Hrm is more important in current economic climate business Essay Example

social effects. These challenges arise from the high level of responsibility assigned to HR managers in the current economic situation (Source: Survey of global HR challenges, 2005). Jackson and Schuler (1995) perceive these as external environmental pressures that can be either positive or negative.Examples of factors that can influence the success and growth of businesses include tax incentives, a favorable business environment, and HRM functions. These factors encourage local companies to compete effectively with international counterparts and retain their workforce. On the other hand, political instability and uprisings discourage foreign investment, leading to unemployment and negative impacts on business success and economic growth. According to Brewster et al. (2005), developed countries like the United Kingdom and the United States are also influenced by political, legal, and societal factors in their HRM mapping. These factors can have either positive or negative effects as businesses operate within the laws and regulations of their environment. For example, British Petroleum (BP) in Libya has been affected by political unrest, which has also impacted other companies in the country and decreased government revenue. In contrast, Japanese car manufacturing companies in the UK have thrived due to a favorable political, legal, and societal environment they have established. SOM (2008) states that an organization's success relies heavily on HRM functions such as staff selection, training and development, incentives, and compensation in the current economic situation.According to Beardwell and Holden (2001), employment practices in the UK have undergone changes compared to those in the US due to economic pressures such as increased competition, recession, and technological advancements. These changes include providing more employee training and development to adapt to new technology, resulting in

improved skills that benefit the organization's success. However, it has been argued that inadequate training by HR managers can lead to lower productivity, decreased customer satisfaction, and strained relationships between employees and the organization.

To address increased competition, organizations have also modified their recruitment and selection approaches to ensure they hire individuals who are best suited for business success. However, this approach may result in unemployment as only a few individuals with the necessary skills are hired. The forces of globalization and heightened competition have also prompted organizations to prioritize continuous learning and training through their human resource management departments. The goal is to fulfill the needs of employees and clients while achieving business success. Nevertheless, some organizations tend to solely focus on extracting benefits from employees without considering their growth and training requirements.Implementing a purposeful HRM strategy is necessary for achieving employee and client satisfaction, ultimately leading to organizational success (Varma, 2008). During the economic recession in the 1980s, trade unions experienced a shift in their role and saw minimal or no strike actions. This change was influenced by factors such as unemployment, the recession itself, and new laws that limited the power of trade unions in controlling strikes. As a result, businesses faced challenges as employees lacked motivation to perform at their best (McKenna & Beach, 2008).

Deen and Giri (2008) propose that employees are an administration's greatest assets and should be motivated through various HRM activities/functions like emotional support, training and development, and financial rewards. This approach ensures that employees remain committed to contributing positively towards the organization's success. McKenna and Beech (2008) argue that with weakened trade unions' power comes the need for

simplified processes in collective bargaining and conflict management. This simplification leads to faster negotiation settlements while also granting organizations flexibility in implementing changes to work practices which can increase productivity while reducing workforce size.The large pool of available labor has resulted in HR practices shifting from recruitment to selection, aiming to choose the right candidates for business success. However, this shift may lead to increased unemployment. McKenna and Beech (2008) argue that reduced dialogue between labor unions and HR specialists, along with less time devoted to recruitment and selection, allows HRM to implement employee layoff programs and negotiate low wage settlements. Unfortunately, this is detrimental for employees as it results in low pay and potential demotivation at work. In the current economic situation, Goel (2008) highlights the need for a strategic information management system in HRM to effectively manage employee redundancy and negotiation programs by facilitating the gathering, storing, analyzing, and disseminating of information related to recruitment and selection processes. Without such a system, organizations will struggle to access information about their current and prospective employees.To ensure business success, organizations must implement an HRM information system that meets their information management needs. Davi (2008) argues that increased competition has presented challenges for the HRM function, such as managing directional changes, organizational culture, leadership training and development, assessing HRM effectiveness and employee satisfaction, creating employee engagement strategies, handling dismissals and compensation.

Addressing these challenges requires HR managers to identify and analyze key issues and provide solutions through the use of HRM strategies and performance measures (Pinnington & Edwards, 2000). In larger organizations, HRM functions resemble finance or marketing departments with specialized roles and a management team dedicated

to achieving organizational objectives (McKenna & Beech, 2008).

However, smaller organizations may not have the same level of specialization in their HRM functions and may handle them within a managerial role. The author highlights that larger organizations with specialization are more likely to achieve greater business success compared to smaller organizations lacking this specialization.

Bhattacharya (2008) emphasizes that it is inappropriate for any administration's human resource department - regardless of its size - to promise job security to employees who are seen as liabilities by other departments.Pendleton (2011) underscores the significance of collaboration between the HRM department and other departments in identifying valuable employees for the administration and retaining them, as they contribute to business success. According to McKenna and Beech (2008), human resource planning aims to align the quantity and quality of employees with organizational needs, considering both internal and external resources. Foot and Hook (2005) stress that having the right staff is essential for an administration's competitiveness, achieved through effective recruitment processes that assess internal human resources. The text discusses how considering employees' skills, responsibilities, and accomplishments contributes to achieving business success. McKenna and Beech (2008) argue that both internal and external workforce supply contribute to business success. Internal supply refers to existing employees' potential, while external supply includes factors such as demographics, education developments, and labor market competition within the European Union (EU). Prior to recruiting staff, job analysis is conducted to create a job description outlining necessary qualifications.Various techniques, such as application forms, interviews, tests, and assessment centers, are utilized to select the most suitable candidates from a group of applicants. The selection process involves creating a shortlist of applicants and providing them

with training to enhance their skills and contribute to the organization's success. However, in the current economic climate, employees face increased pressure to meet business goals while also taking on additional work due to training. To address these challenges, some organizations offer stress management seminars and provide training on coping with workplace stress. According to Armstrong (2003), HRM functions play a crucial role in developing human resource strategies that lead to business success. However, if these strategies are not implemented effectively, it can result in business failure. Foot and Hook (2005) state that an organization's structure should align with its plans for addressing future events and determining how best to approach them economically.Armstrong (2003) defines strategic HRM as the decision-making process that considers an administration's objectives and plans in relation to the employment relationship. This includes recruitment, training, development, performance management, rewards, and employee relations strategies. Failure to properly implement these strategies can lead to business failure.

