Introduction
Human Resource Management is the process of recruiting and selecting employees, training employees, rewarding them, evolving policies and strategies related to them, as well as developing strategies and tactics to retain employees. Moreover, the Human Resource management department is the most important department of the organization in terms of functionality and success of the organization. The organization that considers the human resources as the valuable assets of the organization is more likely to be successful in achieving the mission and vision. This essay will shed light on the functions of the Human Resource management. Firstly, this essay will introduce the concepts and practices that HRM uses in order to increase the performance of the organization. Secondly, the functions of Human Resource Management will be discussed in this essay. It is identified that HRM has five key functions in the organization that have a significant impact on the organization’s performance. Thirdly, the broad scope of International Human Resource management of the organization is discussed in this essay and how IHRM is differentiated from HRM is described in this essay. Lastly, the two main functions of the HRM are analyzed in this essay, and its impact on organizational performance is analyzed thoroughly.
Human Resource Management
Human Resource Management is the process of managing employees of the organization by using a human approach. The human Resource approach enables the HR manager to understand the people as an imperative resource of the organization. HRM uses a human resource approach for not only the benefit of the organization but they use this approach for the benefit and satisfaction of people. Therefore, HRM emphasizes the development of human resources and effective management of people so the people enjoy their employment. Human resources have a dynamic nature, so the management of people is a very challenging job. Employees are not similar in skills, abilities, sentiments, tacticians, as well as in behaviors. So, it is the responsibility of human resource management to assign tasks according to the abilities and skills of people. Moreover, HRM uses different approaches that have a positive impact on the performance of the organization. For instance, the Resource-based view approach is used by the SHRM to view resources as key to the performance of the organization. With the help of this strategic approach, the organization can gain as well as withstand competitive advantage.
Human Resource Management has a significant influence on the growth of organizational capabilities that increase the performance of the organization. The RBV approach to strategic human management is used to develop sustainability in the competitive advantage by creating value that is different from competitors, and it is difficult for competitors to emulate this value. Moreover, HRM needs to visualize the unique bundle of resources that are intangible, dynamic, and multifaced. Lado and Wilson (1994) argued that policies and practices used by HRM have a significant impact on developing the capabilities of people. Thus, HRM can use the effective Resource Base Value approach to create the value of human capital with the help of strategic planning of internal development of people. HR practices influence the Input-based capabilities that introrse the development of the internal labor market. Further, HR practices control the output-based capabilities that have a positive impact on the internal development of personnel.
Important functions of HRM
HRM has five major functions that have a significant impact on the performance as well as on the success of the organization. The first major function of HRM is the recruitment and selection of employees. The HRM sets the criteria for the particular job on the basis of skills, abilities, capabilities, and the qualifications of people. For the recruitment of employees, it is very important for the HRM to set the criteria effectively that have a positive impact on the performance of the organization. This criterion should meet the vision and mission of the company so; HRM can recruit the employees on the basis of criteria to attract qualified people for the particular job. Secondly, before selecting the employees, HRM executes the appropriate plans for staffing and grading the number of employees that are required and how many vacancies are available. This function is important as it reduces the costs of the organization if it is properly managed by the HRM. For instance, the selection of incompetent and underqualified employees can be costly for the organization as their productivity and performance will be low.
Additionally, performance management is the second most important function of Human Resource management. HRM ensures that all employees know the performance level and standards that are expected of them to meet. The third function of HRM is the reward management. It is essential to give rewards to increase the motivational level among employees. The rewards can be appraising or monetary. HRM develops strategies and policies to ensure the value of people in achieving the goals of organizations, and these people must be awarded. The ideal compensation and reward system has a positive impact on the efficiency of employees. The fourth major function of HRM is the training and development of employees. HRM organizes the activities that increase the knowledge, skills, and capabilities of the employees. HRM develops many training sessions to improve the performance of employees by educating them. Furthermore, the last function of HRM is to establish a good relationship between employees with the employer. HRM has the ability to influence the behaviors of employees and productivity. When the employees have a good relationship with each other and with the employer, then they will be satisfied with the job, and ultimately their productivity will be increased.
