Human Resource Management Practices

8/3/2019 Human Resource Management Practices

1/8

HR Policies in past

Human resources alone account for between 65 and 70 per cent of the annual

running costs of government departments and agencies. Because of the job security

it provided but also the status it afforded in an uncertain world. Public service

employers likewise could anticipate that there would be no shortage of potential

recruits and little competition from other sectors for the highest qualified and

skilled staff or with regard to terms and conditions of employment. The

contemporary human resource situation for public service managers is very

different. During the 1990s, Ireland has experienced a sustained and unprecedented

economic boom which should last into the next century (see Sweeney 1998). This

economic growth, combined with fundamental social, demographic and cultural

change, has serious implications for how public services are organized and the

demands placed upon them. In real terms, taxation and public expenditure remain

very high and the GNP per head is still below the EU average. While public sector

borrowing fell from 20 per cent of GNP in 1981 to the current level of two to three

per cent, public spending only adds to living standards if the money is well spent(see Sweeney 1998). Gray (1997) urges prudent control of public spending to

ensure that any downturn in the economy can be accommodated. Proposals are

aimed at reducing bureaucracy in the civil service and towards the provision of

excellent service to the public through a customer-focused culture, the effective

and efficient use of resources and better policy coordination between departments.

There are considerable challenges facing the civil service in moving from the

traditional model of tight central control, separation of functions and diffusion of

responsibility towards a model based around strategic goal setting, effective

management systems, greater development of responsibility and accountability,

ensuring value for money and decentralization. It identified the need for a move


2/8

from a situation where local authorities were not responsible for many public

services, to effective local government which would enable local affairs to be

settled through citizen participation and local control of local services. Its vision

for bringing together as many agencies of government as practicable to focal points

within reach of the people have developed into proposals for one stop shops

outlined in recent proposals for reform (see Humphreys 1998). The Devolution

Commission Interim Report (1996) specifically recommends a three-tier structure

for local government which would separate strategic planning from day-to-day

management. The challenges facing the task force overseeing the implementation

of proposed changes include ensuring equity through arrangements for the

Commissioning and funding of services, and arrangements for funding national

specialism.

Likewise, the principles of equity, quality and accountability dominate proposals

for future health service developments set out in Shaping a Healthier Future,

which aim to manage health and social services with a view to maximizing health

and social gain for the population. There are particular difficulties in determining

the lessons to be learned from the experiences of reform in other countries. HR

planning is essential for maintaining quality public services, attracting high quality

staff and ensuring continued commitment from public servants to reform.


3/8

HUMAN RESOURCE MANAGEMENT PRACTICES IN PRESENT

The most prominent line of research in modern human resource management

(HRM) is the relationship between HRM practices and firms financial

performance. Two questions dominate this literature: first, what package of HRM

practices optimizes performance? And, second, what are the channels of influence

through which HRM practices affect performance? This makes three innovative

contributions to the field of human resource management. First, anHRM frequency

distribution is presented that depicts the key empirical facts that form the center of

research in the field; second, a new microeconomics-based model is presented that

develops a new theoretical and empirical tooltheHRM demand function -- and

uses this tool to predict the performance maximizing level of HRM expenditure;

and third, a unique data set is used to estimate the parameters of the HRM input

demand function for several American hundred companies. A variety of new

insights and implications emerge.

Human Resource Management: Major Influencing Factors:

In the 21st century HRM will be influenced by following factors, which will work

as various issues affecting its strategy:

Size of the workforce.

Rising employees' expectations

Drastic changes in the technology as well as Life-style changes.

Composition of workforce. New skills required.


4/8

Environmental challenges.

Lean and mean organizations.

Impact of new economic policy. Political ideology of the Government.

Downsizing and rightsizing of the organizations.

Culture prevailing in the organization etc.

The model treats HRM as a factor input into production and posits that firm-

level differences in the marginal revenues and costs of HRM practices lead

t0systematic differences in HRM adoption and expenditure. The transmission

mechanism (black box) between HRM and firm performance is also modeled and

direct and indirect effects are distinguished. These insights are formally

developed in terms of an HRM demand curve and HRM input demand function.

None of these concepts and ideas has been formally presented heretofore in the

management literature. They are not claimed to provide a complete theory of

HRM; they are claimed, however, to significantly advance the state of HRM

theorizing relative to the extant body of theory. On the empirical side, this paper is

the first to estimate an HRM input demand function.

