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									Role of the Human Resource Manager in Deciding the Relationship between Rewards,

                          Motivation and Performance

Executive Summary

The following study was conducted to analyze the role of Human Resource Management

practices within the organization and their impact on the performance of the employees, the

reward system and the motivation level of employees to perform their duties effectively.

This study also measured the relationship between these above mentioned HR practices and the

organizational performance for the development of the competitive advantage for the company.

This study was based on the secondary research method including books, journals, online articles

and the related materials respectively.

The findings of the study suggested that the Human Resource Management is the most

importance system within the organization which is the key component behind the success of the

company in the markets. Human Resource Management works as a bridge between the top

management and the employees to communicate and understand.

The findings also suggested that the effective HR practices, like proper reward and recognition

system, job enrichment, competitive pay scale etc., guarantees the high level of employee

performance and the satisfaction. The satisfied employees then perform their particular tasks to

maximize the profits of the firms.

On the basis of the study findings, conclusions and recommendations were made. The

recommendations suggested that the HR department must be aligned with the organization’s all

other departments and its strategies.

Table of Contents                            Page #

Introduction ……………………………………………………………..       4

Human Resource Management …………………………………………   6

Conclusion ………………………………………………………………. 13

Recommendations ……………………………………………………….       15

References ……………………………………………………………….. 16


        The organizations working in the markets are one of the major employers of people after

the government departments. These organizations have predefined set of rules, regulations and

policies that must be followed to obtain the desired results. The people working in these entities

are regarded as assets of the company and deemed very important for the success of the

company. It is therefore crucial for the company to manage and retain these people in the

organization for as long as possible.

        From the last decade or so, there is a rising trend in the companies to develop a

specialized department for the personnel management. This department which is responsible for

maintaining and managing the effective employee relationships is called Human Resource

Management (HRM). This term has received lot of important and recognition in both UK and

USA. It was first appeared in the writings of the academic scholars in late nineteen century (for

example Tichy et al, 1982, Fombrun et al, 1984, Beer et al, 1985 etc.) which was readily adopted

by the managers in the countries like UK and USA.

        Human Resource Management is defined as the function within a company that

specializes in the activities related to the recruitment, selection, training, management, and

providing directions to the people; employees, workforce, working within the company

(Heathfield, 2011). The importance of HRM cannot be denied. Almost every business unit and

business function is linked with the HR department of a company. HRM has a strategic

importance as well for the management of people, organizational culture and the environment.

The effective human resource management helps the employees to perform its duties and tasks

effectively at right time in right direction.

       It plays significant role as a facilitator between the company and the employee

relationships, jobs, motivation, and performance. The effective HRM guarantees the workforce

collaboration and performance but in the absence of effective HR, there, sometimes, exists

organizational and employee related conflicts that can take severe position; increased ratio of

employee turnover, declining performance, labor union issues etc.

       The research on the importance of Human Resource Management has grown many folds

over the past few years. This study is based on understanding and evaluating the role of Human

Resource Management and the HR managers in deciding the relationship between company and

employees with regard to rewards, motivations, recognition and performance in an organization.

Keeping in mind the importance of Human Resource Management and all the implications

related to the management of people within an organization, this study was conducted to obtain

the importance of Human Resource Managers for facilitating the positive and long term

relationship between the organization and employees with reference to rewards, recognition and


Human Resource Management

       Large numbers of people do not appreciate the Human Resource Department and its

approach towards the enforcement of rules, regulations and policies in the company. There are

instances in the organizations when the people think and believed that HR department in their

company is the most evil department which is a kind of bureaucrat that imposes unnecessary

policies and rules on them and therefore, required to be changed. The most common criticism

regarding the Human Resource Department is related to the performance appraisal; pay related

issues, and working hour issues etc. Many people are found criticizing that the performance

appraisal system in their company is the most eroded system which is mostly useless.

       No matter what people believe, but the Human Resource Management is a necessary

component of an organization due to the varied reasons especially related to the regulations

imposed by the government for workforce, labor issues, legal requirements etc. and therefore HR

must take precautionary measures to comply with the performance standards.

       Human Resource Management is a legal collaboration between the organization and the

employees working there to comply with the latest industry standards as well as the rules,

policies and practices assigned by the company. HRM is defined as “designing management

systems to ensure that human talent is used effectively and efficiently to accomplish

organizational goals” (Mathis and Jackson, 2007).

       Towers (2007) explained that Human Resource Management is now days considered as a

field of study that views the workplace management in the more innovative way then the

traditional way of managing people. The latest trends in the organizational cultures represents

that the HR managers are now forced to develop and express the human resource goals and

activities with high degree of specificity to help the workforce understand and undertake these

roles. Moreover, these managers are also required to provide the human capital and resources

required by the organization to complete the tasks and projects successfully. He further specified

that the Human Resource Management techniques, if properly employed and practiced gives the

understanding of the organizational goals and the operational capabilities of the company as a


         These days many companies are in a continuous process to find ways and practices for

the better performance of the company in terms of its products and services. This has increased

the level of competition in the domestic and global markets for the companies. The companies

are now forced to conduct internal audits and evaluation of the existing resources and the

resources required by them to obtain maximized results and gain competitive advantage over the

counterparts’ at large (Barney, 1991; Hamel and Prahalad, 1994). This internal evaluation and

examination has increased the attention of the firms to use the employees of the company or the

human resource capital as a competitive advantage over the competition (Huselid, 1995; Lado &

Wilson, 1984; Miles &Snow, 1984; Schuler & MacMillan, 1984; Wright, McMahan, &

McWilliams, 1994).

