reducing the
cost of operation activity. Making plan in an enterprise is important to attain goals and objectives
in systematic way which increase performance of the company.
Assist in making healthy working environment- In order to motivate workers Aldi should focus
on providing healthy work environment so employees can do their task efficiently. Human
resource can help in making healthy working environment so that employees can perform well
and get satisfaction with their work.
Development in plans and policies- Human resource management provide necessary to the
managers so they can evaluate performance of every department and make future plans
according to objectives of the organization. Manager of the company develop the plan and
policies to attain objectives in appropriate manner.
Maintain employee relation- Human resource practice maintain employee and employer relation
in Aldi. This task can be done by giving appropriate growth opportunity to the workers and treat
them in better way fair. In every organization employee relation is essential part to attain the
success and improve employee performance (CHUANG and Liao, 2010).
Solving problems- Human resource management practice can help in solving the whole problem
of the employees and business activity. It can maintain positive working environment at a
workplace which increase performance of employees.
Define development and training needs of employees- Human resource practice define regular
analysis of worker to evaluate need of them. This practice assists in organization training and
development program for employee's so they can improve their skills and survive in a highly
competitive a market. Training and development is important to all employees in organization to
perform well and enhance their working performance in an enterprise.
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Sources of collection data- Practice of HRM analyse various activities of all department which
provide important information to managers about what is going at all level of organisation
(Wright and McMahan, 2011).
P4 Effectiveness of different HRM practice
Practice of human resource of management is important to every enterprise to increase
effectiveness and efficiency. The whole activities of human resource can coordinate with all
department and activities which is reduce the cost of the production in Aldi. This will give
competitive advantage to the organization in the industry. It will also provide growth opportunity
to the employee which will increase their job satisfaction. It will motivate and increase
employment loyalty regarding the enterprise. Effectiveness of human resource management can
assist in developing the employee’s performance and achieving objectives which is
predetermined by manager of the Aldi.
Employees is essential part of every business enterprise which is helps in achieving goals
and objectives in organization. Without subordinate’s firm does not done any work. Human
resource management provide good environment to their employees to improve their
performance and enhance sanctification level in effective manner. Satisfaction can be increase
productivity of workers at a workplace. Manager of the Aldi define HRM practice to encourage
their employee to do their best which improve profitability and productivity in appropriate
manner. This practice supposed ethical activities in an organization in it also make positive
impact on goodwill of a firm. Employee turnover will also get reduce and potential candidates
will get attracted towards the company (Crook and et. al., 2011). Practice of human resource
involved in organization in correct and effective manner which improve whole performance of
the business activity to maximized workers productivity. These practices include delivering
process of goods and service to their customers according to their needs and wants. They provide
best product service which increase satisfaction level of customers and increase sale of the
company.
Manager of the Aldi used all practices of human resources management which determine
the aims and objectives and also increase market share. Market share will also increase cash flow
of enterprise. With the help of practice of HRM manager can achieve business aims and
objectives so that it is very important to every organization (Purce, 2014).
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TASK 3
P5 Importance of employee relation in respect to influencing HRM decision making
Maintain good and healthy employee relation is more important to every organization to
attain effective success in marketplace. Healthy relation between employer and employee
increase productivity and also increase sale level of the Aldi. It helps in build trust in employees
and get commitment from workers. In organization there are three advantage which beneficial to
the business organization in achieving best targets:
Productivity- Good employee’s relation rise productivity in business organization to attain high
success in appropriate manner. It defines positive environment at a workplace which motivate
employee to perform well in enterprise. With the help of employment relations productivity of
all the workers will improved which will ultimately make a positive impact on profit of the
organization (Daley, 2012).
Employee Loyalty- Healthy employment relation build loyalty in workers in organization. It also
increases the allegiant workforce which is increase the employee retention. Cost of recruitment
in training will go down drastically in upcoming time.
Conflict Reduction- Efficient work environment id reduce conflict at a workplace. Employment
relations will help in attaining business objectives and reduce obstacles to improve their
performance in effective manner (Ployhart and Moliterno, 2011).