International Human Resource Management
International Human Resource Management is defined as activities that aim to manage the human resources of the organization at the international level to achieve the objectives and competitive advantages of the organizations at both national and international levels. Typically, IHRM includes the functions of Human Resource management such as recruitment, selection of employees, training and Development, reward management, and performance management at the international level (Taylor et al., 1996). IHRM includes additional activities, for instance, skills management and emigrant management. In other words, IHRM is committed to managing the people at multinational companies. The major difference between HRM and IHRM is that HRM is concerned with national companies, whereas IHRM is concerned with multinational companies at the international level. Moreover, IHRM is more complicated than HRM as it has a greater influence on external factors.
Raletic-Jotanovic et al. (2015) identified that in the 21st century, the concentrated procedures of trade exchange, technology, the flow of capital, and technology had been categorized. These procedures are often discussed as globalization, and the most important feature is the establishment and connection of interdependencies between national economies. Therefore, in multinational and large organizations, IHRM has a viable scope in the management of human resources as these multinational companies depend on global sources whose products are designed for detailed segments of the world market.
Role of IHRM on multinational companies
Multinational companies have several reasons to expand business globally, and one of the most important reasons for the expansion of business is to increase the competitive advantage through realizing economies of scope. Moreover, multinational companies adopt many strategies and structures in the process of expanding their business globally. Farndale and Paauwe (2005) identified that in multinational companies, IHRM plays a crucial role in the development of practices among the various subsidiaries. Farndale and Paauwe (2005) recognized the P&G had adopted the integrative approach to Human Resource Management strategy. P&G established a strong approach for the communities of practice that is reinforced by influential Human Resource Departments at corporate levels in order to ensure the control of human resource management activity.
Moreover, Siemens and Unilever are also multinational companies that have been operating their businesses in the international market for many years. These companies are using the approach of IHRM in shifting the centralized position. Consequently, Human Resource departments of corporations have fully fledged in size and have a significant impact on the global and regional level (Milliman et al., 1991). Moreover, it is difficult to develop strategies and policies in multinational companies that rise the conflicting demands of the multinational companies. The conflicting demands in multinational companies arise to maximize the capabilities to respond to the requirements of the host countries (Lee & Bruvold, 2003).
Substantial Discussion on strategic functions
Training and Development
It is the core function of Human resource management as many organizations consider training and development to be the integral function of Human Resource Management. Training is an attempt that aims to progress and develop the skills and abilities of people on the job to increase the performance as well as the productivity of employees. Technically, the employee’s training can change the attitude, knowledge, and skills of people with the subsequent development of the behavior. For effective training and development, Human Resource Management plans the activities shown after detailed need analysis. Human Resource management keeps in mind the individual and organizational goals of the organization. Employees feel good being able to develop new skills, progress the performance of the job and increase the potential toward challenging roles and deities. Noe & Wilk (1993) identified that employees value training and education from all age groups as it is key to staying updated on the job.
Critical Skills
Development and training programs developed on the assessments of the workplace that certify the skills and knowledge of the employees and develop new skills for employees. HRM offers training programs to the workforce to develop their skills in order to perform well in the competitive market. With the advancement of technologies, workers need to learn the technical skills to remain productive for the organization (Lazazzara et al., 2013). It is evident from the Micro-tech company that is one of the leading companies in Germany in introducing training programs for mutual learning to increase knowledge of the workforce. The Micro-Tec develops a strong linkage between young and old-age employees of the organization in the training session. Both young and old-age workers are trained to help each other in adopting new skills as well as critical capabilities in the organization. Burke (2015) argued that employees need to develop new skills in their careers. Therefore, training and development is the essential function of HRM that enhances the capabilities of employees.
Strategies that HRM use:
For the development of employees, HRM can use different strategies such as pairing young and old-age workers is the most beneficial strategy that HRM could use to guide the workforce. Young Workers can counsel the old-age workers to learn new skills whereas old-age workers share their experiences with young workers to enhance their knowledge.
The Perspective of Human Resource Management
Human Resource management views the development of talent in employees as the best way to operate the roles of the company. Firstly, it is the cheaper way to develop the skills internally. With the help of development and training of employees the organization can reduce the costs of the company by training the employees rather than hiring new employees. Secondly, training and development are the simpler as well as, the quicker way to bring employees on one platform to achieve the company’s mission. Thirdly, with the help of training and development, internal mobility is promoted, leading to a more loyal and engaged workforce.
