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The Impact of Strategic Human Resource Management on Organizational Performance

Human Resource Management

Presented by: Bolortungalag.A

Goomaral.G

Journal of Economia, Seria Management, Vol.17, Issue 2

Literature Review

CONCLUSIONS

Strategic HRM concept

Strategic HRM is a process that involves the use of overarching approaches to the development of HR strategies, which are integrated vertically with the business strategy and horizontally with one another.

Strategic HRM focuses on actions that differentiate the firm from its competitors (Purcell, 1999).

It is suggested by Hendry and Pettigrew (1986) that it has seven meanings:

  • the use of planning;
  • a coherent approach to the design and management of personnel;
  • systems based on an employment policy and workforce strategy;
  • often underpinned by a “philosophy”;
  • matching HRM activities and policies to some explicit business strategy;
  • seeing the people of the organization as a strategic resource;
  • achievement of competitive advantage (Armstrong, 2006).

Organizational performance concept

Campbell’s (1999) theory defines performance as behavior or action relevant to the attainment of an organization’s goals that can be scaled, that is, measured. Moreover, job performance is defined as what one is paid to do, or what one should be paid to do. The theory states that the measurement options, be they ratings from a supervisor, peer, or self, a simulated work sample, or hard criteria (e.g. tallying revenue generated, costs saved, customer complaints, or some variant of a computerized performance assessment) besides being valid, reliable, and not deficient should be free of contamination from sources of variation that are not under the control of the individual (e.g. differences in technology impacting a person’s performance).

Strategic HRM is a detailed process for human resource management throughout the organization that it’s integrated with the organization's overall strategy. It enables the organization having employees with the right skills and putting them in positions according to the level of their qualification and skills. In general, organizational performance is related to the achievement of the objectives required by the organization. The achieving organizational performance is a result of the behavior of employees in the organization. Policies and practices of organizations motivate employees and they give impact on organizational performance.

The study analyzed 30 organizations, which 16 are the service sector and 14 in the manufacturing sector. The structure of the research is as follows:

a. Organizations know the concepts of organizational performance and strategic management of human resources. This theoretical knowledge translates in practical implementation in these organizations. From 30 organizations emerged that 26 (87%) of them were familiar with the concepts and implementation in their organization. These organizations have a specific strategy for managing human resources. While 4 (13%) of other organizations were not very familiar with the implementation of organizational concepts. These organizations do not have a human resources strategy.

b. The organizational performance will have impacts from strategic management of human resources. From 30 organizations, 21 (70%) organizations had proven significantly change their performance through strategic management of human resources, while five (16.7%) organizations admitted that the organization had been minor changes in their performance. The four (13.3%) organizations did not have the impact on organizational performance by strategic human resource management.

INTRODUCTION

Many organizations are driven by the market to set their goals in their performance.

Workforce, as the key to success, will enable the achievement of organizational performance.

Human resources management is more important than other competitive sources because these people use other assets in organization, create competitiveness and realize objectives.Organizations must understand the expectations of their workforce in order to achieve the desired performance. The realization of the expectations of employees will enable the desired behavior of employees in the organization.

Desired outcomes of the organization in managing their workforce are: competence, cooperation of employees with managers, cooperation of employees between them, showing the capabilities of employees; motivation, commitment and satisfaction; attitude and presence; employee behaviors.

Armstrong (2006) provides for expectations to be defined and agreed in terms of role responsibilities and accountabilities (expected to do), skills (expected to have) and behaviors (expected to be).

The purpose of strategic human resource management is to improve business performance through people management. The organizations need to manage their human resources effectively and efficiently to achieve the desired goals and objectives.

The main objectives of the study is:

a. To observe closely how applicable is in practice the theoretical aspect of strategic human resource management for the achievement the organizational performance.

b. To observe if organizations use the strategy of human resource management for the achievement of their performance objectives.

c. To observe the importance of these strategies in the organization and in their performance.

