HRM and Business Effectiveness

Based on Chapter 3 of Human Resource Management in a Business Context (2nd

Edition, 2004) by Alan Price - published by Thomson Learning
Contents
Objectives
The purpose of this chapter is to:

Introduce the concept of high commitment/performance work systems

Provide an overview of human resource systems

Evaluate the contribution of HRM and HR technology to business

effectiveness

Provide a checklist of HRM principles

High Performance Organizations

Knowledge management
Knowledge management: a Big Idea
Tacit and implicit knowledge
Knowledge management practice
HRM and business effectiveness
HR systems
HR professionals and the HR system
Measuring the impact of HRM
Where does the HR profession go from here?
A 10-C checklist for effective HRM
Summary
In this chapter we discussed recent and ongoing ways in which the human resource
management function is changing - perhaps more radically than ever before. The HR
function and its activities are being examined in microscopic detail in many large

organizations. Human resource processes, especially those involving the collection and
dissemination of information, are being computerized and automated, potentially
eliminating routine clerical activities. HR information and knowledge is being linked and
integrated with other information systems, breaking down departmental barriers.
As HR processes become more easily measurable, the need for justification and the
means to do so become more obvious. Concepts such as the high performance
organization and knowledge management offer HR specialists the chance to push HRM
to the fore. HR processes and their outcomes are central to these concepts and the
introduction of technology allows more exact methods of determining whether or not
human resource initiatives do affect the 'bottom line' and shareholder value.
Yet there is some cynical scepticism coming from HR practitioners and academics,
some of it associated with dogged technophobia, together with justifiable questioning of
the methodology, rationale and, not least, the capabilities of the systems and concepts
we have discussed.
Further reading
Karen Legge provides a carefully reasoned critique of the high
commitment/performance concept and its links to HRM in a chapter of John Storey (ed)
(2001) Human Resource Management: A Critical Text. In the same book, John Storey
and Paul Quintas provide a thorough overview of knowledge management and its
implications on HR in their chapter on the topic. How to Measure Human Resource
Management (2001) (3rd edition) by Jac Fitz-Enz and Barbara Davison, published by
McGraw-Hill, contains practical information on measuring elements of HR. If Only We
Knew What We Know: The Transfer of Internal Knowledge and Best Practice (1998) by
Carla S. O'Dell and Nilly Essaides (published by the Free Press) provides a good
explanation of how applying the ideas of Knowledge Management can help employers
identify their own internal best practices and share this intellectual capital throughout
their organizations.

HRM and Business Effectiveness

Any business to be effective has to perform and for the employees to

perform at their best some or the other kind of motivation is required. It
may be in form of cash or in form of kind. Thus it is necessary that the HR
managers keep the HR team motivated. Highly motivated team can deliver
high performance results and thus the business can become effective. That
is why there is a strong and a secret connection between Human Resource
Management and Business Effectiveness. Today in this section we are going
to understand the relation between them.
When there is support from the top levels of management, then the
environment which is present becomes an environment of trust and honesty.
Also the top level management teaches the juniors to take risk and becomes
successful leaders. There should be environment where everyone is able to
express their views and take suggestions. Thus workers and managers can
develop a shared vision. Also there should be strategic planning and
everyone should sit across the table and discuss the pros and the cons of the
companys strategies. This will help to map out the quarterly goals of the
organization.
Also equal focus should be made on commitment and customers
expectations. These expectations should be fulfilled with proper feedback
and surveys. This is applicable not only to external but also to internal
customers. Thus by doing this there can be a proper focus on customers and
the quality can be maintained throughout the business life-cycle. Also when
there is so much focus on customers then after a certain period of time it will
become a principle to be followed. When such practices are performed then
it becomes easy to measure the performance of the company as well.
Also effectiveness means the managers should focus on terms team spirit,
empowerment and employees participation or involvement. This leads the
business effectiveness and high performance organizations. This is the basic
of HRM and every manager should encourage these kinds of practices. But
the managers should also keep in mind that the practices which are
practiced in the work environment should be according to the budget of the
company. Everything should be in the context of business development.
This is the impact that HRM has to business and in the above mentioned
ways it can become effective. HRM and Business Effectiveness are thus
summarized.