Role of the Human Resource Manager in Deciding the Relationship between Rewards,
Motivation and Performance
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, &
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.
Barney, J. (1991). Firm Resources and Sustained Competitive Advantage. Journal of
Management, 17, 99-120.
Becker, B. E., & Huselid, M. A. 1998. High performance work systems and firm performance: A
synthesis of research and managerial implications. Research in Personnel and Human Resources
Management, 16: 53–101.
Cappelli, P. & Singh, H. (1992). Integrating strategic human resources and strategic
management. In D. Lewin, O.S. Mitchell & P. Sherer (Eds.), Research frontiers in industrial
relations and human resources, Madison, WI: Industrial Relations Research Association.
Cherrington, David J.; Reitz, H. Joseph; Scott, William E. (1971) Effects of contingent and
noncontingent reward on the relationship between satisfaction and task performance. Journal of
Applied Psychology, Vol 55(6), doi: 10.1037/h0032041
Delaney, J. T. and Huselid, M. A. (1996) The impact of human resource management practices
on perceptions of organizational Performance, Academy of Management Journal; 39, 4;
ABI/INFORM Research, pg. 949
Delery, J., & Doty, H. (1996). Modes of theorizing in Strategic Human Resource
Management:Tests of universalistic, contingency, and configurational performance predictions.
Academy of Management Journal, 39, 802-835.
Gerhart, B., and Milkovich, G. T (1990) Organizational differences in managerial compensation
and firm performance, Academy of Management Journal, 33:663-691
Hamel, G. & Prahalad, C.K. (1994). Competing for the Future. Cambridge, MA: Harvard
Business School Press.
Heathfield, S. M. (2011) What is Human Resource Management?, about.com, retrieved on July
28, 2011 from http://humanresources.about.com/od/glossaryh/f/hr_management.htm
Huselid, M.A. (1995). The impact of human resource management practices on turnover,
productivity, and corporate financial performance. Academy of Management Journal,
Huselid, M. (1995). The impact of human resource management practices on turnover,
productivity, and corporate financial performance. Academy of Management Journal, 38,635-
Kotter, J. and Heskett, J (1992) Corporate Culture and Performance, The Free Press
Lado, A.A. & Wilson, M.C. 1994. Human resource systems and sustained competitive
advantage: A competency-based perspective. Academy of Management Review, 19(4):
MacDuffie, J. (1995). Human resource bundles and manufacturing performance: Organizational
logic and flexible production systems in the world auto industry. Industrial and Labor Relations
Review, 49, 197-221.
Mathis, R, L., and Jackson, J. H., (2007) Human Resource Management, 12th edition, Thomson
South Western Publishers: USA
McNamara, C. (1997) Human Resource Management, Free Management Library, retrieved on
July 28, 2011from http://www.managementhelp.org/hr_mgmnt/hr_mgmnt.htm
Miles, R.E. & Snow, C.C. (1978). Designing strategic human resources systems. Organizational
Peters, T. and Waterman, R (1982) In Search of Excellence, New York: Harper & Row
Pfeffer, J and Cohen, Y (1994) Determinants of Internal Labor Markets in Organizations,
Adminstrative Science Quarters, 29; 550-572
Price, A. (2007) Employee Involvement, Employee-Centered Management and Empowerment,
Human Resource Management in a Business Context. 3rd edition, retrieved on July 28, 2011
Schmidt, F., L., Hunter, J. E., and Pearlman, K. (1981) Task Differences as moderators of
aptitude test validity in selection: A red herring, Journal of Applied Psychology, 66: 166-185
Schuler, R.S. & Jackson, S. (1987). Linking competitive strategies with human resource
management practices. Academy of Management Executive, 1: 207-219.
Schuler, R.S. & MacMillan, I.C. (1984). Gaining competitive advantage through human resource
management practices. Human Resource Management, 23(3): 241-255.
Snell, S. A., Youndt, M. A., Wright, P. M. (1996). Establishing a framework for research in
strategic human resource management: Merging resource theory and organizational learning. In
G. R. Ferris (Ed.), Research in personnel and human resource management, vol. 14: 61–90.
Greenwich, CT: JAI Press.
Terpstra, D., E and Rozell, E. J. (1993) The relationship of staffing practices to organizational
level measures of performance, Personnel Psychology, 46: 27-48
Towers, D. (2007) Human Resource Essays, retrieved on July 28, 2011 from
US Department of Labor (1993) High Performance Work Practices and Firm Performance,
Washington DC: US Government Printing Office
Welbourne, T., & Andrews, A. (1996). Predicting the performance if initial public offerings:
Should human resource management be in the equation? Academy of Management Journal, 39,
Williams, J. G. (2010) The importance of HR practices and workplace trust in achieving superior
performance: A study of public-sector organizations, The International Journal of Human
Resource Management, Vol 14, Issue 1, DOI: 10.1080/09585190210158501
Wright, P. M., Dunford, B. B., & Snell, S. A. (2001). Human resources and the resource-based
view of the firm. Journal of Management, 27: 701–721.
Wright, P.M. & McMahan, G.C. (1992). Theoretical perspectives for strategic human resource
management. Journal of Management, 18(2): 295-320.
Wright, P.M., McMahan, G.C. & McWilliams, A. (1994). Human resources and sustained
competitive advantage: A resource-based perspective. International Journal of Human
Resource Management, 5(2): 301-326.
Youndt, M., Snell, S., Dean, J., and Lepak, D. (1996). Human resource management,
manufacturing strategy, and firm performance. Academy of Management Journal, 39,