7BSP1247

Submission Deadline: 18th April. 2018 At 23:00

Word Count: 1500 +/- 10% Words

Student ID: 14113074

Module code: 7BSP1247

Report title: Evidence of the link between Human Resources Management interventions and successful
business outcome.

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Contents
List of Abbreviation ............................................................................................................................. 2
Introduction ........................................................................................................................................ 3
Evaluation of HRM impact, role on business or organisation with real life organisational example. 3
Strategic Human resources management (SHRM) ............................................................................. 3
HRM development and workforce ...................................................................................................... 4
Role of line managers in the management of HR ................................................................................... 8
Recommendation and conclusion .......................................................................................................... 9
References ............................................................................................................................................ 10

List of Abbreviation
HR= Human Resource

HRM= Human Resource Management

SHRM= Strategic Human Resource Management

RBV= Resources Based View

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Introduction
In a market with greater competition and dynamics, organisations performance are more important than ever
before. However, organisation is measured by different indicators such as its environmental impact, its HR
strategy, its performance and the organisation. This could guarantee its continuity in global competitive market.
Typically, all these performances are implemented and are achieved through human resources management
(Becker and Gerhart, 2017; CANIA, 2014). However, HRM needs to be managed effectively to achieve the
organisation performance required. Human Resources Management is a plan that facilitates the way an
organisation is being run, by supporting the organisation’s long-term goals and outcomes with a strategic
framework (CIPD, 2017; Kearns, 2008). This report will critically evaluate the role, impact and the contribution
of HRM in organisation with an illustrated example. One which is successful and one which is a failure. The
second part of the report will analyse the role of line managers in the management of HR. the report will be
completed by some recommendation for HRM.

Evaluation of HRM impact, role on business or organisation with real life organisational example.
Organisations are driven by different market factor such as low-cost strategy, differentiation strategy,
customer’s retention, customer loyalty and more to set their goals in their performance to enable them to have
competitive advantages. These goals are achieved by HRM in organisations. HRM operates in diverse ways within
an organisation in this ever-changing technology world. They focus on long-term management arears of
workforce such as resourcing issues, staffing, work place policies, retention, training and development,
employee reward and the evolvement of work within an organisation (Armstrong and Taylor, 2014). Ostroff
(2000) suggests that the relationship between HR practices and organisation performance depend on
organisation’s business strategy.

Over the recent years there have been a great interest on the impact of HRM practices in organisation’s
performance. Becker and Huselid (1998) suggest that HRM practices is one vital component that could help an
organisation to become effective and achieve the organisations objectives and have competitive advantage.
However, it could be questioned whether HRM contributes or impact organisations performance, Or if there is
impact of HRM on organisations performance, how does it occur or maybe what approach or methods does
HRM use to manifest them. Hence, these questions have been answered by many scholars by suggesting
different approaches on how HRM impact organisations performance and the role of HRM in organisation such
as system-based approach, and strategic based approach (Ferris et al., 1999; Armstrong, 2006). Nieto (2006)
report shows that 70% of CEOs consider HRM as the key to achieve corporate goals and performance. Therefore,
HRM contribute to organisational competitive strategy evidently.

Strategic Human resources management (SHRM)

Strategic perspective explains the relationship between HRM practices and the organisation performance
through the resources-based view (RBV) (Delery and Gupta, 2016). This view argues that competitive advantage
can be achieved when resources are valued, rare, and inimitable, resources which is human capital.
Furthermore, this perspective explains that HRM practices must fit with one another. Workforce performance
is achieved through the entire system of practices and the goodness of their internal fit. For example, MacDuffie

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(1995) argues that maximum gain is achieved through “bundles” of HRM practices that reinforce and enhance
one another. Therefore, combined HRM contribute greatly to organisation’s success other just focusing on one
part of HRM.

In a study conducted by Richard and Johnson (2001) on the impact of SHRM in bank organisation, they found
that SHRM effectiveness was directly related to employee gradual decrease in labour turnover because the
success and failure of any organisation depends merely on its HRM. For example, XpertHR’s annual survey on
labour turnover shows an average of 15% of employee turnover in 2016 with a median of 13.1 compare to 16.1%
in 2015 (XpertHR, 2017). However, the managerial suggestion is that HRM practices are socially complex and are
linked in ways that make them difficult for competitors to copy (Holbeche, 2004).

