Analyzing HRM System for Sustainable Value in Stakeholder Relations

This essay examines the role of Human Resource Management (HRM) systems in creating sustainable value for stakeholders. It defines an HRM system as a complex structure comprising various internal systems resulting from HRM activities and levels, emphasizing the importance of strategic HRM (SHRM) in aligning these components with organizational goals. The essay discusses key HRM philosophies, policies, practices, and processes, highlighting their interconnectedness in achieving company success. It emphasizes employee engagement through training, job design, and compensation, linking these practices to theories of performance, motivation, and organizational behavior. The analysis underscores the importance of HRM in addressing workplace complexities, aligning individual ambitions with company goals, and ensuring continuous communication and proper compensation. Ultimately, the essay concludes that a well-implemented HRM system is crucial for sustaining a company's valuation and maintaining stakeholder interest through motivated and engaged employees.

Running head: HRM SYSTEM IN SUSTAINABLE VALUE FOR STAKEHOLDERS
HRM System in Sustainable Value for Stakeholders
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HRM SYSTEM IN SUSTAINABLE VALUE FOR STAKEHOLDERS
Introduction
A company is as strong as its employees, their motivation, training and performance. It is the
job of the HR department to ensure employee satisfaction. Considering all these aspects help in
achieving an effective Human resource management system in the company. A company can only
succeed if it hires, motivates and maintain individuals who are able to respond to and adapt to the
challenges and changes in the future. As employees matter more to a business, the competencies sought
by companies are changing focus towards the management of relationships, people's ability to network,
innovate and to partner.
A Human Resource Management system can be defined as a complex system comprising of
several internal systems resulting from HRM activities and HRM levels and sub-levels which have to
work together in order to achieve harmony within the company, achieve competitive advantage and
promote innovation (Alfes, 2012). In order to link all the levels, sub-level and the whole HRM
mechanism and to see how these level and the mechanism work together to achieve company's
organisation and performance outcome, a Strategic Human Resource management system( SHRM) is
applied (Arthur & Boyles, 2007;). The HRM systems that have to fit together are HRM processes,
practices, policies and philosophies (Alzola, 2018).
Jenkins and Delbridge (2017) define HRM philosophies( highest level) as, “an integrated set of
assumptions and beliefs about the way things are and should be guiding organization’s policies to
treating its employees on the one hand, and shape the perceptions shared by employees on the other
hand”. These assumptions are basically a company's mission and vision. HRM policies ( second
highest level), provided the guideline on how to achieve HRM philosophies. They include the
company's goals and they are based on HRM practices. This level of HRM contains details of how a
company values of its human resources and defines how employees and managers should be treated in
order to realize company success. Human resource managers are responsible for creating HRM

HRM SYSTEM IN SUSTAINABLE VALUE FOR STAKEHOLDERS
philosophies and policies since their stakeholders develop statements and the denotations on how
employees are valued and recognized and how this is reflected with the particular goals the company is
trying to achieve. The third and fourth levels of an HRM system are HRM practices and HRM
processes. HRM practices contain the method to implement the pre-determined HRM policies. They
are specific means to achieve company goals and can, therefore, be motivating to employees and
provide a perception into task performance. HRM processes, on the other hand, are the actual
implementation of HRM practices. They are the actions of the employees. The key difference between
HRM policies and practices is that policies do not contain explained information on how to implement
a specific practice since it lacks precision. In short, HRM philosophies entail a perception into how
employees contribute value to the company in order to contribute to the company success, HRM
policies can be regarded as particular HRM-associated goals which should be achieved, HRM
practices are tools and means on how to achieve these goals and HRM processes are the actions
executed by employees achieve these goals.
The word stakeholder was first used in 1963. It means those individuals without whose support
the company would cease to exist. They include share-owners, employees, customers, lenders and
society (Jenkins & Delbridge, 2017). The major aim of any organization is profit maximization, this
can only be achieved through co-operation of all the parts of the company. Human resource department
ensures a good employee engagement. According to Tillmann (2016), employee engagement can be
defined as a positive attitude held by the employee toward the organization and its values. An engaged
employee knows of the business context and works other with employees to improve the performance
of their work, Kahn (2011). An engaged employee has vigour and dedication to the extent that they are
fully focused on their work. In order to fully engage an employee, HRM resorts to several activities
Training aims at giving an employee the opportunity to improve and hone skills, qualifications,
and activities. Training provides the opportunity to cope with and adapt to problems and challenges and

