HRM Individual Essay

Name: Hoang Thuy Linh

Student ID: 17229178
Class: BBUS 15
Subject: Human Resource Management
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Essay Question:
Do certain combinations of human resource management practices or human
resource bundles lead to superior outcomes for organizations?
Draw on theoretical and empirical academic studies to support your response.
Introduction
Among human resource practitioners, the term strategic human resource management is
generally used to signal the view that human resource management (HRM) practices should
enhance organizational performance, not least in financial terms (Schuler and Jackson 2005).
The HR function can be thought of as having six menus of HR practices, included job design and
analysis; employee recruitment and selection; employee learning and development; performance
management; pay structure, incentives and benefits; and industrial relation; from which a
company can choose the most appropriate to implement its strategy. Therefore, human resource
bundles can lead to the superior outcome for organizations.
The relationship between HRM practices and perceived firm performance was analyzed in more
than 3,000 firms located in European Union countries.[1] A factor analysis of 80 different HRM
practices resulted in 15 bundles of HRM practices which were then further categorized as being
either calculative, collaborative or intermediary. However, since the concept of strategic
HRM was launched in the mid 1970s, there has been uncertainty as to which of the high
performance HRM practices actually facilitate superior performance.[2]

This paper will showing the test for relationship between HR practices and economic
performance using the hypothesis that "bundles" of interrelated and internally consistent HR
practices, rather than individual practices, are the appropriate unit of analysis for studying the
link to performance, because they create the multiple, mutually reinforcing conditions that

HRM Individual Essay

support employee motivation and skill acquisition. Furthermore, the hypothesis advanced in
Arthur (1992)[3] and Kochan, Cutcher-Gershenfeld,[4] and MacDuffie (1991)[5] that an HR bundle
or system must be integrated with complementary bundles of practices from core business
functions and strategies to be effective.
Body
Flexible production systems have a distinct organizational logic that integrates bundles of human
resource practices with manufacturing practices in pursuit of simultaneous improvements in
productivity and quality. A flexible production plant reduces inventory levels and other buffers,
increasing interdependence in the production process and highlighting production problems.
Dealing effectively with these problems requires motivated, skilled, and adaptable workers. By
combining the reduction of buffers with the development of these work force characteristics,
flexible production systems create the conditions under which innovative HR practices are most
likely to yield effective economic performance.
One of these practices that can lead to superior of employees performance is the recruitment and
selection process. In order to successfully recruit and select good employees for a business, there
are a number of important steps and methods to go through and consider. Recruitment is defined
by Robin Kramer (2011, pp.256) as any practice or activity carried out by the organization with
the primary purpose of identifying and attracting potential employees. One of Human Resource
managers responsibilities involves the task of building a supply of potential new recruits into an
organization when the need arises. Recruitment is designed to affect the sum of people who
apply for job positions, the type of people who apply for vacancies and the probability of the
applicants job acceptation to be accepted. It is not an easy task for employers to be able to
attract highly skilled and talented workers as well as being able to retaining high-caliber talent.
According to a recent national survey sourced by (Lee Froschheiser, 2009) [6], thirty percent of
Chief executive officers have admitted that almost half of the employees

working for the

company are a poor fit for their job. Having an inappropriate worker for a job can have large
consequences for any business such as low productivity, lost opportunities and high staffing
turnover. This highlights the importance for a process of recruitment and selection.

HRM Individual Essay

It is unsurprising that the culture of a particular work organization will influence selection
decisions, with recruiters both consciously and unconsciously selecting those individuals who
will best fit that culture. In some organizations recruitment policy and practice is derived from
their overall strategy which disseminates values into the recruitment and selection process. In the
example of Garden Festival Wales, an organization created to run for a designated and short
time-period. This organizations managers were particularly concerned to create a culture via
recruitment of suitable employees. Another successful example is Microsoft. Microsoft recruiting
very strictly, they only hired the good workers. Since the new employees will be the co-workers,
colleagues, and will work together; no one can be a burden to others. Microsoft said that the
quality of human resources is the most important, and decided to the company's productivity.
There are no management systems even how good it is can compensate for the lacking of skilled
workforce, but may be reversed.

