The Integral Role of HR in Organizational Performance

 The Integral Role of HR in Organizational Performance

Let us discuss the SHRM's impact on organizational performance. 

Strategic Human Resource Management (SHRM) significantly impacts organizational performance by aligning HR practices with strategic goals. By initiating effective recruitment, training, and retention strategies, SHRM ensures that the right talent is in place to drive business objectives forward. Furthermore, SHRM plays a pivotal part in fostering a positive work culture, enhancing employee engagement, and promoting innovation and productivity. By strategically overseeing human capital, SHRM helps organizations shape changing market dynamics, maintain competitiveness, and win sustainable growth.

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Guest et al (2000) Modelled the relationship between HRM and performance as shown. Although there are various stakeholders in an organization, the chief strategic goal of any business is higher financial performance or maximization of wealth for the shareholders. The performance of an organization depends to a large extent on effective operational performance. The operational performance of an organization is a function of people, processes, and technology. For effective interaction of people with technology and processes, the people in the organization must be competent enough, with the required knowledge, skills, and abilities. The competence of the individual is an important factor that decides operational effectiveness in terms of providing quality products and services within a short time. HRM practices such as selection, training, work environment, and performance appraisal may enhance the competence of employees for higher performance (Caliskan,2010).

Model of a link between HRM and performance- Amstrong, 2009

What are the HR Practices That Impact performance??

People are the organization’s key resources and organizational performance largely depends on them. All other resources could be acquired easily. If an appropriate range of HR policies and processes are developed and implemented effectively, HR will make a substantial impact on the firm’s performance.

HR Practices	Impact
Attracting, developing, and retaining high-quality people.	Matches people to the strategic and operational needs of the organization.
Talent Management.	Ensures that the talented and well-motivated people required by the organization to meet present and future needs are available.
Work environment.	Develops a clear vision and set of integrated values.
Job and work design.	Provides employees with stimulating and interesting work and gives them the autonomy and flexibility to perform theses jobs.
Learning and development	Enlarges the skill base and develops the levels of competence required in the workforce.
Managing knowledge and intellectual capital.	Focuses on both organizational and individual learning and provides learning opportunities to share knowledge in a systematic way.
Increasing engagement, Commitment, and motivation	Encourages people to identify themselves with an act upon core values of the organization and willingly contribute to the achievement of the organizational goals.
Cultural Change	Development of shared values, encouraging attitudes and behavior that are oriented toward performance.

Characteristics of HR practices that make an impact on performance.

·       The practice meets the business need.

·       How the practices meet the need is specified.

·       Success criteria have been established to measure the impact.

·       Steps taken to make the line managers and staff understand the need for the practice.

·       Practice can be put into action by the line manager.

The high-performance management approaches.

A simple approach to high-performance organization- TORBEN RICK

Characteristics of a high-performance culture.

·       Everyone understands why their work matters - Management defines the requirements of performance improvement, sets goals, and monitors performance.

·       Values are practiced throughout the company-Alternative work practices are adopted such as job redesign, autonomous work teams, improvement groups, team briefing, and flexibility.

·       All activities provide the ultimate value to the customer- Employees know what is expected of them.

·       Employees are empowered- Employees' tasks match their capabilities and specialty.

·       Strong leadership- Team grows without dependency on in

·       Promotes positive attitudes.

·       Performance management processes are aligned with business goals.

·       Pool of talent ensures a continuous supply of high performers in key roles.

·       Employees are involved in developing high performance.

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Conclusion

The role of HR in organizational transformation is critical for the success of any business. The HR practices, which include attracting, developing, and retaining high-quality people, talent management, work context, job, and work design, knowledge and development, managing knowledge and intellectual capital, accelerating engagement, commitment, and motivation, and cultural change, can have a significant impact on the performance of the association. HR practices that make an impact on performance are those that meet the business need, have established success criteria, are understood by line managers and staff, and can be put into action. To produce a high-performance culture, management needs to outline the demands of performance improvement, set goals, observe performance, adopt alternate work practices, empower employees, deliver strong leadership, promote positive attitudes, align performance management processes to business goals, ensure a continual supply of high performers in pivotal roles, and involve employees in developing high performance. By executing effective HR practices and creating a high-performance culture, organizations can enhance their operational performance and achieve advanced financial performance or wealth maximization for their shareholders.

References

·       mnestudies.com. (n.d.). Impact of HRM on Organizational Performance and Employee Performance | Monitoring and Evaluation Studies. [online] Available at: http://mnestudies.com/human-resource/impact-hrm-performance [Accessed 19 Apr. 2023].

·       ‌ AIHR - Academy to Innovate HR (2020). How to Make Impact with Strategic HRM | AIHR Learning Bite. YouTube. Available at: https://www.youtube.com/watch?v=jSh2dKHZpo4.

·       Armstrong, M., 2006. A handbook of human resource management practice. Kogan Page Publishers.

·       Torben Rick. (2014). A SIMPLE approach to high performance organization. [online] Available at: https://www.torbenrick.eu/blog/performance-management/infographic-simple-approach-to-high-performance-organization/ [Accessed 19 Apr. 2023].