The impact of human resource management on organizational performance
Many organizations have usually underplayed the role that human resource management has in impacting organizational performance. This has changed now especially with a greater degree of awareness about aspects like the criticality of talent, the high levels of human resources with business decisions and the parameters that should actually be evaluated to assess organizational success. A good hr certification online will always share the linkages that exist within various levels of the organization, between human resource management and business performance.
Let us take a closer look at what kind of impact it has.
- Culture – One of the most common quotes in the business world is about how people join or leave an organization because of the culture it has. What is culture? It is the work environment or climate that is seen in the interactions, policies, programs and practices that exist. Leadership communication is also a large part of it. Human resource management consists of building a positive culture as well as being aware of cultural issues that could be resulting in attrition. Human resources department is the process owner that works relentlessly to sustain a good place to work for the employees. The effects of a great place are lower attrition, higher motivation, better performance and team work. These are the biggest pillars that result in business performance improvement.
- Leadership Development - Leaders have to be identified, developed and then coached or mentored as well. Human resource management as the crucial responsibility of doing this. The talent that exists has to be assessed so that they can be moved into more business critical roles. This is a process of talent development that HR manages. It then works on design interventions that can meet any gaps so that the individuals become ready for roles that will contribute to business directly. It is only by identifying the right talent and then mentoring them, can the business grow. That is how HR impacts organizational performance.
- Effective recruitment practices – The cost of rehiring and retraining a person is huge, as most companies have now realized. The only way to resolve that at the first level is by making the right hiring or recruitment decisions. These are decisions that can only be made when the Human resource team puts the correct practices and process in place. It is a critical exercise for a company to undertake and HR is at the helm of it. They make sure that the right parameters are being assessed, the tools that can help to make an informed decision are being used and the manner in which the recruitment happens is unbiased. This dramatically improves the talent quality and hence impacts overall organizational performance.
- Market-competitive Compensation strategies – Rewards and right compensation are one of the biggest motivators for an employee. They make sure that he or she feels appreciated and recognized for the extent of work they do. Human resources management consists of aligning compensation to the market best practices and continuing to benchmark with the right set of competitor companies. This ensures that the best talent remains with the company and also continues to perform in a manner that is consistent with the organization’s philosophy. When the right set of employees is retained, they can increase company performance significantly.
- Diversity & Inclusion – One of the new areas that Human resource management consists of is Diversity and Inclusion. In keeping with the times we are in, ensuring that the workforce has representation from all segments of society , policies that reflect the needs of a younger workforce, practices that are supportive of those who are involved in child care and elder care, are all roles that HR plays. Human resource management is therefore also about future focused new-age responsibilities that are shaping up the organization and hence affecting its business. Ensuring that the programs are in line with present and future requirements is a big responsibility.
- Learning & Development – The career aspirations of all employees are usually linked to how they can acquire more knowledge and move up the ladder. Facilitating this in the right manner is the role of Human Resources. The function works dedicatedly to not only identify specific training needs that exist for all individuals, but also who can help to close those gaps. Learning happens when there are enough opportunities provided and the right culture for it. HR has to take the accountability for ensuring that the environment and options are available, to suit the learning styles of all individuals in the firm.
These are some major ways in which human resource management impacts organizational performance. It ensures that the business goals are met through a mix of motivating and guiding the employees, as well as giving them the right support structure. Understanding the overall business scorecard and how that gets percolated down to the people scorecard, is also a crucial part of the job of Human resources. The alignment between people and business , between top leaders and the rest of the workforce are what drives the final performance.
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