This empirical approach is substantially different from that followed in the

standard HRM-firm performance literature. Both models assume firms adopt HRM

practices to maximize performance; this model explicitly solves for the optimalHRM input bundle as a function of various independent variables and then directly

estimates this relationship, the conventional approach, on the other hand, derives

hypotheses from universalistic and RVB arguments that most likely have limited


5/8

domain and then tests these hypotheses in a regression model that is not only an

indirect specification (making performance the dependent variable when theory

suggests the relationship is more the reverse performance concerns drive

choice of HRM practices) but also potentially misleading (since the regression

coefficients on HRM practices are widely hypothesized in the literature to be

positive when economic reasoning suggests they may well be zero, particularly in

competitive equilibrium).

Modeling the Firms Demand for HRM Practices

Following the mainline of the HRM-firm performance literature, assume the

firms short-run objective is maximum financial return, which for simplicity treat

as maximum profit (Box all, 2007). This assumption formally limits model to

private sector for-profit firms, although would not be surprised if many of the

implications and predictions of the model also apply to non-profit organizations.

The key analytical innovation is treat HRM practices as a factor input in

production. That is, the firms output is assumed produced with capital, labor, and

HRM practices. Thus, the firms optimal expenditure on HRM is determined by

the same marginality pedecision rule found throughout microeconomics to

maximize profit, keep investing in more HRM as long as the marginal revenue

gained exceeds the marginal cost incurred and stop when the two become equal.

This basic insight is not new -- Jones and Wright (1992) discuss an economics-based approach along this line and Kaufman (2004) further formalizes it. This

paper builds on this earlier work in three regards: first, the microeconomics-based

model of HRM is further formalized and developed; second, it is used to derive an


6/8

HRM input demand function; and, third, the HRM input demand function is then

fit to empirical data.

Human Resources Practices in future

In the modern era of management employees of the organization are not

treated as resource, they are treated as assets of the organization. Because modern

people management is not only restricted getting, maintaining and retaining people

right man on the right job. Modern people management has to nurture the dreams

and ambitions of the employee to realize the employees that they are very

important part of an organization. Some still consider HR to be support function,

but there are some people who actually believe that Humans are not resource they

are assets for the organization.

HR professionals have been making change in the styles of the human

resource management. In the future HR function will be involve the ability of the

managers and look around the corners.

The HR organization must understand the strategy and economic realities of

the business it supports. It must be regarded as an essential contributor to the

business mission. HR people must speak the language of business and their

activities must reflect the priorities of the business. Nothing contributes more to the

credibility of the Human Resource Department than for it to be focused on matters

of genuine concern to the business. If it is not, it gives the opportunity for its

opinion to be disregarded and its contribution to be minimized or even eliminated.


7/8

The primary HR role is to create an environment in which employees are

committed to the success of the enterprise that employs them. Its about developing

forms of attachment with people that make them a want to work there and

contribute willingly. It involves using teamwork and establishing peer review

systems that provide employees with a meaningful voice in decisions that affect

them. It involves engaging employees in the change process and giving them a

voice in shaping their future since experience shows that people support that they

can create. Creating effective relationships includes providing employees with

opportunities to acquire new skills, which increase their capacity to contribute.

The HR function must understand the process of change. It must work

closely with line managers who are leading change and assist those who must

implement change but seem reluctant to do so. HR can help managers appreciate

that people do not resist change much as they resist both being changed and the

top-down approach often being used to introduce change. HR should help

managers understand that involving employees in the change process energizes

them, draws on their know-how, and helps produce a sound result. HR people

should be viewed as thoughtful and enthusiastic advocates of the changes and new

ideas that contribute to the success of the business. HR must provide a thoughtful,

objective and realistic assessment of the human resource aspects of pending

decisions to help ensure that the best conclusion is reached. Since sound business

decisions balance a series of factors that typically conflict with one another, the

HR role is not to win arguments but to ensure that human resource issues are given

the attention they deserve. The impact of decisions on employees almost certainly

is overlooked unless HR puts a spotlight on it. A failure to provide this perspective

does a serious disservice to decision makers as well as to the people who will be

affected by the decision.


8/8

Human Resource Management Practices

Documents

Transcript of Human Resource Management Practices