Human resource is considered the most important asset of an organization, but very few organizations are able to fully harness its potential. Human resource management (HRM) is defined as composed of policies, practices and systems which influence employees’ behaviour, attitude and performance. Paying special attention to the HRM is an important requirement for every organization. HRM practices and processes are part of the management of the human resource in the organization. There are several HRM practices which have potential to improve and sustain the organizational performance.Human resource management does not only have a limited role in the organization, rather, it is to support the organizational goal and objectives. It is to ensure that the HRM processes and practices are aligned towards the employees’ motivation and satisfaction so that the organization can grow and be productive.
HRM practices and processes are also to be effective in order to present the organization a competitive advantage as well as provide environment for achieving the set targets.It is well known that the human resource of the organization gives it the competitive strength. Human resource in the organization can constitute technological, marketing, financial, transportation and logistics, and many other experts, managers, supervisors, and the workforce. Further, the success of even a very visionary management of the organization at a time of unparalleled technology development depends on the organizational human resource. Hence, for the organizational management to succeed, it is essential that proper and effective HRM practices and processes are developed in the organization.
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HRM practices can play three major roles, namely (i) building of critical organizational capabilities, (ii) enhancing employees’ satisfaction, and (iii) improving customer and stakeholder satisfaction. Proper HRM practices do make a difference in the working efficiency of the organization. They enhance internal capabilities of the organization to deal with current challenges being faced or future challenges to be faced by the organization. Positive HRM practices also promote the well-being of the employees of the organization. The commitment and motivation built through good HRM practices can lead to hard work and can have a very big influence on the performance of the organization. Organizations with right HRM practices can create a sustainable and lasting capability of the organization to manage internal performance and face external challenges. Any practice which deals with the enhancing of competencies, satisfaction, commitment, and culture building in the organization can be considered as HRM practice. The practice can take the form of a system, a process, an activity, a norm, a rule, or just a way of doing things. Right types of the HRM practices do make a difference in the functioning of the organization. HRM practices are those practices which contribute to one or more of the three C’s namely (i) competencies, (ii) commitment, and (iii) culture. These practices are to be identified in the organization, to be implemented in a cost-effective manner, and to be reviewed and revised from time to time to enhance their effectiveness and appropriateness.
Theoretical framework
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The relationship between HRM practices and the organizational performance is the subject of various studies for decades. On this subject, the paradigmatic study was of Dewey, which established that human satisfaction is achieved when individuals can express creativity and critical thought. These aspects are merged in his notion of ‘creative intelligence’ (CI), or the capacity of individuals to challenge existing beliefs and habits of thought by assessing and shaping action. In the context of organizations, the use of CI takes the form of a meaningful interaction between the individual and the organizational environment, as the individual strives to satisfy particular aspirations. The exercise of CI is a potential which can be developed from HRM practices. In this sense, HRM practices can be considered like a domain where the employees can apply CI and achieve immaterial satisfaction, thus impacting on the organizational performance.
In some of the studies existing HRM practices have been placed in into three categories. These are (i) strategic, (ii) descriptive, and (iii) normative. Under the strategic HRM practices, the organization which is adhering to proper HR practices, internally and externally, performs better than the organizations which do not adhere to. Under the strategic category, the organization tries to strike a balance among the organizational strategies, structure and HRM practices for achieving the performance. The category, descriptive is primarily non-prescriptive, and either lists areas of HRM practices and outcomes or uses a system-based approach which describes the relationships among employee levels. The normative category views the organization for establishing rigid standards of best HRM practices.
There are several models which have been developed for the HRM practices. Out of these four important models are (i) the Harvard model, (ii) the Michigan model, (iii) The Guest model, and (iv) the Warwick model. The Harvard model promotes the soft aspect of HRM practices and can be used by all the organizations. Additionally, the Harvard Model focuses on employee commitment to the job and the employees’ job compatibility, competence, and cost-effectiveness. The Michigan model views employees as any other organizational resource is thus called ‘hard HRM practices’. Under this model employees are to be recruited at minimal cost to the organization, used only as required, developed to meet needs, and maximized their output. In conventional HRM practices, autonomy implies that the individual can enjoy substantial freedom, independence, and discretion in scheduling the work and in determining the procedures to be used in carrying it out. However, autonomy can imply more than the degree of discretion being exerted in the implementation of day-to-day activities.
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Other important HRM practice is the collaborative teamwork. Collaborative teamwork can substantially enlarge the amount and quality of resources available to the employees, mainly in terms of supporting relations, reciprocal trust, and knowledge sharing. Through these resources, the team defines a domain where commitment and participation favour the transposition of CI into new action in general, therefore possibly impacting on satisfaction. This supports the possibility of a positive relation between teamwork and immaterial satisfaction. As for performance, in general, a positive relationship is observed. One of the studies has found that there is a strong positive link between teamwork cohesion, organizational learning, and technical and administrative innovation as measures of the organizational performance.
The study of the nexus between HRM practices and performance has been tested in several studies. However, findings are not always consistent, leaving a question mark on what conditions make specific organizational features effective or not effective. Particularly, the role of employees’ satisfaction has not received sufficient attention until recently. In an organization, the immaterial satisfaction like part of the CI can be higher (i) when the organizational context favours inclusion as a way to promote sense-making, critical enquiry, learning and compatibility between individual and the organizational objectives, and (ii) when employees have or can develop the skills to meaningfully engage in both autonomous and collaborative work.
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