Healthy employment relation with employees maintain good environment and all employees
treated in fair manner, Friendly relation with employees should be finished, feedback process
will be improving employee’s performance at a workplace. These kind of ways is adopted by the
manager of the Aldi which can helps in making healthy relation with employees. Maintain good
relationship with employees is important for very organization to achieve success in appropriate
manner. It can improve performance and ability of workers, it also defines business objectives
and target. To make healthy relation with employee’s manager should be provide best
opportunities to their workers to perform well and increase productivity of workers. Manager
should motivate subordinate to create positive environment.
Unhealthy relation with workers can rise obstacles in enterprise, decrease morale of
employees, so that it is very important to maintain healthy relation with subordinates which
improve goodwill of business (Gruman and Saks, 2011).
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P6 Key element of employment legislation and the impact it has upon HRM decision making
Employment legislation covered area relating to relationship between employer and
employee, it also depicts what they can expect from each other at workplace. It developed
effective and fair plan to guide employers to attain success. There are some laws which is related
to employment legislation:
Employment rights act- This act is important to every organization which is focused on
employment rights. It is main and essential act for employment legislation to determine the rights
of employees at a workplace and provide minimum wages (Lengnick-Hall, Beck and Lengnick-
Hall, 2011). According to this law an employee should get minimum wage and proper working
condition so they can work in healthy work environment. All information of this law should be
providing their employee in written document when they join the organization (Guest, 2011).
Equal pay act- This act is based on equal payment to same job profile employees. Equal pay act
helps in making healthy environment at a workplace that can assist in attain business objectives
in appropriate manner. It is defining that same payment should be given to the all employees
which is doing same job in an organization.
Discrimination act- Employees should not be discriminated at workplace on the basis of their
gender, age, culture and colour. Proper growth opportunities should be given for each and every
employee. Promotion, recruitment of applicant and training and development etc. are some fields
where discrimination should not be done.
Minimum wage act- This act is based on minimum wage which is provide to the employees
according to need and wants in business organization. Wages is more important at a minimum
amount according to economic process in market place which fulfil employees demand and basic
needs (Employment legislation).
Employee relation act- This act is more important to an organization which define healthy
relationship with employees. Manager of the business enterprise should maintain healthy and
good relation with employee at a workplace. It helps in achieving business goals and objectives
in minimum time of period in an enterprise. By providing more growth opportunities relationship
with workers can be improved in short period of time and treat them in effective manner.
Working time directive- This act is based on time in organization that says minimum working
hour of employees at a workplace, if employee wants to do overtime so that they can do work for
long hours.
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Disability discrimination act- This act is helpful for the disable workers in organization which
provide best facilitates to them. It assists in saving rights of disable employees and provide
special condition that is needed in working area for these kind of people (Kehoe and Wright,
2013).
TASK 4
P7 Application of HRM practices in a work-related context
In organization Human resource management practice increase effectiveness and attain
success in appropriate manner. There are some application of HRM practices:
Maintain quality- In every organization, maintain of quality of products is essential part which
attract more customers to buy product according to their needs and wants. Human resource
management is effective process to maintain the product quality to get higher satisfaction of the
customers and increase business performance in appropriate manner (Huselid and Becker, 2011).
Human resource planning- Human resource management practice can help in making
recruitment plan and the work that employee need to do in an enterprise. It provides great
assistance in reducing the cost of recruitment. Planning is very important to every organization to
get best result and set goals and objectives.
Training and development- It is very important to worker to improve their performance level at
a workplace and achieve business objectives which is predetermine by the manager. Human
resource management practice helps in determine the need of employees regarding training and
development. Skilled and educated employees are essential to deliver bets service to customers
and get higher satisfaction by them.
Creation of mission and vision- Quality of workers made huge impact on process of reaching
mission and vision of the company. Experience and skilled employees assist in attaining business
goals and objective and improve productivity in marketplace to enhance their business
performance and profitability also.
