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Human Resource Management In Business

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Running Head: HUMAN RESOURCE MANAGEMENT IN BUSINESS

Human Resource Management in Business

Sylvan R. Wilcox

Warner Southern College

Abstract

Human Resource Management (HRM) is no longer a personnel office that is simply a record-keeping and maintenance function. Huselid (1995) points out that there is a positive correlation that has developed between HRM as a strategic ally and company performance. HRM research has grown from an atheoretical origin to view organizational activities from an interdisciplinary perspective (Jennings, 1994) that is concerned with a movement toward methodological and theoretical development (Ferris & Judge, 1991). This review will look at the different ways HRM plays into the overall scheme of providing an organization with a more sustainable competitive edge.

Table of Contents

Introduction.....................................................................................................4

Background.....................................................................................................4

Strategic Human Resource Management...................................................................6

Multicultural Knowledge Transfer..........................................................................8

HRM in the Public Sector....................................................................................9

Conclusion....................................................................................................11

References.....................................................................................................13

Human Resource Management in Business

The fast paced area of HRM as seen many new developments in the science and practice of the field over its roughly 80-year history (Ferris et al., 1999). One of the earlier developments in HRM research that still has significance today was, at the time, a theoretical foundation that challenged researchers to design measures to assess the relationship between "individual personalities" and "company personalities" (Gilmer, 1960). This field of inquiry led to the research that has come to be known as strategic human resource management (SHRM), a field that attempts to align HRM functions and activities with the strategic goals of the organization (Butler, Ferris, & Napier, 1991).

Another aspect of this review takes a look at HRM from an international perspective. This viewpoint acknowledges the importance of the global economy, as well as emphasizes the value of the Human Resource (HR) activities that address cross-cultural concerns (Napier, Tibau, Janssens, & Pilenzo, 1995).

Lastly, the political perspective of HRM presents an opportunity to address those features of public sector HRM practices that have become outdated by contemporary organizational standards (Soni, 2004).

Background

Human Resource Management is a diverse entity consisting of a variety of activities. Some of these activities include the decision about staffing needs and if hiring employees or contracting with independent sources will fill these needs, recruitment and training of employees, making sure those hired are high performers, dealing with performance and evaluation issues, and ensuring that HR practices comply with various regulations (McNamara, 1999). Additionally, McNamara (1999) points out three other activities that fall within the realm of HRM--managing the approach to employee benefits and compensation, employee records, and personnel policies.

Several HRM practices may influence individual performance by providing incentives that bring out appropriate behaviors (Minbaeva et al., 2003). Such incentive systems may include performance-based compensation and the use of internal promotion systems that focus on employee merit and help employees overcome barriers to career growth (Huselid, 1995). Previous research has shown that employees are more motivated when they are informed about the organization. Sharing of information on strategy and company performance tells the employees that they are trusted. Additionally, it is important that employees are kept current on company performance so that they can use the knowledge that resides in the organization to its fullest potential (Pfeffer, 1998). And by factor-analyzing HRM practices, Huselid's (1995) influential study of the impact of 'high performance work practices' points out the importance of HRM as it relates to organizational turnover, productivity, and corporate financial performance. Without HRM practices in place, organizations are likely to suffer in the three areas described above. The importance of HRM as a business function is exemplified in Huselid's (1995) view that HRM practices influence employees' skills and competencies through the acquisition and development of a business's "human capital."

Because HRM is such a fast-changing study it seems appropriate here to explain the alternative terminology that is starting to make the scene. "Human capital" was introduced in a statement by David Walker (2000), the Comptroller General:

We at GAO use the term "human capital" because "in contrast with traditional terms such as personnel and human resource management" it focuses on two principles that are critical in a performance management environment. First, people are assets whose value can be enhanced through investment, as the value of people increases, so does the performance capacity of the organization, and therefore, its value to clients and other stake-holders. Second, an organization's human capital approaches must be aligned to support the mission, vision for the future, core values, goals, and strategies by which the organization has defined its direction and its expectations for itself and its people... The term "human capital" originated in the field of economics. But both words human and capital are equally important to the concept as we apply it. Enhancing the

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