However, these complexities of the HR value creation processes make HRM a source of competitive advantage
that is rare, inimitable, and non-interchangeable (Barney, 1991; Ferris et al., 1999). The RBV has encouraged
HRM practices contribution to firm performance by influencing human capital, flexibility effort, and desired
attitudes and behaviours. Strategic approach notion explains that organisation must horizontally align their
various HRM practices toward their strategic goal and that HRM practices must complement one another to
achieve the organisation’s strategy (Boxall and Purcell, 2003; Bowen and Ostroff, 2004). Therefore, competitive
advantage can be obtained through investing in human capital or through RBV.

HRM development and workforce

Lepak et al., 2006 and Liao et al., (2009) argued that HRM influences organisation’s performance through their
direct effect on workforce characteristics by first, how HRM determine workforce for example, Purcell et al.,
(2003) people and performance model: Ability, Motivation and Opportunity (AMO figure 5) and second, how
workforce characteristics determine workforce performance. Delery and Gupta (2016) argue that by promoting
workforce characteristics in the organisation by HRM will promote the organisation superiorly. HRM practice
can influence multiple workforce characteristics all together. Such as compensation system can be used to
illustrate this point. One element of the compensation system (pay level) affects attraction and retention of
workers, thus, determining workforce ability. Performance-based pay is also more likely to affect workforce
motivation. When the HRM system (compensation system) is measured broadly, these complexities are ignored
(Subramony, 2009). This might affect the employee performance or commitment, because compensating
employee will motivate them to be more committed to work and this will contribute to the organisation
performance.

According to CIPD (2010), many organisations are doing more in terms of workforce planning, although it is
frequently a collection of different practices such as talent and succession planning. Furthermore, the below
activities are carried by the respondent as part of the workforce activities with percentage as shown in table 1
(CIPD, 2010).

Table 1 table showing workforce activities by percentage.

Succession planning 62%

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Flexible working 53%

Demand supply forecasting 53%
Skills audits/gap analysis 49%
Talent management 42%
Multi-skilling 36%
Role design 35%
Risk management 34%
Outsourcing 29%
Career planning 20%
Scenario planning 20%

Therefore, these reveal that workforce planning shaped the organisation strategy as one of the vital process of
HRM to ensure the right number of people with the right skills, in the right place at the right time to deliver the
organisation short and long-term objectives.

Itsu faced subdued problem a couple of years ago after years of success. The business relied greatly on the skills
and dedication of a small army of fish cutters doing detailed but dirty work-and the fact that they were feeling
unloved was costing it a small fortune and constraining growth (CIPD, 2017B). According to Guest comparative
model (Guest, 1997) works on the premise that a set of integrated HRM practices will result to greater individual
and organizational performance as explained in (figure 1 and 2). It supports a significant difference of HRM from
Performance Management. It holds that HRM strategies like differentiation, innovation, the focus on Quality
and cost reduction will lead to practices like better training, appraisal, selection, rewards, job designs,
involvement, and security leading to more quality outcomes; commitment and flexibility. Performance will then
be affected in that productivity will increase; innovation will be achieved as well as limited absences.

Figure 1Conceptual Model of Guest (Source: Guest (1997)) sited from Long et al., 2013

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Figure 2Framework for the relationship between HRM practices, workforce characteristics, and performance.
Source: Delery and Gupta, 2016

Itsu overcome the problem it faced by emphasising the human element in its workforce, elevate the standing of
its fish cutter and increase pride among the people at the heart of its operation. By investing a significant amount
in training its fish cutters. This can be attributed to workforce characteristic of ability that can enhanced through
selective staffing and/or through training (Liao et al., 2009). Thang et al (2010) also suggested that by helping
the employee to progress in their career by training them prepares them to achieve the ultimate goals of the
organisation. In addition, Tanveer et al., (2011) study showed that good employee performance would enhance
the organisation performance (see figure 3 for the Tanveer et al model). Deloitte insights (2016) survey shows
that 75% thinks using HR people strategy add value to organisation performance, 29% are using HR data while
only 8% consider themselves as strong performance in HR people strategy. Itsu adopt this strategy and invested
in their human capital, by creating a masterclass to improve the skills of their fish cutter. Hence, Itsu did not just
trained its fish cutters but also trained new managers whose engagement raised job satisfaction among the
trained cutters, and a social media campaign amplified their standing externally to aid recruitment efforts. While
the reward team brought in a new pay structure that raised pay for those who coached others.

