Can HRM Create Long-Term Value for Stakeholders? An Analysis

This essay examines the crucial role of Human Resource Management (HRM) in generating long-term value for stakeholders. It emphasizes the importance of effective HRM practices, such as training and development, experienced workforce, and employee engagement, in improving organizational effectiveness, productivity, and profitability. The essay highlights how strategic HRM contributes to better resource utilization, adaptability, and a positive brand image, particularly in multinational companies. It discusses the significance of clear policies, leadership development, and effective communication in fostering teamwork, managing risks, and creating value for both internal and external stakeholders, including employees, investors, and customers. The analysis underscores that a well-managed human resource base is essential for navigating the changing business environment and achieving sustained success.

HUMAN RESOURCE
MANAGEMENT

1
Can an organisation’s management of its human resources creates long-term value for
stakeholders
Human resource acts as one of the most important resources for any organisation. Managing
human resource in appropriate manner always adds value to the firm especially to their
stakeholders. The role of HRM becomes very much important in this. There are different
kinds of challenges that any organisation faces when it deals with its Human resource. These
challenges need to be resolved with the help of strong and efficient policies. The better the
human resource is managed within the organisation the better is their chance to create value1.
There are multiple stakeholders attached with any firm and it is crucial that firm manages the
interest of all its stakeholders. This is necessary for the growth of the company at the same
time it is crucial for enlarging the stakeholder’s number.
Every organisation utilises different strategies to manage their human resource of which
training and development is an important part. Training and development enhances the skills
and knowledge of an individual which is necessary for improving the quality of the products
and services that firm delivers. This is necessary for improving the organisation’s
effectiveness and productivity. Enhancement of effectiveness and productivity of the
organisation has a direct and positive impact on the stakeholders. This can be understood by
the fact that due to increase in the organisation’s efficiency and increase in productivity, the
profit margins for the company also increases. This increase will have positive impact for the
stakeholders2. An experienced workforce that is capable of implementing long term and
short-term strategies made by the organisation will help the firm in creating long term values
for its stakeholders. This is most likely to be seen in the case of change management. Since
changes are necessary for development of the company and in this, experienced employee
1 G Dess, Strategic management, in , New York, McGraw-Hill/Irwin, 2012.
2 K Kohl, Becoming a sustainable organization, in , Roca Raton, FL, CRC Press, 2016.

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helps in smoothening the process hence it is crucial that company manage its staffs which
remains loyal and work for the benefits of the firm.
In the modern day time, when the sustainability has become one of the biggest issues for any
firm and its associated stakeholders, the skilled workforce is always beneficial. This is
because it reduces the wastage of resources which is necessary in the modern day context.
This creates a long term-value for the stakeholders that are attached with the firm as firm can
utilise these resource for the longer period of time. It is not that they can only use their
resources more sustainably but they will also improve the handling of resources. This can be
understood by the example of IT technologies. Better utilisation of technology always gives
competitive advantage to the firm over the rivals. All this goes down to proper management
of the talent within the organisation3. This goes with recruiting the perfect candidate for the
firm. Providing sufficient benefits to the human resource will help in improving the
motivation level of the staffs. This will ensure that employee retention will be high they will
perform in a better manner and will have 100% commitment towards the firm. This will
ensure that firm has positive response towards the changing environment. Adaptability is the
key to success in the modern day business environment which cannot be possible without the
help of employees.
Employees play an effective role in the management of the business environment and helps
organisation to come out of the challenges they are facing. This can be in terms of making
most appropriate strategies by improving the decision making capacity to implementing these
strategies appropriately for gaining the maximum advantage from it. When an organisation
trains its employees, enhances their knowledge capacity, they are actually making the firm
capable of dealing with the changing business scenario4. It rules out the challenges that will
be faced by different stakeholders due to the change in the business environment. In the
present competitive world, the organisation which has the most skilled or efficient workforce
are more capable of gaining advantage over the others.
Use of the tools such as performance management systems will help the firms to maintain the
performance of the employees at the highest of levels. This will ensure the success of the
3 J Connell & S Teo, Strategic HRM, in , Prahran, Vic, Tilde University Press, 2010.
4 S Ramlall, "Strategic HR management creates value at Target", in Human Resource Management
International Digest, vol. 14, 2006.