Organizations can improve the quality of current employees by providing comprehensive

training after selection. In addition, training helps organizations to cope with market demands
and changing customer needs. Further, as training builds firm specific human capital, human
resources learn their duties, and therefore improve their productivity (Hatch, Dyer, 2004) [7]. HR
practices help firms select and implement skills and resources that will create marketplace
uniqueness. Skills can be defined in terms of staff capability, systems, or marketing savvy not
possessed by a competitor (Powers, Hahn, 2002)[8]. Ability of human resources to learn is
enhanced by their human capital investments in experience and problem-solving (Hatch, Dyer,
2004). Since it builds firm-specific capabilities, resources, competencies and strategies to
respond to environmental pressures, organizational learning is a source of differentiation
between firms (Bhatnagar, 2006)[9]. Because specific knowledge that resides in human resources
creates differentiation and organizational success. Employee learning means sensitivity to
employees and their potential, and therefore, provides implications for a talent management
program.
Training can advance employees' capabilities of accepting new skills and using new knowledge,
and therefore, improve employee competence in innovation because through training employees

HRM Individual Essay

can acquire new knowledge and can increase their innovation ability (Li et al., 2006). Moreover,
employees obtain firm-specific skills and values via on the job training and learning (DeCarolis,
Deeds, 1999).[10]
Therefore, greater training hours have been linked to higher performance because investments in
human resource training increase learning by doing performance (Hatch, Dyer, 2004). Whirpool
Corporation initiated to differentiate itself from competitors via their core competencies such as
innovation, customer-centered excellence, and customer loyalty. Training and development
played an important role in developing these competencies in the company.
Employers carefully monitor individual performance and pay them according to their ability to
effectively perform their jobs (Hayton, 2003) [12]. A strong positive relationship has been found
between performance appraisals and enhanced organizational performance (Carlson et al., 2006)
[13]

. A firm implements incentive compensation system to provide employees of rewards so that

employees meet specific goals. Furthermore, role of compensation strategy is to align interests of
employees with interests of the firm that may have impact on firm performance. Therefore, a
compensation system results in increased employee performance and a profit-sharing system
improves productivity and improves performance by decreasing absenteeism (Harel, Tzafrir,
1999)[14]. So, pay for performance plans are related to subsequent financial success of the firm.
According to one large study, a 10% increase in a bonus was associated with a 1.5% increase in
return on assets in the subsequent year. Therefore, from 1988 to 1995 the number of US
companies offering pay for performance jumped from 47% to 77%. Because strengthening the
ties between pay and employee performance provides an excellent opportunity to align employee
efforts and organizational goals (Harel, Tzafrir, 1999). Therefore, design of compensation
systems has been linked with performance. As organizational perspective views that
compensation is a control mechanism for increasing individual motivation and achievement.
To increase impact of HR on firm performance, organizations should effectively implement HR
practices. Therefore, they should apply professional HR practices in their organizational
structure. To professionalize human resource strategy a firm is concerned with the quality of
management's perception of the firm's strengths and weaknesses in HR in relation to the needs of

HRM Individual Essay

talented staff, to its capacity to cope with its current and future competitive context, and in
relation to the strengths and weaknesses of its main rivals (Boxali, 1998) [15]. Therefore, it is
important that HRM education can and should assist HR professionals in effective and
appropriate interaction with their environment, whether environment is defined as the
organization's strategic environment or the broader social and institutional context (Barber,
1999).[16]
Conclusion
To sum up, it emphasizes the different types of HRM practices that organizations can implement
namely best practices or bundles of HRM practices. The key success factor is to ensure that the
HRM practices are aligned to business strategy and that it forms an integral part of the business.
The research found that while the organization utilized the best practices approach, organizations
should firstly understand their goals and then assess their HRM needs for the future proactively
and decide which approach to implement.
The research provided broad evidence in support of the literature that there is a relationship
between HRM practices and improved business performance. Overall the results suggested that
HRM practices do have a relationship with business performance indicators. The research found
that HRM practices which included training and development, career discussions and
performance appraisals do have a relationship with business performance indicators namely cost,
efficiency, labour turnover and quality.

Total 1564 words