         The effective human resource practices are deemed to be the source of competitive

advantage to the company which supports and aligns the organizational resources and

competencies to maximize the value to the firms (Wright et al, 2001). Many researchers have

argued that the strategic human resource management plays very important role in the

identification and alignment of resources for benefitting the organization in order to achieve

competitive advantage (Snell et al, 1996; Wright et al, 2001).

       In the today’s business scenarios, the management of company employees and the right

approach employed in the company can have great impact on the overall performance of the

company. It is important for the growth oriented companies to build strategic advantage in the

human resource of the company to excel further which can take start from the right staffing and

ends at managing the employee performance. Thus Human Resource Management is a basic

motivator and a force behind the development of the employees as well as the organization

(McNamara, 1997). According to Becker and Huselid (1998) there is a strong link between the

HR practices and the performance of the company. There has been great deal of research in the

last decade to examine this linkage. The research has proven that the HR activities and practices

are the most crucial component which is deemed important for the organizational performance,

success and the competitive advantage in the markets.

       HR managers are not only responsible for the management of the employees but also they

are effectively taking part in building the organizational culture. The studies conducted on the

organizational performance have come to a conclusion that the organizational culture plays

significant role in the performance of the company. The model presented by Kotter and Heskett

(1992) specified that there is a positive link between the organizational culture and the

performance of the company. They further explained the importance of the alignment of culture

and performance, according to them, the strong organizational culture can benefit the employees

in aligning their values with that of organizations. The strong organizational culture also

enhances the level of employee motivation in the organizations.

       The HR managers in the organization keeps checks on the goals, strategies and practices

adopted in the company for the development of the standards required for their achievement. The

continuous scrutiny of the HR team helps them find out the current and potential problems or

bottlenecks in the company as well as the underperforming employees. They have immediate

access to the information related to employee issues and performance problems and is readily

mediated to avoid inconvenience at greater scale. The HR managers are also engaged in the

identification of the processes and techniques that can be helpful for the company to improve the

quality of products, timely delivery and manufacturing standards (Price, 2007).

       The prior access to the potential issues helps the management and the employees to

communicate with one another to resolve their problems. According to Price (2007), the HR

manager facilitates the communication among the top management and the employees. The

bridging between both the parties by HRM can establish long term relationship between them

and the increased the level of trust and the understanding.

       Many United States based companies are forced to employ the range of activities related

to the performance enhancement to improve the level of their performance in the global markets

(US Department of Labor, 1993). Such practices have influenced the organization’s way of

doing things and its performance. The excellent organizations are defined as the organizations

that employ these performance improvement practices in their business units (Peters and

Waterman, 1982). These practices include employee recognition, participation, empowerment as

well as employee job training, rewards, and positive motivation at workplace (Pfeffer, 1994). It

is widely believed that the people working within the organization are important resources to the

companies and are crucial to the success (Peters and Waterman, 1982; Pfeffer, 1994). The

research conducted by Delany and Huselid (1996) suggested that the progressive human resource

management practices, for example, proper staffing, on job training, recognition, competitive pay

etc., are strongly related to the performance of the company.

       The scholars have always taken two main perspectives when studying the relationship

between the performance and the HRM. The first approach in their study is based on the

systematic approach. The research in recent years through this perspective was based on the

separate research and understanding of Human resource practices and the performance of

employees. Recently, the research has moved to the study the performance of employees and the

practices of HR as a collective process (Arthur, 1992; Huselid, 1995; Huselid & Becker, 1996;

Huselid, Jackson, & Schuler, 1997). The second approach taken by the researchers is based on

the strategies adopted by HR in the organization (Ferris et al, 1999). In this approach the

researchers try to examine the relationship between the competencies of the organization and the

practices of Human Resource Management (Miles & Snow, 1994; Wright & Snell, 1991). This

approach studies the overall strategies adopted by the HR of a company with comparison to the

organization’s competitive advantage.

       There are many ways of measuring the relationship between the HR practices and the

performance of an organization. The employee performance is based on the effective system of

rewards, recognition and compensation. The research conducted by Gerhart and Milkovich

(1990) asserted that there is a significant link between the HR and the performance of the

company based on one single HR practice: Compensation, and/or selection (Terpstra & Rozell,

1993). Barney (1995) suggested that the better results can be obtained by combining the

company’s strategies with the HR policies as a whole. Another way of measuring and managing

the impact of HR practices on the organizational practices is to develop a set of best practices to

be performed at every level of organization to measure (Pfeffer, 1994, Schmidt et al, 1981).

