This paper shall talk about the integration of best human resource management (HRM) practices to the performance and overall success of corporate organizations. There are a number of ways for an organization to decide on and execute the necessary strategies in order to arrive at their desired corporate objectives. These steps are ultimately geared towards creating ample competitive advantage that will ensure that a particular company will dominate its market and stay ahead of its competitors. The end goal is to improve firm performance to such extent that it will surpass previous benchmarks, thus creating more value and more profits for its shareholders, employees and stakeholders.
Today's highly globalized corporate environment poses new and more complex challenges for the corporate manager, thus the need to come up with equally innovative and adequate solutions is all the more important. According to Huang (2006), the globalization of economic activities is the most significant development in the world economy in recent history. The volume and variety of products that have been included in the global trade have increased drastically. Likewise, the patterns of consumption and production are no longer as stable as they were before.
Economic globalization refers not just to the geographic spread of economic activities but also the integration of various economic activities at different levels (Huang, 2006). Thus, whole countries, regions, and other transactional parties are formed into one functional global economy through highly intricate international systems of production, trade, and finance.
Today's corporate managers are facing a highly competitive environment that requires critical and innovative responses (Miles, Preece, and Baetz, 1999), which underscores the fact that not only must they monitor organizational growth at the aggregate level, but also development among its employees and improvements in its operational activities.
At this point, it becomes apparent how important competitive advantage is to a corporate organization. Most of the strategic planning that organizations make is concerned with maintaining their position in the market. Halawi, Aronson and McCarthy (2005) wrote that one of the main ingredients for corporate success in today's globalized environment is acknowledging how to create and sustain competitive advantage, which ultimately depends on what a company decides it will or will not do.
Competitive advantage may be defined as the "ability to earn returns on investment consistently above the average for the industry" (Halawi, Aronson and McCarthy, 2005) and is evident when the firms are able to create a value-adding strategy that is not employed by any of its current competitors. On the other hand, Becker and Huselid (2006, pp. 899) also concur by saying that the right corporate strategy that creates competitive advantage results, in turn, to above-average financial performance.
Continuous enjoyment of competitive advantage can only happen if (1) the level of performance that a firm attains in its implementation of the unique value-enhancing strategy is not concurrently being done by existing or potential competitors and (2) the competitors are either reluctant or unable to recreate the benefits of this particular strategy. Thus, competitive advantage can only arise from the maximization of the right strategic assets.
Competitive advantage can be made through hiring, developing and retaining a highly trained and dedicated employee base that is sensitive and responsive to the needs of the market. It can also be done through the creation of a well-maintained value chain that delivers optimum satisfaction for every buyer who avails of a particular product or service. It is the latter strategy that is the focus of this paper, primarily because the technology and production processes that a company can design are susceptible to duplication by other companies, but the knowledge and skills of their corporate human capital can rarely be copied.
Systematic review methodology
This paper shall not be carried out using primary data from actual respondents. It is research based and will call for a systematic and thorough analysis of relevant literature that touch on the topic of human resource management, particularly in the areas of performance appraisal, employee training and selection, and employee retention methods.
Thus, there is a need to employ a tested review methodology that will allow the researcher to examine and synthesize a broad range of previous studies. In this manner, the researcher can gain a comprehensive understanding of all the necessary findings and methods that have been found in the past and draw logical inferences from them.
This paper will use the systematic review methodology as the primary tool for investigating linkage between organizational success and the importance of human resource management practices. The systematic review methodology has been traditionally used on primary data about health care technologies such as drugs, devices and surgical interventions (Green and Moehr 2001).
However, there is already a trend among researchers to use this review methodology on other topics such as policy-making and social research. The Cochrane Collaboration was the first to implement the systematic review methodology to actually collate huge amounts of data that are put together in a regularly updated collection of evidence-based medicine databases. This kind of methodology affords the researcher more depth by allowing him to check on the previous findings made by other scholars and synthesizing them to create a map of where the current knowledge on the topic at hand lies.
Despite the usefulness of the methodology, care should be made in choosing the right electronic sources that can offer us with the most number of relevant researches, as well as in establishing the key words that will be used exhaustively for turning up previous findings on the topic.
For the purpose of this paper, several key words were used to search Google, Questia and other suitable online sources for information on the current trends in. The keywords used for the research are performance appraisal, employee feedback, human resource management and organizational success. Other formulations of the main research topic yielded the same results and so only these four key phrases were considered.
