The role of HR in the modern organizations

University Degree Business and Administrative studies

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Essay – 12 January 2010

The role of HR in the

modern organizations

Many commentators considered Human resources as the most important asset of an organisation. Lado and Wilson (1994) define a human resource system as a ‘set of distinct but interrelated activities, functions, and processes that are directed at attracting, developing, and maintaining a firm’s human resources’. Management of this system, commonly, has got more attention from service organizations than from manufacturing organizations.

When employers consider their employees as their human capital and let their people become ‘’draggy’’ then we see the critical difference between success and failure. Successful companies consider their employees as their most important aid. That is one of the main goals of Human Resource Management. Other important goals are continuously development of the employees, to make your company more attractive for new people, and to reduce the employee turnover (Pomoni, 2009). To maintain success, a company must have the tools to perform effectively; make sure the employees know what is expected of them, successfully measure their results, and involve employees with the problem solving, i.e.; ask what they think the solution might be (Thornton, & Rupp, 2008).

Human resource management has been distinguished in two kinds of forms: soft and hard (Storey, 1987). It is necessary to analyze and elaborate the distinction between soft and hard. Hard HRM stresses the "resource" aspect of HRM; Legge (1995a) refers to this as "Utilitarian Instrumentalism". This hard model takes HRM’s focus on the central attention of the close integration of HR policies, systems, business strategies, and sees humans as a resource to be 'provided and deployed' as necessary to achieve organisational objectives. The soft model, "developmental humanism", treats human resources as valued assets who offer a source of competitive advantage (Truss et al, 1997). The key distinction lies in whether the emphasis is placed on the human, or the resource (Guest, 2001).

The dichotomy between hard and soft HRM is a direct descendant of McGregor's (1960) “Theory X and Theory Y”. He rests theory X on three core assumptions: ‘(1) the average human being has an inherent dislike of work and will avoid if he can, (2) because of this human characteristic of dislike of work, most people must be coerced, controlled, directed, threatened with punishment to get them to put forth adequate effort toward the achievement of organizational objectives.., (3) the average human being prefers to be directed, wishes to avoid responsibility, has relatively little ambition, wants security above all’.

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On the other hand he rests the Y theory on six core assumptions. I am going to name only three of them: ‘(1) Commitment of the objectives is a function of the rewards associated with their achievement.., (2) the average human being learns, under proper conditions, not only to accept but to seek responsibility.., (3) Under the conditions of modern industrial life, the intellectual potentialities of the average human being are only partly utilized’.

We see that the Y theory of McGregor is the theory that the human resource management pursuits. He talks about commitment, rewards, no pressure, seeking for responsibility, and other properties that the (S)HRM is seeking for. Above all he observes that the organization is likely to suffer if it ignores the “personal needs and goals” of the workforce. He also calls for “integration” which “demands that both the organization’s and the individual’s needs to be recognized”.

According to Legge (1995b) is the ‘vocabulary for managing the employment relationship had undergone a change: “Personal Management” is giving way to “Human Resource Management” or better still to “Strategic Human Resource Management” ‘.

Modern organizations need to shift from Personnel Management to ‘strategic’ HRM. Drucker wrote in the ‘Harvard Business Review’ in 1988; ‘To be sure, the fundamental task of management remains the same: to make people capable of joint performance by giving them common goals, common values, the right structure, and to respond to change’. Krulis-Randa’s (1990a) thesis is that the shift of personnel management towards human resource management reflects some changes in the practice of management. Because ‘Personnel specialists are often not informed about the business planning and strategy in their own companies and rarely have direct contact with corporate planners’. Krulis-Randa (1990b) also commented that the ‘International Market’ of Europe is likely to cause a considerable change after 1992 and will force the companies, if they want to maintain success, to adopt (S)HRM.

However, the converting process of personal management into human resource management will not come by its own or be easy. Jan & Krulis-Randa (1990) suggested that the following steps are necessary to ensure the changeover of the HRM from the personnel specialists: ‘‘ (a) Gain a complete understanding of business strategy and policy of the company, (b) identify and assess environmental forces influencing the business and the necessary skills and behaviour of human resources in such environments, (c) evaluate the strengths and weaknesses of the company’s human resources and estimate the potential of human resources as a competitive advantage in new markets, (d) link human resources with all other business resources into an integrated corporate strategy for Europe after 1992, and (e) analyse and integrate multi-cultural HR into a cross-cultural organization’’.

Commitment is likely the most important aspect that HR considers (see the references above). But we all know what happened in 2008; we had the economic fall down regression. I am not going further in details about that, but because of it a lot of people lost their jobs and companies were “bankrupt”. The companies that survived the strike had to increase their costs as much as they could. Reduction of management and flattening of the organizational hierarchy are one of the cost increasings. Nowadays the modern organizations are more careful with the recruitment and selection (R&S). They have to select only the best by using the R&S techniques (more about R&S techniques see Roberts, 1997). Every new recruited member needs training, which cost time and money. Another issue is that companies can not ensure the new staff a long-term contract. Unfortunately the commitment of employees fades away. However, that does not mean that the study about commitment is outdated. Because the organization must have a core of people who actually ‘are’ the organization. As jobs become more flexible and organizations smaller, those who remain in the organization become even more important. Meyer & Allen (1997a) describe it as follows: “Once the fat is gone, the remaining employees represent the heart, brain and muscle of the organization”. So employees are given more responsibilities for decision making and for managing their own daily activities (Meyer, 1997b). Eventually, employees will be feeling more convertible by being committed to the organization. Organizations need HR departments to achieve those goals.

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Bibliography

Drucker. P. F. (1988) "Management and the World of Work". Harvard Business Review, 1988 (5): 65.

Guest, D. E. (2001). ‘Industrial relations and human resource management’ in Storey, J. (ed) Human Resource Management: A Critical Text (Second Edition), Thompson Learning: London.

Jan, S. & Krulis-Randa (1990) Strategic human resource management (SHRM) in Europe after 1992. , Volume , Issue September 1990, p 131 - 140

Lado, A., & Wilson, M. (1994). Human resource systems and sustained competitive advantage: A competency-based perspective. Academy of Management Journal, 19(4), 699-727.

Legge, K. (1995) Human Resource Management: Rhetorics and Realities. England: Macmillan Publishers Limited

McGregor D. & Cutcher-Gershenfeld, J. (1960). The human side of enterprise, Annotated Edition. New York: Published in 2006 by The McGraw-Hill Companies Inc.

Meyer, J.P. & Allen, N.J. (1997) Commitment in the workplace: theory, research, and application. London: SAGE Publications Ltd. 1997

Pomoni, C. -- Articlebase, 18/2/2009, The Importance Of Human Resources Management In Modern Organization, [online available]: http://www.articlesbase.com/human-resources-articles/the-importance-of-human-resources-management-hrm-in-modern-organizations-778297.html [accessed on 18 December 2009]

Roberts, G. (1997). Recruitment and selection: a competency approach. Great Britain: The Cromwell Press, 1997.

Storey, J. (1995) Human resource management: a critical text. London: Routledge 1995

Thornton, G.C. & Rupp, D.E. (2008) Assessment centres in HRM: Strategies for prediction, Diagnosis, and Development. New Jersey Lawrence Erlbaum Associates, Inc. Publishers