THE EFFECT OF HUMAN RESOURCES MANAGEMENT ON ORGANISATIONAL PERFORMANCE
Vol.7, No.3, pp.76-94,
THE EFFECT OF HUMAN RESOURCES MANAGEMENT ON ORGANISATIONAL PERFORMANCE
Ramazan Yılmaz Fatih Mehmet Bulut Bursa Orhangazi University – Bursa, Turkey
Abstract: In the last thirty years, change became a part of life in all the areas. All those developments and globalisation aff ect the markets and have caused radical changes in employees’ relationships. One of the most obvious examples of this change is the shift in the understanding of labour management. Th e competitive business world, sustainable competitive advantage is the basic factor for reaching organisational strategies. On the present day, fi rm’s success broadly depends on the capabilities of its employees. Companies may have capital and technology, but it is the HRM that will help companies face the challenges of globalisation of business. Human resources practices appear to have a vital importance to the success of organisational performance.
Key words: human resources management, human resources practices, organisational performance.
Introduction Developing technology and ease of communication in the competitive environment that makes every day a little more ruthless, the most important value for the organisations has given birth to the concept of human capital and human resources. In the today’s market, the eff ective use of human resources in order to reach the objectives of the company is very important. Without the enlargement of human resources as a strategic resource within the company, it will be diffi cult to assure the long-term strategic future of the company, even though fi nancial resources might be suffi cient (Lorange 1986, p. 138). In order to compete, companies must continuously enhance their performance by decreasing costs, innovating products and processes, and development quality, productivity, and pace to market (Becker & Gerhart 1996, p. 779-801). KNUV 2015; 2(44): 5-13 6 Ramazan Yılmaz, Fatih Mehmet Bulut This article investigates the effect of human resources practices on organisational performance within organisations. Th e parts of this paper are given below: – To review theoretical background – To examine human resources management practices (HRP) – To examine the relationship between human resources management (HRM) and organisational performance (OP) – To review research methodology – Conclusion.
Theoretical background Human resource management (HRM) has the key role in the today’s competitive work environment. Th e style and management of human resource systems based on employment policy, comprising a set of policies designed to maximise organisational integration, employee commitment, elasticity, and quality of work (Alagaraja 2013, p. 119). HRM is defi ned as a strategic and compatible approach to management of an organisation’s most approached assets – the people working there who one by one and jointly contribute to the accomplishment of its objectives. According to Armstrong, the main aim of human resource management is to provide that the organisation can achieve success through people (Armstrong 2006, p. 8). Th ere are many researchers and authors who defi ned HRM in diff erent ways. Some of these defi nitions are given below: Th e HR function can and progressively is making important contributions to building an organisation that is staff ed by the right human capital to eff ectively make real the work of the fi rm and to provide the achievement of business strategy (Lawler III & A. Mohrman 2003, p. 1-30). Defi nitions of human resources can be classifi ed under two broad stages: generalist and distinctive. Th e fi rst category mainly includes concepts proposed by the HRM perspective, where “human resources” cover all people under employment at a special organisation. Th e second category puts an emphasis on employees’ abilities, knowledge, attitudes and experience (Kazlauskaitė, Bučiūnienė 2008, p. 80). Most of defi nitions show that HRM is the basic element for organisations. Some defi nitions focus on the solving problem aspect of HRM practices, the other of defi nitions show that role of HRM practices on organisational performance. Under the today’s market conditions, each of organisations must have the department of HRM to compete. Otherwise, they cannot survive in diffi cult conditions of the market for a long time. Without understanding eff ect of HRM the organisation cannot take competitive advantages against its competitors.
Human resources practices When the world is turning more competitive and unstable than ever before, fabrication-based industries are seeking to obtain competitive advantage at all cost and are becoming more innovative sources with HRM practices (Sparrow, Schuler & Jackson 1994, p. 267-299). HRM practices can create enriched knowledge, motivation, synergy, and commitment of fi rm’s employees, outcome in a source of sustained competitive advantage for the fi rm (Harter, Schmidt & Hayes 2002, p. 274). HRM practices regulate the attitude and status of the employer-employee relationship which can encourage the employees to become more innovative (Tan & Nasurdin 2006, p. 156). With changing conditions in the world, especially for businesses struggling in the rapidly changing global competitive environment, HRM practices began to be seen as the basic element of the ongoing success of competition. In order to gain maximum competitive advantage and to enhance organisational performance, companies need to use much more their human resources practices. In recent years, global companies believe that one of the most important tools for human resource management practices is improvement of individual and organisational performance and maintenance. HRM practices affect employees’ abilities through the obtaining and improving fi rm’s human capital. HRM practices are able to impress fi rm performance through supply of organisational structures that embolden participation among employees and permit them to enhance how their jobs 8 Ramazan Yılmaz, Fatih Mehmet Bulut are performed (Huselid 1995, p. 635-672). HRM practices are also conceived as a set of inwardly coherent policies and practices designed and implemented to provide that fi rm’s human capital contribute to accomplishment of its business aims (Delery & Doty 1996, p. 802-835).