This section shall be further divided into three parts. The first subsection shall be dedicated to laying down the groundwork for theoretical discussion on human resource management and firm performance, by looking at the nature and dynamics of the employee-employer relationship. The second subsection offers a thorough review of the fundamental concepts behind human resource management and its eventual transformation to strategic human resource management, which is a more comprehensive and integrated approach towards organizational performance and the participation of the company's employees in it.
The third subsection will be a discussion on specific points in HRM best practices, such as performance appraisal and employee development, which are important to improving the overall performance of a corporate organization. The conclusion chapter of this paper shall be a synthesis of the entire body of literature reviewed for the study, thereby underscoring the need to apply the best and most beneficial HRM practices that will allow a company's employees to grow and develop along with it.
Employee-employer relationship
Employer/employee relations refer to the communication between the representatives of employees and employers, bringing them together to work out common problems and talk about their respective views and requirements. Discussions between employees and employers include pay, bonuses, the work environment, disputes, work schedules, grievances, health and safety, hours of work, and production targets (The Times 100, 2009). It is expected that such discussions would lead to satisfactory productivity, motivation and morale (Office of Human Capital Management, 2009).
Successful employer/employee relations involve striking a balance of interests. From the employer's perspective, industrial relations is about having the right to manage the labor power in relation to planning for the future operational path of the company, to turn a profit, and to keep the employees motivated with their work. On the other hand, from the employees' point of view, labor relations is all about getting the best possible working conditions and living standards that are parallel with their quality of life (The Times 100, 2009).
Employee/employer relationship occurs at two levels: at the individual and at the collective level (The Times 100, 2009). At the individual level, the employee relates with his or her employer, especially with regards to his or her contract of employment and conditions of work. At the collective level, we have groups of employees-such as trade unions-in communication with an employer or group of employers.
The employer-employee relationship is a problematic one. Neo-classical economists see it as a system wherein labor is exchanged for pay (wage theory), but at the same time, it is also a power relationship in which the employer has the formal authority to plan and direct effort towards specific goals for the company, while the employee can frustrate the achievement of those objectives through informal means-if they are given the motivation to do so (HRM Guide, 2007).
What is the cost of poor relations between an employee and his or her employer? Some of the negative consequences of such include high labour turnover, bad timekeeping, frequent absenteeism, slackness by individuals, and other practices. Discontent among the staff can also be seen through the number of complaints filed, friction among the workers and between managers and workers, neglect for authority, and apathy. At the end of the day, poor relations between the two can reduce the firm's ability to fill out its orders and eventually make a big impact on its overall productivity and profitability.
The shift from human resource management to strategic human resource management
Through the years, the changing pattern in the human resources (HR) has been observed - HR is becoming a strategic partner. Strategic HR management emerged in the 1980s as a new breed of HR management principles that are used alongside the more traditional functions of the latter within corporate organizations (Dyer and Kochan, 1994). This new perspective has rapidly advanced in terms of theory and research, if not entirely in practice.
Paauwe and Boselie (2002) point out that the emergence of such a breed of HR management has been brought about by the fact that human capital is now seen as a source of competitive advantage; that HR management practices directly affect the human capital of a firm; and that the complexity of HR management systems can make it matchless.
The Chartered Institute of Personnel Development (2009) defined strategic HR management as an integrated approach wherein organizations allow their HR departments to become full strategic partners who also have a say in the future direction that the company is charting.
Adopting this kind of perspective means that an organization expands the role of its HR personnel, especially in terms of business planning. Strategic HR management does not stem from business strategy or business strategy from strategic HR management, as they are mutually informative. How people are managed, motivated and deployed, as well as the pool of skills and knowledge will all shape the business strategy.
One of the most important distinctions between simple HR management and strategic HR management can be seen about each one's emphasis and integration (Becker and Huselid, 2006). For one thing, the latter concept is more concerned with total organizational performance rather than the individual performance of the employees. Moreover, strategic HR management also underscores the role of HR management systems as a viable means to solve business dilemmas rather than using only individual HR management practices in isolation.
By putting together HR management practices and the wider scope of the organizational planning-that is, by emphasizing HR activities that can help broad agency mission goals and by strengthening the link between HR and management-companies are able to ensure that HR management can contribute to the attainment of established goals and objectives and that managers are also held accountable for their HR management decisions.
Part and parcel of the HR department's job is maintaining sound relationships between the management and the workers, and this is usually done by conducting an annual performance report on each employee and unit within the company. However, given the renewed emphasis on using the human capital as the main source of a company's success, there is a need to go beyond these basic tasks and create new solutions that will best cater to the interests of both the company and the employee. It is at this point that we see the emergence of motivational techniques that can be used for improving employee performance and job satisfaction, in order for them to be more connected to the company's comprehensive goals and aspirations.