HRM SYSTEM IN SUSTAINABLE VALUE FOR STAKEHOLDERS
to be able to come up with solutions to them as pointed out by Arrowsmith and Parker (2013).
HRM policies are the driver for training. It illustrates which company-specific skills are needed to
perform which specific task within the firm to ensure that training is aligned with those tasks
requirements (Jenkins & Delbridge, 2017). Thus, taking employees back to school is the perfect way
to train employees and teach new generic skills [generic skills are a skill set which can be applied to a
variety and is transferable between organisations].
Secondly, job design. This includes a clear description of the job assigned to and employees and
any other related tasks. It furthermore integrates expectations regarding the relationship with fellow
workers in order to contribute to the company competitiveness. Within job design, company goals are
translated into job requirement which employees satisfy (Arrowsmith & Parker, 2013). During
employee recruitment, HR needs to understand the tasks and responsibility that needs to be fulfilled for
the sake of company success. This is catered for by the HRM philosophies and policies, they provide
insight that is used for the approach of job design. Job design can easily be used to motivate
employees; jobs are designed in a challenging and interesting way in order to motivate employees.
HRM practices aim at motivating employees by adding variety within the task, rotating employees
between jobs and increasing the authority or responsibility for the task (Lepak & Gowan, 2010). It is
prudent to communicate the intention for job rotation.
Compensation is also essential as a way for the employee to get paid. This can be done by either
financial or non-financial means. CIPD (2003) define compensation as "a show of how firms and
people around them value them as individuals”. There are two ways with which a company can
compensate an individual; either on an individual basis- which aims at motivating a single employee
into better performance or on a group or organizational basis. HRM practices can pay an individual on
the amount of work done or a specific amount of time that an employee is expected to reach a target.

HRM SYSTEM IN SUSTAINABLE VALUE FOR STAKEHOLDERS
Individuals can also be compensated using awards, which are given out if a task is completed or done
excellently. On a group level, HRM practices offer incentives for plans for teams and are paid should
the team reach a goal. Furthermore, gain sharing, profit sharing are also paid on a group basis in order
to reduce any related labor costs. Finally, documenting of group performance can also be considered an
act of compensation.
Human resource management system is an essential way to create sustainable value for a
company. A company's value depends not only on its profits but also their employee satisfaction.
HRM, in particular, use different means to make the working environment for the employees better.
Different theories can be used to explain their endeavor, theories of performance, Henri Fayol argued
that in order for employees to work more efficiently, management also has to be effecient [ from that
came the four functions of management]. Motivation theory, Abraham Maslow invent the pyramid of
employee motivation, the base is the basic needs, then security, then love, then a sense of
accomplishment, then finally, for self-actualization.
HRM also factors in behaviour; organizational behaviors, such as culture and structure, group
behaviour, such as the functionality of a team; individual, such as ability or personality. These put
through a good HRM system can be used as a means to motivate an employee and thereby increasing
company success. In the case of customers, stakeholders are incongruent in terms of duties,
stakeholders identified with the role of HR managers in regard to expectation of their front-line
employees. They identified with the duty of the facilitator and expected front-line employees to enlist
in the production of new services to meet their customer's needs.
HRM philosophies and HRM policies, set by HR managers, rate the establishment of efficient
processes by the creation of strict HRM activities and the advancement of a cost-efficient method.
Numerous methods aim to advise especially lower employees on how to perform a particular task.
Management is about dealing with complexity, HR deals with the complexity of the workplace in order

HRM SYSTEM IN SUSTAINABLE VALUE FOR STAKEHOLDERS
to increase company success. This can only be done when the individual employee's personal ambition
and goal are similar to that of the company. As stated by Tillmann (2016), constant, uninterrupted and
motivating communication is necessary to achieve this. HRM always recognizes an individual's worth,
proper compensation for an employee's work and time.
Conclusion
The valuation of a company is a long-term issue. It takes a long time to be highly valued and to
maintain that value a good HRM system is important to keep the employee motivated. HRM
philosophies, policies, practices and processes are implemented to keep the stakeholders of a company
interested, to keep the employee engaged. This will, in turn, keep the valuation of a company
sustainable.

HRM SYSTEM IN SUSTAINABLE VALUE FOR STAKEHOLDERS
References
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