Management of performance- In organization management performance is a process which is
define by the manager of the company to monitor and measure employee work performance. It
includes job description which is define by the selection team in an organization to hire qualified
candidates. Basically, it is based on the performance of worker in business (Jiang and et. al.,
2012).
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Human resource management practice used in every business enterprise which provide
guidance to their worker to perform well at a workplace. This is important practice for all
enterprise to evaluate the performance of employees and achieve goals and objective of the
company in appropriate manner.
CONCLUSION
In above mentioned report has been conclude that managing of employees is very
important to every business organization to attain best success in effective manner. In
organization hiring and recruitment process in essential to hire employees in business process.
Skilled and educated candidates helps in delivering best service and product to their customers
and get higher satisfaction by them. Talent workers in a firm can perform well and motivate
other people to do their work effectively. Human resource management define the managing
people and provide best goods and service to their customers according to needs and wants.
Maintain good and healthy relation in business it is a responsibility of every people who is work
in business. Good relation with subordinates will create good environment at a work place and
motivate employees to achieving goals and objectives. Every employees and subordinate should
be treated fairly and motivates by them to do their work effectively. Human resource manager
applies all employment legislation to define plan and policies which is relate to the human
resource and maintain best productivity.
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REFERENCES
Books and journals
Armstrong, M. and Taylor, S., 2014. Armstrong's handbook of human resource management
practice. Kogan Page Publishers.
Bloom, N. and Van Reenen, J., 2011. Human resource management and productivity. Handbook
of labor economics. 4. pp.1697-1767.
Boxall, P. and Purcell, J., 2011. Strategy and human resource management. Palgrave Macmillan.
CHUANG, C.H. and Liao, H.U.I., 2010. Strategic human resource management in service
context: Taking care of business by taking care of employees and customers. Personnel
psychology. 63(1). pp.153-196.
Crook, T.R and et. al., 2011. Does human capital matter? A meta-analysis of the relationship
between human capital and firm performance.
Daley, D.M., 2012. Strategic human resources management. Public Personnel Management,
pp.120-125.
Gruman, J.A. and Saks, A.M., 2011. Performance management and employee engagement.
Human Resource Management Review. 21(2). pp.123-136.
Guest, D.E., 2011. Human resource management and performance: still searching for some
answers. Human resource management journal. 21(1). pp.3-13.
Huselid, M.A. and Becker, B.E., 2011. Bridging micro and macro domains: Workforce
differentiation and strategic human resource management.
Jiang, K and et. al., 2012. How does human resource management influence organizational
outcomes? A meta-analytic investigation of mediating mechanisms. Academy of
management Journal. 55(6). pp.1264-1294.
Kehoe, R.R. and Wright, P.M., 2013. The impact of high-performance human resource practices
on employees’ attitudes and behaviors. Journal of management. 39(2). pp.366-391.
Lengnick-Hall, C.A., Beck, T.E. and Lengnick-Hall, M.L., 2011. Developing a capacity for
organizational resilience through strategic human resource management. Human
Resource Management Review. 21(3). pp.243-255.
Ployhart, R.E. and Moliterno, T.P., 2011. Emergence of the human capital resource: A multilevel
model. Academy of Management Review. 36(1). pp.127-150.
Purce, J., 2014. The impact of corporate strategy on human resource management. New
Perspectives on Human Resource Management (Routledge Revivals). 67.
Vörösmarty, C.J and et. al., 2010. Global threats to human water security and river biodiversity.
Nature. 467(7315). pp.555-561.
Wright, P.M. and McMahan, G.C., 2011. Exploring human capital: putting ‘human’ back into
strategic human resource management. Human Resource Management Journal. 21(2).
pp.93-104.
Online
Employment legislation. 2017. [Online]. Available through:
<http://businesscasestudies.co.uk/business-theory/people/employment-legislation.html>.
[Accessed on 6th July 2017].
Six Main Functions of a Human Resource Department. 2017. [Online]. Available
through:<http://smallbusiness.chron.com/six-main-functions-human-resource-
department-60693.html>. [Accessed on 6th July 2017].
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