Performance appraisal
Most of the modern-day labor force undergo performance appraisals as one of the necessary requirements for employment. Both entry-level and management-level employees have to take performance appraisals at least once a year, usually in conjunction with compensation increases and promotion deliberations (Stewart, 2007). This process is most commonly referred to as performance appraisal, but other terms such as performance evaluation, performance review and employee evaluation, are also used.
Because there will always be some measure of difference between the quantity and quality of the same work on the same job as performed by two different people, there is a need to appraise their performance in the best possible way. The latest mantra followed by firms across the world calls for proper performance management and the focus on the individual work of employees.
Maley and Kramar (2007) point out that performance appraisals are a a strategic human resource management (HRM) tool. As such, it allows organizations to constantly evaluate and improve employee and organizational performance based on clearly defined, preset objectives that are directly linked to company strategy (Maley and Kramar, 2007).
For West (2002), the two fundamental components of appraisal are feedback on performance and objective setting. There is strong evidence across all employment sectors that a coherent feedback system on individuals' job performance can result to improved performance and lesser mistakes, with improvements in performance and reductions in error rates across all employment sectors. At the same time, goal setting can also contribute to better performance, especially when the employees take part in the decision making and have a specific idea of the direction that the company is taking.
Vague, 'do your best' goals simply are not challenging enough for them and would most likely lead to poor performance (West, 2002). Such management practices can even help to reduce operational costs. Assessments of performance appraisal range from the openly hostile to the generally benign (Gabris and Ihrke, 2001). To a lesser extent, performance appraisals may be used to control (or at least influence) employee behavior.
Appraisals can only be useful for the above-mentioned purposes if the appraiser or manager is skilled in the evaluation procedure, and is supportive, forward-looking and cooperative (West, 2002). The process carries with it an inherent negative consequence on the part of the employees, as it is a way for their peers and supervisors to evaluate their performance (or lack thereof) over a given time frame. It may even lead to increased stress and anxiety levels, which can in turn develop into burnout levels and lowered job satisfaction levels among the staff (Gabris and Ihrke, 2001).
The importance of feedback system: a case study
Some of the world's top companies have one secret in common: they have a dedicated, competent and well-motivated work force that keeps them on top of the competition. The subsequent shift in how corporate leaders look at the importance of their human capital is characterized by treating them as more than another input factor in the production of goods and services (Lindner 1998).
This renewed vision is true in the case of Dell, the number one computer provider in the United States and only number two in the global market (Dell 2010). As a top technology innovator, Dell Computers is faced with the challenge of smoothly managing and sustaining company performance through human resource management. This is no easy feat, considering that the company has operations in three geographic regions: the Americas, the Europe-Middle East-Africa (EMEA) and Asia-Pacific Japan (APJ).
Dell Computers recognizes that behind every great enterprise is a talented and dedicated workforce, but doing so is a two-fold challenge. On the one hand, it is important to train, develop and retain a talented employee base that can continuously participate in the career opportunities generated by the company's growth. On the other hand, the company is also on the constant lookout for employees that meet their work and qualification standards.
One of the ways by which Dell Computer is able to answer this challenge is to restructure their core training and development programs to enhance their overall effectiveness. Another solution was the improved compensation and benefits packaged that is at par with the company's robust growth over the years.
Being a results-driven company like Dell still leaves a lot of room for neglect in some of its functions, and effective management was one of these. Having a company that was generating huge profits made the management assume that people are willing to work just for the rewards that the company was reaping, with no thought that they are going somewhere in terms of their actual career.
According to Paul Kinnon, the company's vice president at the time these radical changes were happening, the biggest gap then was between where the company stood versus where they wanted to go with the Dell Team. To become a winning culture, the company had to broaden their horizon in terms of what they care about. This meant that they were no longer just concerned with the results, they were also ready to consider the process that produced those results.
Because the employees were not used to this kind of company culture, there were mixed feelings about receiving and integrating the new beliefs and values into their actual work. They launched an employee opinion survey entitled "Tell Dell" that was designed to measure the satisfaction rating of employees with regards to how the managers and leaders in the company handled business.
Five of the statements in the survey are used as core metrics for assessment, and these are:
My manager is effective at managing people.
My manager gives effective feedback.
If you had an opportunity to work some place other than Dell, would you take it?