       The major role of HR management is to implement the organizational strategies. There

are certain models developed by the researchers that explain the level of HR intervention in the

form of important skills and behaviors required to perform a particular task or implement the

strategy. The model presented by Wright and McMahan (1992) asserted the basic impact of HR

practices over the organizational strategies. According to them, the implementation of strategies

impacts the policies and practices of HR management which in turn influence the behaviors and

skills of the human capital in the organization.

       Another Model was presented by Cappelli and Singh (1992) according to their model, the

strategy implementation is based on two points: 1. the responses required from the employees for

a particular organizational strategy, and 2. the set of HR practices and procedures required

generating those responses from the employees. Their model is similar to the model presented by

Schuler and Jackson (1987). According to Schuler and Jackson, the strategy to be implemented

explains the type of “employee role behaviors that are required, resulting in HR practices

designed to elicit those role behaviors which impact organizational performance. In addition, the

actual role behaviors exhibited are impacted by these HR practices”.

       Organizations can implement various human resource practices to develop the employee

skills and behaviors. These practices may involve improvement in the quality of the newly hired

employees or improving the level of skills and performance of the existing employees by giving

proper training to them. The behaviors of the employees can be amended by providing proper

pay, recognition and reward systems. There are various theories developed in this regard to

supplement the HR practices for the better performance, skills, behaviors, motivation level and

the way they work (Delanay and Huselid, 1996).

       The research conducted by Cherrington et al (1971) relayed that there is a significant

relationship between the performances of an employee to the reward system offered. Their

research concluded that the there is a positive correlations with the satisfaction level of

employees, and productivity. Their satisfaction level in terms of reward system to the high

performers, higher will be their motivation level which will directly impact their performance

level. Another research conducted by Williams (2010) assessed the impact of Human Resource

Practices on the employee satisfaction, trust, commitment and their perceived performance level.

The research concluded that the HR practices have very powerful impact and are deemed to be

the predictors of the employee trust, satisfaction and performance.

       It is necessary for the HR managers to understand the ways through which the

performance of the people within the firm can be maximized. For this it is required to examine

the value offered by the HR or it can offer to its people. The ideal HR practices can lead to the

financial success of the company in the markets (Delery & Doty, 1996; Huselid, 1995; 1996;

McDuffie, 1995; Welbourne & Andrews, 1996; Youndt, Snell, Dean, and Lepak, 1996). The HR

practices are important drivers for the development of employee commitment. The effective HR

can impact the workforce skills and performance at large and plays very significant role in the

development of human capital as assets for the firm to gain competitive advantage.


        Due to the increasing importance of the Human Resource Management within the

organization for managing the human capital and developing strategies that can sustain the

competitive advantage of the firm in the markets, it is necessary to have lot more development in

this field. There is very little theoretical evidence present that specifies the importance of HRM

practices and the development of strategies for the firm, therefore extensive research is required

in these fields (Wright & McMahan, 1992). The main focus of this paper was on the role of

Human Resource Management to the performance of the organization at large. This study also

focused on the relationship between the effective HR practices and the level of employee


        The study findings have shown that the Human Resource Management is the highly

researched topic in the literature. The importance of HRM cannot be denied. It is responsible for

managing the employees within the organization. HR management is not only related to the

development of HR policies and procedures, it is also responsible for building the organizational

culture. The organizational culture then reflects the performance of the employees as a whole.

This means that HR is not only responsible for the development of human capital but it is also

responsible for the development of organization itself. HR practices and policies hold significant

importance in relationship with the performance of the company. If the ideal HR practices are

employed then the firm received financial benefits as well as competitive advantage over its


        The study has also listed some of the important models developed by the researchers that

can be helpful for the measurement and understanding of the organizational practices and the HR

policies. The major role of the HR department is basically the implementation of the

organizational strategies and aligning the resources with the strategies to achieve the

organizational goals. The resources are widely human capital of the organization.

       The study showed that the effective HR practices like reward system in the organization

can have positive impact on the performance of an employee. The quality of work and

performance of employees can be improved by providing competitive pays and training to the


       Finally, the study findings suggested that the effective HR practices are the key to the

success of an organization. The employee satisfaction is highly based on the HR practices. If the

HR is doing its job right, then the employees’ performance will have positive trend in the

organization and vice versa. Therefore it is necessary for the HR managers to understand the

ways through which the performance and employee satisfaction can be improved.


       The human resource practices are deemed to be the most important factor behind the

success of an organization. The HR practices must be viewed in relation to the overall goals,

policies and strategies of the company instead an alien department to be dealt outside the

company. There are lots of instances where the organizations have developed HR departments

but they fail to collaborate and communicate with them. It is therefore important to have a

combined approach towards the HR management systems and the organizational strategies. The

company can only be successful in the markets if it has effective collaboration with its

employees which is only possible if effective HR practices are adopted.

       Moreover, the HR managers should have the right power to practice within the

organizational frame in order to obtain the maximized results. The development of employees is

dependent on the effective HRM. The right level of rewards, recognition and compensation will

be required to motivate the employees to perform their best for the company and the customers.


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