According to Nachimuthu (2008), increased competition has prompted organizations with similar business strategies to merge for greater success. In these situations, HR plays a crucial role by retaining existing employees and integrating them into the new administration through HRM strategies like evaluations.

To succeed, it is essential for organizations to integrate HRM strategies with other departments such as finance, sales, and marketing. Foot and Hook (2005) argue that close collaboration between these departments and HR is necessary for areas like recruitment, workforce development, and training in order to achieve overall business success.

Nachimuthu (2008) also highlights the importance of HRM in managing cultural integration, communication, and leader selection during mergers and acquisitions.In the newly formed organization, HRM is responsible for retaining

valuable employees and implementing compensation and welfare programs. Pinnington and Edwards (2000) suggest a well-planned HRM strategy that focuses on employee selection, performance assessment, development, and rewards to address these challenges. Hutchinson and Purcell (2003) note that strategic HRM differentiates a business administration by focusing on unique actions. Armstrong (2003) states that strategy involves long-term allocation of company resources, aligning them with the external environment to achieve goals. It aims to address critical issues or success factors for a significant impact on behavior and success. When considering strategic HRM, Armstrong (2003) suggests taking into account the interests of all stakeholders in an organization – employees, owners, and management. Storeys (2007) argues that "soft strategic HRM" ensures employment security, training, development, and benefits for managing people while "hard strategic HRM" considers investing in human resources for business success. Therefore, a well-planned soft and hard strategic HRM will ensure organizational success in this state of affairs.Factors such as organizational objectives, employee selection and management should be considered (Legge, 2005). Armstrong (2003) emphasizes the importance of having a shared basis for developing long-term approaches to people. This allows organizations to capitalize on opportunities and gain a competitive advantage. However, Hamel and Prahalad (1998) argue that competitive advantage cannot be achieved without training human resources in new techniques. Effective people management also provides a competitive advantage that is difficult for rivals to copy (Pendleton, 2011). According to Armstrong (2003), an organization sets itself apart from competitors through its unique blend of procedures, processes, personalities, manners, capabilities, and organizational culture. This differentiation is achieved by implementing human resource strategies that ensure higher quality employees than rivals. To address challenges faced

by the organization, HRM strategies must be redefined to sustain a competitive advantage and invest in human resources. HR directors need the core competency to handle changes in economic situations, social effects, and technology affecting the organization.According to a survey conducted in 2005, it is important for organizations to identify and address key issues by providing development and training solutions. Armstrong (2003) asserts that the resource-based approach to HRM aims to improve resource capability through aligning resources with opportunities and maximizing their effectiveness. Cesyniene (2008) recognizes the challenges of recruiting skilled labor in fields with shortages. Armstrong (2003) also states that both rational capital theory and resource-based theory emphasize the value of investing in people for organizational success. By developing employees, organizations can add value and work towards achieving business goals. Boxall (2011) further argues that business success can be achieved by engaging and developing talented staff while expanding their skills. This approach focuses on enhancing the intellectual capital of the organization as a long-term HRM strategy rather than solely meeting business needs.The author emphasizes that for a business to succeed, it should have strategic capabilities or plans that enable effective competition regardless of the current economic situation. Cesyniene (2008) argues that in order to maintain a competitive advantage, HR managers will shift from "Hard" to "Soft" HRM due to a lack of qualified workers and increasing competition. This shift will prioritize employee needs. Kamoche (2000) explains that this approach relies on recognizing and developing the organization's workforce, resulting in a unified model for strategic HRM. Jackson and Schuler (1995) suggest that companies can gain a competitive advantage by adding value to their employees through

development and training, aligning with the organization's relationships with clients and employees.
According to Armstrong (2003), the key aspect of strategic HRM is integration or fit, also known as the fitting model. Malik (2009) further clarifies that this fitting model helps achieve strategic integration by aligning HRM functions with the organization's strategy, leading them towards the same strategic direction for business success when implemented.
Legge (2005) points out that there may not always be compatibility between an administration scheme and strategic HRM.During the economic downturn, some administrations carried out a retrenchment exercise that was not aligned with human resource management strategy. This resulted in demotivation of employees and poor performance (Pendleton, 2011). However, Bowen and Ostroff (2004) argue that having good HRM policies alone is insufficient to motivate employees and achieve organizational performance for business success. They suggest considering HRM process as well. Fey (2000) recommends focusing on employee development and training at all levels of management and staff. McKenna and Beech (2008) imply that HRM functions should aim to meet organizational objectives such as improving service provision, quality, profitability, or efficiency of services/goods. However, Fey (2000) also argues that there is no direct relationship between HRM practices related to employee training and development and organizational performance. In the current economic climate, increased competition has made HRM functions more crucial than ever for business success according to Hutchinson and Purcell (2003).The inclusion of various activities in HRM such as recruitment, workforce planning, employee training, pay administration, and personnel research contribute to the overall success and growth of a business. These functions support employees in taking on more responsibilities and help maintain a good working relationship between the

organization and its employees. Pinnington and Edwards (2000) found that there has been an increase in the responsibilities assigned to the HR director compared to before. They argue that effectively executing these functions will lead to the success of the business. However, neglecting these functions can have negative consequences on the business and hinder its achievement of success.