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organisations which provides a long term value to the stakeholders. This will also maintain a
healthy employee relation at the workplace which avoids situations like conflicts and hence
adds value to the stakeholders in the longer run as business process will be carried on in an
appropriate manner5. The situation becomes more critical in the case of multinational
companies. This is because the numbers of staffs and the associated stakeholders are also
huge and they belong to different cultures. If the IHRM of the MNC is able to manage all its
staffs appropriately then it would be easier for them to create value for the stakeholders on
the longer run. This is because proper coordination will be maintained between the staffs
living in different countries. This will help the firm to manage the business operations in an
appropriate manner which will improve the business model hence values can be generated for
the firm.
It is the duty of HRM to implement an efficient organisational structure at the workplace.
This ensures a firm that they place all their stakeholders at important positions which brings
efficiency in the work process and also helps the firm in maintaining a healthy relation with
their stakeholders. In the modern day time employees want that they should have their say in
the decision making. If the HRM is able to provide such platforms to all their stakeholders
then they are easily able to improve their relation with them. Such kind of stakeholder’s
engagement ensures that the decisions that are made within the firm are working for creating
long term value to stakeholders6. This allows them to work for each other’s benefits as
different stakeholders know their job role and hence a combined effort is made by them to
create value for each other. Better management of human resource allows a firm to deal with
risks that might be coming in the future. The risks such as poor sales and marketing
performance or market disruption due to innovation can be handled when company maintains
a healthy relation with their employees.
HRM that maintains a human resource in an appropriate manner allows it to create a better
brand image for them. This gives them assurance that company is moving in the right
direction. It helps company in creating value for them which directly creates value for their
5 H Aguinis & M Lengnick-Hall, "Assessing the value of human resource certification: A call for
evidence-based human resource management", in Human Resource Management Review, vol. 22,
2012, 281-284.
6 "Human Capital Management – Achieving Added Value through People", in Human Resource
Management International Digest, vol. 16, 2008.

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stakeholders. It is the role of the IHRM to ensure that they have an effective communication
mechanism7. This helps in creating a better team work among the employees and hence
achieving the task can be done in an appropriate manner. HRM has a huge role in the
building team spirit. This helps in achieving the interest of all the stakeholders appropriately.
It will also ensure that no two stakeholders stand in front of other and hamper the interest of
any stakeholders. This ensures that long term value of the stakeholders is protected.
Defining clear policies and setting best practices for how the employees have to be in the
organisation and the way in which they deal with different situation. This helps the company
to improve their relations with the stakeholders and both looks to work hand in hand so as to
improve the business model. One of the essential aspects of the effective HRM is the
leadership development. When a company’s HRM creates large numbers of leaders in
different functional units, they are easily able to enhance the working methodology8. A better
approach to dealing with the situations in the organisation is created. It improves the status of
the organisation as everyone starts taking their responsibility. This reduces the risk in the
business due to human failure or capability to deliver something. More people will have to
ensure that they have an effective mechanism for leadership development. This ensures
personal and professional development for the internal stakeholders which is like value added
to their personal and professional career.
HRM that manages proper staffing always ensures that work process is maintained smoothly.
It creates value for the external stakeholders such as customers. For instance if the customer
needs any kids of assistance about the products or services and the right person is there to
assist them, it creates value for the products and services and hence customers feels attached
with the company. By this way both creates value for each other9. On the other hand,
stakeholders such as investors always want that they invest in the projects that are carried on
7 B Becker et al., "HR as a source of shareholder value: Research and recommendations", in , , 2019.
8 "Who are the stakeholder in Human Resource management", in Answers.com, , 2019,
<https://www.answers.com/Q/Who_are_the_stakeholder_in_Human_Resource_management>
[accessed 24 April 2019].
9 in Www2.deloitte.com, , 2019,
<https://www2.deloitte.com/content/dam/Deloitte/de/Documents/human-capital/creating-value-
through-hr.pdf> [accessed 24 April 2019].

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by right type of people. If HRM is able to work according to the demands of the stakeholders,
their profits and benefits from their projects gets increased. This creates a long term value for
these investors and they also want to invest in more and more such projects. This is more
important in the case of innovation by the method of research and development hence HRM
should build research and knowledge gathering skills in their employees.

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