METHOD

  • Aim is focused on the impact that has strategic management of human resources in achieving organizational performance
  • Questionnaires
  • City of Durres, Albania
  • Manufacturing and Service Industries
  • Total 30 organizations 16 service sectors, 14 production sector
  • This study is based on two major sources of research

THE ROLE OF STRATEGIC HRM ON PERFORMANCE

STRATEGIC HRM AND PERFORMANCE

Figure 1 shows the pattern of connectivity between HRM and performance. Through this model is reflected in detail the connection that exists from business strategies to organizational performance measured by financial indicators.

According to Michael Armstrong (2006), in the center of this model is the performance as a function of the Ability + Motivation + Opportunity (AMO).

  • An important role of strategic human resource management is about focusing the management in employees as a tool to gain competitive advantage. Now, organizations are made aware that successful human resources policies and practices of appropriate can increase performance in various areas such as productivity, quality and financial performance.
  • Performance management is a planned process in which key elements are different measurement, feedback, positive reinforcement and ongoing dialogue between managers and employees. It has to do with measurement results in the form of performance achieved in comparison with the expectations expressed as objectives.
  • it has to do with the inputs and values. Inputs are the knowledge, skills and behaviors necessary to produce the expected results.
  • Needs are identified by defining these requirements and evaluate the degree to which the expected levels of performance are achieved through effective use of knowledge and skills, appropriate behavior

Strategic human resource management may bring a number of benefits to the organization (Brewster et al., 2000):

-Contributing to the goal accomplishment and the survival of the

-Supporting and successfully implementing business strategies of the company,

-Creating and maintaining a competitive advantage for the company,

-Improving the responsiveness and innovation potential of the company,

-Increasing the number of feasible strategic options available to the company,

-Participating in strategic planning and influencing the strategic direction of the company as an equally entitled member of top management,

-Improving cooperation between the HRM department and line managers.

FINDINGS AND DISCUSSIONS

  • Performance management can be defined as a systematic process for improving organizational performance by developing the performance of individuals and teams (Armstrong, 2006). According to him, it is a means of getting better results from the organization, teams and individuals by understanding and managing performance within an agreed framework of planned goals, standard sand competence requirements.
  • The structure of the research, to give a better verification assumption or rejection it, is as follows:

a. Organizations know the concepts of organizational performance and strategic management of human resources. This theoretical knowledge translates in practical implementation in these organizations.

b. The organizational performance will have impacts from strategic management of human resources.

  • The study is focused on two sections. In the first section, study is focused on the theoretical aspects of adoption in organizations. While in the second section, study focuses on the impact that can provide strategic management of human resources in organization performance.

Section 2

Section 1

Referring figure 2, from the study of 30 organizations emerged that 26 (87%) of them were familiar with the concepts and implementation in their organization. In other words these organizations have a specific strategy for managing human resources. While 4 (13%) of other organizations were not very familiar with the implementation of organizational concepts. This means that these organizations do not have a human resources strategy. These organizations do not implement adequate strategies, which mean that the required performance can be hard to achieve.

Referring figure 3, from the study, it emerged that 21 (70%) organizations had proven significantly change their performance through strategic management of human resources, while five (16.7%) organizations admitted that the organization had been minor changes in their performance. The development and implemented of human resources strategies have not been in line with the strategy of the organization. The four (13.3%) organizations did not have the impact on organizational performance by strategic human resource management. These organizations do not have a genuine business strategy and human resource management. These organizations to strategically manage their human resources pay attention in:

a. Recruitment and selection of appropriate staff;

b. Career Management in the organization;

c. Training and development of employees;

d. Job satisfaction;

e. Creating a dynamic environment;

f. Motivating employees

ABSTRACT

Organizational performance is getting more and more important, especially in a market with greater competition and dynamic. The implementation of performance indicators achieved through human resources. Human resources are the key for keeping the organization in the market so competitive. These human resources need to be managed effectively to achieve the required performance of the organization. It is necessary to manage strategically the human resources and to adapt at its strategy with organizational strategy.

Focused on the impact of the strategic management of human resource in achieving organizational performance.

Conducted based on primary and secondary sources as following:

  • How much organizations appear competitive in the market through achieving the performance indicators?
  • How important is the management of human resources in achieving organizational performance?

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