Impact of Training and Development on Organizational Performance
Training and Development have a positive effect on the return on investment. The performance of the organization depends on the performance of the employees, as human resource capital plays a significant role in the development and growth of the organization. Thus, to improve the performance of the organization as well as employee performance, training is an essential tool that has a positive impact on the performance of employees. Taylor & Davies (2004) identified that many factors, such as job satisfaction and knowledge management, have a positive effect on employee performance, but the impact of training and development on employee performance cannot be ignored.
Reward Management
Reward management is an important function of Human Resource management. It is essential to give rewards to increase the motivational level among employees. The rewards can be appraising or monetary. HRM develops strategies and policies to ensure the value of people in achieving the goals of organizations, and these people must be awarded. The ideal compensation and reward system has a positive impact on the efficiency of employees. Further, reward management is the practice of matching the performance level of each job with the reward system in the organization. Human Resource Management prepares a suitable reward system in order to make the effective management of rewards.
Impact of reward management on the performance
A clear and transparent reward system motivates the employees as well as dedicates the employees to perform better. Güngor (2011) identified that reward management has a major impact on the success and profitability of the organization as systems for reward management can catch, retain, as well as motivate the employees and a higher level of performance is produced. Yazici (2008) stated that reward management, as well as the organization effectiveness, have a positive impact on the productivity of employees. A large number of organizations found that reward management systems drive the counterproductive behavior of employees. Goronzy (1968) recognized that the path-goal model explains the relation between the performance of employees and to reward system. According to the path-goal model, if an employee sees that high productivity leads him to achieve personal goals, that will tend to make the high employee producer. On the contrary, if the employee sees that low productivity will lead the employee towards the accomplishment of goals, then he will become a low producer. In simpler words, the motivation level of the employee will be increased, and he will spend a greater amount of work if he perceives that his recent struggle for work resulted in getting rewards.
According to Flynn (1988), employees want to be recognized for their performance, and if Human resource management recognized the employees for their performance, their spirits would be boosted, and they would perform better. The foremost purpose of recognition as well as reward management is to communicate to employees that their work is a contribution to the organization’s success and they will be rewarded for their work. According to (La Motta, 1995), the motivational level of employees I increases when they get unexpected praise, recognition, and intrinsic rewards. Today, recognition is the highest need of employees that motivates them employee to perform better, whereas rewards that are monetary cannot motivate employees (Huselid, 1995).
Additionally, reward management is an effective approach to retaining employees in the organization for the long term. Allen et al. (2003) identified that to retain efficient and skilled employees at the workplace, it is necessary for the organization to give them rewards for their excellent work. Hussain & Rehman (2013) identified that offering good compensation rewards to skilled employees is the way to retain employees in the organization. Further, for a Successful organization, the retention strategy should provide market-related compensation, competitive rewards, and other benefits, as these rewards will increase the motivational level of employees and make them committed to the organization. According to the case study, it was reported that employees would be retained if they were rewarded and compensated well, and they would leave the organization of they were not fairly awarded in the organization (Mercer, 2003). P (2000) identified that employee are likely to remain in the organization if they perceive that their abilities, efforts, capabilities, and contributions are recognized in the organization. Cappelli (2000) states that both external and internal equities regarding compensation are the retaining strategies that could prove effective in retaining employees.
Conclusion
From the above discussion, this essay concludes that Human Resource Management is the process of recruiting and selecting employees, training employees, rewarding them, evolving policies and strategies related to them, as well as developing strategies and tactics to retain employees. Moreover, it is analyzed that HRM has five major functions that have a significant impact on the performance as well as on the success of the organization. These HRM functions include; recruitment and selection of employees, reward management, performance management, training and Development, and Employee relations. Moreover, it is concluded that the major difference between HRM and IHRM is that HRM is concerned with national companies, whereas IHRM is concerned with multinational companies at the international level that in the multinational companies. IHRM plays a crucial role in the development of practices among the various subsidiaries. Lastly, this essay thoroughly analyzed the two main functions (reward management and Training and Development) of HRM and its impact on the performance of the organization. Reward management has a major impact on the success and profitability of the organization as systems for reward management can catch, retain, as well as motivate the employees, and a higher level of performance is produced. Training and Development have a positive impact on the return on investment as the productivity of employees is increased with the help of proper training and Development.
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