I feel like I can be successful and retain my individuality at Dell.
My manager helps me manage my work/life balance.
This feedback system allowed Dell's top leaders to monitor whether or not the company's goals are aligned with that of their employees and vice versa. Simply put, feedback was a way for employees to receive their superior's assessment over a given period of time (London 2003). Feedback must be taken in a positive light, even if it contains negative remarks, because it ultimately redounds to the benefit of both the employee and the superior by praising good points about their work behaviour and giving suggestions as the bad points. It is also a way for superiors to provide objective knowledge about employee performance and how this can be improved upon (Sirota et al. 2005).
Managers and immediate superiors are important in the feedback system because they are the ones who establish performance objectives and give rewards to the best performers among their team. In fact, it is the manager's main concern to discover the hidden talents of their employees and to maximize them for the achievement of the company's primary goals (Torokoff n.d.).
However, there are also other important sources of feedback for an employee's performance, such as his peers, subordinates, customers, suppliers and even the employee himself. It is important for employees to also take note of the different lessons that other people in the workplace can impart to them. The feedback system is ultimately a way for redefining the proportion of work in the company and to enhance cooperation among the employees. Non human sources such as productivity, absenteeism and delivery time are also important sources of feedback (Sirota et al. 2005).
In addition, the feedback system proved to be an excellent venue for the managers to know the deficiencies, if any, in the knowledge and competency of their employees, and to fill in the same by means of specially developed training programs that allow the latter to be more effective and productive at work. This is called employee development, which is an ongoing collaborative effort between employee and employer to improve the former's skills, knowledge and abilities for the mutual success of each. Employee development requires striking a balance between the worker's career needs and goals and the organization's need to get work done as efficiently as possible (University of Minnesota 2008).
The problem of employee retention
Turnover, in and of itself, is a crucial problem in organizational studies (Dalton and Mesch, 1990). Turnover is usually defined as who voluntarily leave or transfer to another unit within the hospital (Duffield, et al., 2009). In the health care setting and especially in hospitals, there is always a need for a good number of adequately-skilled and experienced nursing staff to assist in the delivery of quality health care service, so staffing levels should always remain positive. However, the current trend is that new recruits, particularly fresh graduates of nursing, do not last long in their jobs.
This is more than just an isolated case of mismanagement or poor administration in a number of health care institutions, as the problem is becoming more rampant in different settings across the globe. In fact, in some countries like Canada, health care officials and scholars are already anticipating a nationwide nursing shortage, which is estimated to be at 78,000 by the year 2011 (Smith, 2008).
The high financial cost to the hospital management of rapid turnover of the nursing staff is also a driving force behind the need to effectively retain new nurses. If it were only such, less scholarly and administrative attention would be given to the matter.
The intent to leave a job has a reverse relationship with job satisfaction as well as the social climate found in the health care institution (Atencio et al. 2003). The more satisfied an individual is with his or her job, the less the tendency for turnover. In a study by Robert, Jones, and Lynn (2004, as cited in Halfer and Graf, 2006), it was seen that resident nurses who wanted to stay in their current positions pointed to specific factors such as their co-workers, schedule and perceived control in the workplace as prime motivators for their job. On the other hand, job stress has been found to be a very strong predictor for job satisfaction (Halfer and Graf, 2006) as well as successful socialization within the organization (Smith, 2008).
As such, any attempt to lower turnover rates and improve retention strategies within hospitals will have to be geared towards increasing job satisfaction and socialization while decreasing job stress levels for new graduate nurses. One possible solution is adopting a flexible working schedule and staffing policies for the new graduate nurses, which will allow to accommodate non-work responsibilities and other opportunities for career development such as further studies and workshop training (Dalton and Mesch, 1990; Laporta, Burns and Doig, 2005).
Conclusion
The abovementioned evidence all points to the fact that the human capital of a corporate organization is more than just another factor of production. A company's employees are in fact the basic building blocks for success, and it is their skills, dedication and productivity that drive the company to optimum performance. As the link between management and the employees, human resource management practitioners should be the ones who can provide the necessary processes that will convert employee skills to real organizational success.
Firm performance can be measured in any number of ways, such as the size of its yearly profits and the extent of its tangible properties and investments. However, there is now a paradigm shift within the corporate environment because knowledge has become a more powerful and relevant currency by which companies are evaluated. Competitive advantage now comes in the form of intangible assets such as human resources, thus emphasizing the need for corporate managers to give sufficient attention to knowing how to maximize the potential of their human capital.
