Understanding Organizational Performance and Employee Satisfaction
Added on 2019-10-18
50 Pages11945 Words395 Views
Leadership ManagementData Science and Big DataStatistics and Probability
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Human Resources ManagementImpact of HRM Practices on Turnover, Productivity, andCorporate Financial Performance
Executive Summary1
Table of ContentsExecutive Summary.........................................................................................................................1Introduction......................................................................................................................................3Literature Review............................................................................................................................7Research Design and Methodology...............................................................................................11Results, Analysis and Evaluation of Findings...............................................................................24Conclusions and Recommendations..............................................................................................36References......................................................................................................................................40Appendix........................................................................................................................................452
IntroductionThe paper has tried to understand the relationship between the HR and the way anorganization is performing. The relationship is an important aspect of the organization that hasbeen largely discussed around the academic community. Numerous researches on theinternational ground have been conducted. Most of them have utilized the survey method whichhas reflected that the practices in the organization in relation to this topic have brought in highimpact on the economic aspects of the organization.The progress in HRM is related to the improvement of the firm considering variousimportant plans of the organization. The conceptual or theoretical study of most of the papers hashelped in understanding that the good practices in HRM generally leads to the maintenance ofbetter organizational progress and advantage over the other companies on competitive front. There have been researches that have widely discussed the way the performance of anindividual can impact the organizational performance. Moreover, along with the individualimpact on the organizational performance, the impact of the collective effort cannot be denied.Observation of the theory developed by Barney (1991) can reflect that the four major areas of theorganization are important for the growth of the organization. The studies ahead in this paper hasconsidered discussing these areas in detail.Various works have identified the role of Human resource management in increasing thecompany’s profitability and one of the works by (Wright, McMahan, 1992) showcase theimportance of HRM in the advantages which are firm-specific. HRM is majorly an underutilizedresource by various firms and they remain ignorant about its positive impact. Mainer times the3
employees unknowingly work much below than their potential and the organizations donor haveaccurate plans to motivate these employees and get the most out of them and for such tasks HRMhas the best solution. Some of these solutions include praising the works of the employees andlinking these good works with an incentive in the salary and internal promotions which are onthe basis of work merit of the employees and many other tasks can be done which help inbringing the aims of the individual and the shareholders on the same line of interest.Mentioned below are the areas that have been elaborated further:a.Turnoverb.Productivityc.Financial performance (corporate)Considering the research conducted by Arnold and Feldman (1982), one can state that theemployees need various elements from an organization prior to giving their full effort to performwithin the organization. Some of them are like secure jobs, affiliated employee union, beingcompensated well, time period at the company, minor elements such as age, level of education.These factors in general contribute to the improvement in the organizational growth andreduction in the employee turnover. From here, one can state that the impact of human resourcemanagement is embedded in the individuals working within the organization. There are alsoother employee related factors that contribute in reduced turnover of the employees such as theexpectations of the employees’ career growth within the organization.It has been found that the human resource management practices impact the overallproductivity of the organization in several ways. The study conducted by Cutcher (1991) statesthat the companies that allowed existence of less conflict among the employees and the4
organization and those helped the companies work cooperatively in the company has witnessedappreciable growth in the past few decades and there has been fewer turnover within thecompany. Moreover, the employees who faced less strict human resource policies and thatallowed autonomy to some extent became the most productive employees of the firm. Weber(1985) asserted that the companies where there exist less aristocratic policies and the policies areliberal, then it can be stated that the employees will be more productive and the organization willgrow further. If the employees are in the good relationship with the colleagues and theenvironment within the organization is appreciable, then it can be stated that the entireindividuals within the organization will benefit along with the organization itself. Moreover, thereduction in the employee turnover has found to have appreciable impact on the overallorganizational growth. From the study conducted by Kruse (1990), it has been found that thecompanies that have good compensation provision for the employees have witnessed appreciableproductivity for the overall organization.The relationship among the human resource practices and the financial aspects of thecompany have been amply studied by numerous academicians. The study conducted by Cascio(1991) and Flamholtz (1985) have found out that the good financial returns within theorganization can be associated with the way the policies within the organization is being moldedto handle the employees. The consideration of the facts within the study can state that the fourtypercent increase in the salary of the employees is in direct coordination with the growth of theSD.A study conducted by Becker (1992) on the employee salary and the standard deviationstates that the employees’ growth in the salary by forty percent can be equivalent to the standarddeviation. Numerous researchers have found out that if the employees are recruited with the right5
method and proper training is provided to the employees then it can be stated that there issomewhat chance of better organizational performance (States, 1997).Mentioned below are some of the areas those need to be considered after the studies for thisresearch:i.The issues and solutions related to the organizational performance and strategic humanresource management.ii.Human Resource Practices which can give the advantage to the company from thecompetition.iii.Understanding the way recruitment can help the organization achieve the goals andobjectivesIt is peculiar to note that all the benefits of these high performance human resource managementpractises seem to be beneficial for the firms but then these benefits are temporary. It is said sobecause as more and more companies will start following this practises and the companies whichare right now ignorant about these practise at a point of time will become aware and take stepsaccordingly. At that point of time, the benefits from these practises will soon move towardsequilibrium and the effect will get nullified sooner or later.Secondly these surveys and studies have been mostly done in labs and ideal conditions sothe benefit which the companies will be able to acquire would be dependent a lot on theindividual experiences and talent of the managers and shareholders of various companies andimitating them as a textbook trick will not be easy and one would have to be more and morecreative as use of Harm becomes a common practise.6
Literature ReviewThe purpose of the study is to reach certain conclusion in relation to the research topic,“The Impact of Human Resource Management Practices on Turnover, Productivity, andCorporate Financial Performance”, and studies that are concerned with the subject beingstudied. The topic will lead the whole study further and act as guide. The study will try toconsider the areas that have not been studied by the researchers. Recent theories have stated Human Resource Management as the primary strategy toconsider while preparing the organization for competitive strategy (Barney, 1986). Moreover, theproductivity of the organization is supposed to increase if the human resource of the organizationis motivated and their goals and objectives align with that of the organization. It has beenasserted by the various researchers that the policies concerning the management of humanresource of the organization has huge impact on the overall psychology of the firm and theindustry (Boudreu, 1991; Jones and Wright, 1992; Keliner, 1990).There are numerous studies that suggest that focusing on the internal talent for filling thevacancies improves the chances of growth of the organization. The major factor behind suchchange is the increase in the motivation level of the employees sighting the chances of growth inthe company. This also reduces the rate of turnover. Moreover, a study conducted by Kelly-Radford (2001) found that companies face 34 percent chances of failure if a senior executive ishired from outside, on the other hand, if the same executive post is filled from the inside of theorganization, then it reduces the chances of failure to 24 percent. The practices of HRM affirmatively impact the growth of the organization eventually thefinancial front of the organization if handled effectively and efficiently. According to Russell et7
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