The relationship between human resource management and organisational performance Acquaah indicated that HRM practices advance organisational eff ectiveness and performance by attracting, identifying, and keeping employees with knowledge, skills, and abilities, and acquiring them to behaviour in the manner that will support the mission and aims of the organisation. In this way, the eff ectiveness of HRM practices depends on how it encompasses the appropriate attitudes and behaviour in employees, in addition to its implementation (Acquaah 2004, p. 118-151). Some researchers have recommended that evaluations of performance should be based on fi nancial indicators (e.g., profi t), and for years, human resources issues have been secondary to such indicators. Nowadays, many researchers admit that profi t alone is not suffi cient to hold the excitement and adherence of employees or to pay attention to the core elements of a business that has to get attention if it is to perform adequately. Stanton and Nankervis pointed out that organisational performance can be improved, especially through raised productivity and employment elasticity, by ranging entire employees’ performance outcomes with wide strategic business and HRM obligations. In this way, the management of singular employee’s performance, and their unifi ed contributions to whole impressiveness, has possibly become the most signifi cant actual HRM function in all organisations (Stanton & Nankervis 2011, p. 69). It is important that a fi rm embraces HRM practices that make the best use of its employees. Th is trend has led to an increased interest in the impact of HRM on organisational performance, and a number of studies have found a favourable relationship between the alleged high-performance work practices and diff erent measures of company performance (Huselid 1995). Also, there is some empirical support for the hypothesis that fi rms, which arrange their HRM practices with their business strategy, will achieve ascendant outcomes (Bae & Lawler 1993, p. 502-517).
Research methodology Th e main purpose of this article is to examine the eff ect of human resources management on organisational performance. In this article, samples were selected of the fi rms that operate the manufacturing of textile products as members of Bursa Chamber of Commerce and Industry (BCCI). Th e survey was electronically prepared to send to BCCI members that they were 314 companies which have HR department. We got positive feedback from the 221 companies. 12 questionnaires could not be included in the evaluation for various reasons. 209 questionnaires were evaluated. Th e participants were the diff erent levels of executives who were experienced in human resources management practices in the private sector from 209 companies. 47.37% of respondents were HR managers. HR executives accounted for 30.14%, and general managers – for 22.49%. 48.33% of the respondents were females and 51.67% were males. 41.15% of the sample had university degrees, 32.01% had post-graduate degrees (master and doctorate), 16.75% had high school degrees, and 9.09% had primary school degree. Th ere was no organisation which was established 5 years ago; 11.00% of organisations age was between 6 and 10 years; 19.14% of organisations age was between 10 and 20 years; 49.28% of organisations age was between 20 and 30 years; 20.57% of organisations age was 30 years and more.
In this article, R² displays the rate of the variance in the OP scores accounted by the predictor variable of HRP. Th e regression equation of this study made a good fi t with the data (R² = 0.576), demonstrating that the eff ect of human resources applications was a good predictor of organisational performance (F = 157.561, p < 0.05). Th e Beta value (β) is a measure of how strongly each predictor variable infl uences the criterion variable. Th e higher the Beta value, the greater the eff ect of the predictor variable on the criterion variable. Beta value can be used to compare the contribution of each predictor variable on the criterion variable. As seen in Table 1, the independent variable, entire HR practices (β = 0.759), has positive relationships with OP. Table 1 shows the relationship between the use of HR practices and the extent of organisational performance. Th e entire-F test for the model defi ned that the use of HR practices jointly clarifi es a signifi cant amount of the variance in the extent of organisational performance.
if p-value is above 0.1, then the prediction in ‘β’ is untrustworthy and is said to be statistically unimportant. As a whole, the ‘training and education’ (t = 7.961, p = 0.000), ‘human resources planning’ (t = 6.169, p = 0.000), ‘recruitment’ (t = 5.766, p = 0.000), career management (t = 5.233, p = 0.000), and performance management (t = 3.633, p = 0.000) factors have statistically important relationships with the dependent variable. Th e positive Beta value shows a positive relationship between predictor and criterion, negative coeffi cient shows a negative relationship. Th e higher the Beta value, the greater the impact of the predictor variable on the criterion variable. Beta value can be used to compare the contribution of each predictor variable on the criterion variable(Schroeder, Sjoquist, & Stephan, 1986). Table 2 displays that all factors: training and education (β = 0.470), performance management (β = 0.214), human resources planning (β = 0.364), recruitment (β = 0.340), and career management (β = 0.309) have positive relationships with OP. H2: Th ere are some HRM applications that are most predictive in OP.
Conclusion an organisation can only be as good as the performance of organisation’s employees because employees’ performance is the most important determinant of organisational success. In other words, routed and improving individual performance will also increase the performance of the organisation. Th e way to achieve that employees will fi nd their work meaningful is through the creation of the working environment and building the system that aims to continuously improve performance. Th e most important task at this point it does falls undoubtedly to human resources managers. The purpose of HRM practices is to provide eligible employees for organisations in order to increase organisational performance and eff ectiveness. Th erefore, entire HRM activities endeavour for regulative people to organisations in order to ensure retention and long-term employment, and increase organisational performance. Long-term employment and retention of employees require workers to believe that the organisation’s values and their values fi t. HRM practices are able to increase organisational eff ectiveness by ensuring profi table experiences for employees. For example, when employees get in the organisation well-applied orientation programmes help them to learn about the organisation and its values to increase organisational performance. Companies can adapt to changes and fulfi l their social functions; there may be found a company in the mission fi eld staff as a whole contribute to the overall objectives and the staff at the desired level of performance subject to the continuous improvement evaluated. Human resource management (HRM) is a key function for an eff ective and effi cient organisation
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