Figure 3 Model Proposed by Tanveer et. al. (2011)

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Furthermore, Sudin (2004) model proposed that HRM enhance organisation’s performance as well as presents
how organizational performance can be measured meaningfully in different organisation as shown in figure 4.
In comparison, Itsu’s have delivered some noticeable changes in their financial outcomes: a £600,000 decrease
in labour costs, saved £850,000 on food waste. At the same time changes in HR outcomes such as the number
of trained fish cutters rose, retention improved, measurable pride in the role increased, and there were
significant gains in engagement as well as fewer customer complaints. Therefore, HRM has a significant impact
on organisational performance by developing many positive mediating factors including improving productivity,
positive social outcomes and reduced turnover (Richard and Johnson, 2001).

Figure 4 A Proposed Model of the Relationship between Human Resource Practices, Human Resource
Characteristics, and Organizational Performance (Source by: Sudin (2004)) (cited in Long et al., 2013).

On the contrary, while HRM appear as a valuable tool for competitive advantage of an organisations, there are
some drawback associated with HRM concept. Gill (2007) argues that HRM are disbursement of doing business
rather than a source of competitive advantage. He explains further that HRM reduces employees to passive
objects whose values are based on how well the organisation can use them rather valuing them as people.
Similarly, Taylor and Walker, (1998) argue that HRM practices is discriminative against traditional marginalised
groups like women and older workers. For example, the idea of paying men and women equally for doing the
same is not traditional. Lahteenmaki et al., (1998) also, argued that aspects of HR practices were hardly related
to company performance, but might be strongly related to future performance expectations. These suggest that
the organisation’s profits and performance are more important to HRM than the main internal power of the
organisation such as the employees.

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Figure 5 people and performance model source (Purcell et al., 2003)

Role of line managers in the management of HR

People and performance model and the performance management model emphasise the role of line managers
in management of HR in realising organisation’s objectives (Harney and Jordan, 2008). However, line manager
behaviour towards HRM and other employee is linked to job satisfaction and commitment of employees which
can turn encourage flexible behaviour from employees (Briscoe et al., 2012). Furthermore, Armstrong, (2009)
ascertain that one reason why performance appraisal schemes fail is that either the line managers are not
interested about process or they lack the skills required.

CIPD (2012) define line managers as those managers who directly manage other employees and are
subordinates to a higher level of management. (Briscoe, et al., 2012) also affirmed that they do not only manage
the work of other employees but also play an important role in ensuring that employees are motivated,
productive, and competent. Line managers operates at the operational level, who manage operational team of
employees on a day-to-day basis and are responsible for performing HRM activities (Nehles et al., 2006). Line
managers play a key role in accomplishing the organizational objectives (Qadeer et al., 2011).

On the contrary, Harney and Jordan (2008) argues that line manager’s role are limited by factors such as client
requirements, supervision, and the nature of work. But then they still retain significant capacity to facilitate
between internal motivation of employees and external control factors to ensure continuous organisation’s
performance. To be more precise, the quality of leadership displayed by line managers through their day-to-day
involvement significantly impact the achievements that employee get from working in a team as well as their
satisfaction with other aspects of HR practices (Purcell et al., 2003). For example, survey conducted by CIPD of
1300 HR managers found that the people who are closely involved with the day-to-day work of the staff had the

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most influence over the attitudes, behaviours, and performance of their employees which appears to be line
managers (People Management, 2001)

To improve line managers effectiveness in the roles they are involve in, they should get them involved in the
development of the performance appraisal process, by providing them with the necessary training, support from
senior managements, simple process strategy, and assuring them of the benefits of the process of performance
management can help to equip them with the required skills and needed cooperation should be encourage from
them (Armstrong, 2009). Line managers are considered as one of the greatest assets of a company. Therefore,
it is vital to satisfy them and keep them actively engaged so that they can add value to the organization

Recommendation and conclusion

After critical analysis, it appears that line managers were expected to do more of HR job on their own by
integrating HR work with the organisation's other work. A recommendation to improve line manager, line
managers should be involved in pre-development discussions to agree objectives and post-development
conversations to help the line managers set in their new skills. Coaching and mentoring from senior executives
can also be highly beneficial. A key objective in developing first-line managers is to make them feel valued,
recognised and appreciated in the organisation. In addition, the strategy that organisation chooses to use in
their business objectives should not separate HRM strategy. Organisation should also consider the external and
inter environment (PESTLE and SWOT analysis) in which they operate and use that to determine the best practice
that will suit them. At the same time, while maintain some degree of flexibility that will facilitate rapid respond
changes in their environment such as (creating blue ocean market out of red ocean market strategy with the
help of SHRM practices). Using practices that enhance AMO characteristics of the workforce could be financially
advantageous

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