HUMAN RESOURCES MANAGEMENT CONTRIBUTION TO ORGANIZATIONAL PERFORMANCE IN THE CONTEXT OF GLOBALIZATION

HUMAN RESOURCES MANAGEMENT CONTRIBUTION TO ORGANIZATIONAL PERFORMANCE IN THE CONTEXT OF GLOBALIZATION Luţ Dina Maria lecturer, PHD student Christian University Dimitrie Cantemir Faculty of Management in Tourism And Commerce, Timisoara Abstract: The success of each organization results in efficient management of human resources. People are in the centre of the organization is a well-known and frequently used expression nowadays. Yet, few organizations pay enough attention to this matter, their goal being the short or medium term profitability. Economic and technical development, rapid transformation of the social environment of the organizations, the growth of social responsibility and human resources mobility and the changes in industrial psychology are significant factors that highlight the importance of human resources for an organization. This paper provides an overview of the HRM significance within an organization and its contribution to organizational performance in the context of globalization. 1. Introduction: Global competition in production and service sectors is increasing. The business world is more and more marked by the increasing internationalisation of markets and firms. Competitive economies are emerging in areas with high annual rates of growth and strong export performance. The globalisation of products and markets has led to strategic alliances between separate firms who act in partnership or as joint venture to develop and market new products. In this context of global competition, the aim of organizations is to attain world class performance. This happens when what the organization does and how it does are better than the world leaders in the sector in which the organization operates. The need to achieve world class standards to achieve competitive advantage on a global basis has focused the attention of many organizations on the importance on investing in people and building a high quality, flexible, well motivated and commitment workforce. The driving forces of competition were affecting the way in which people are organised and managed. The business practice are conducted by people. But while it is relatively easy to move finance and technology round the world, moving people presents many difficulties, because they are working away from home in new environments and within different cultures. At the same time, deeply rooted cultural differences make it difficult to attempt the imposition of a common approach throughout the world. 355

2. General considerations about organizations and their human resources management We are living in a world of organizations: more and more elements of life are integrated into organizational frameworks. Modern society depends on people working together effectively to solve problems and achieve objectives which are beyond the scope of individuals. It is a truism to say, therefore, that all people management takes place within organizations. According to Daft, R. L. (1989), organizations are the means by which human and other resources are deployed so that work gets done. [3] Jons, G. (1998) shows that organizations are social inventions created with the purpose of achieving some common goals by means of group effort. They are characterized by the coordinated participation of people, not necessarily of things. [6] It is generally agreed that people managers have a critical role in monitoring and controlling performance in order to achieve these targets. Price, A.J. (1997) concluded that to make the best use of an organization s human resources it is necessary to manage not only its people but also its corporate structure and culture. This should be done in a considered an integrated manner, in line with business objectives. The formal allocation of people management responsibilities is fundamental to the process. Businesses vary considerable in this respect: small companies tend to incorporate people management within line or general management, larger organization are likely to have specialist functional roles. These roles might have titles which differ significantly from one organization to another. [10] Different structures of the organizations affect the way in which people are managed. Human resources management (HRM) is bound up with the way the firms are organized. Brewster, C. and Tyson, S. (1991) agreed that businesses throughout the world require the same basic human resources activities: they recruit new employees, develop and train their staff, they have reward systems, they have control and feedback mechanisms and people must inter-relate and make decisions. But these activities are handled in different ways, reflecting the expectations and acceptable behaviour patterns within national business cultures. Similarly, employee values and attitudes are shaped to a considerable extent by people s native culture. Since national cultures are so pervasive, they strongly influence the cultures within organizations. [2] People have strong filings towards the organizations in which they work. Employees, managers and owners expect organizations to operate in an acceptable manner, but the notion of acceptability is culturally determined and varies from one country to another. Expectation and acceptability are important factors in determining the range of possible organizational structures which can operate successfully in a particular country. This is particularly significant in relation to the principles of HRM (for example, individual commitment depends on whether or not expectations are realized). The decision to manage people in a particular way depends on a number of factors, including the basic organizational aspects: goals, size and structure. HRM is conducted in a variety of ways due to these constraints and also because of strategic decision taken to meet organizational goals. Businesses can chose to vary their structures and their people management systems for a number of reasons. Increasingly, flexibility is required from employees and manager to meet new circumstances. Centralized personnel departments have been replaced with more specialized units, some of which may be subcontracted outside the organization. There are opportunities for human resource specialists dealing with complex issues arising from new organizational structures and flexible working patterns. These include: contract arrangements, selection, control, assessment and training. 356

According to Mullins, L.J. (1996), organizational performance involves efficiency and effectiveness. In his opinion, organizations need to be efficient in doing the right things, in the optimum use of their resources and in the ratio of outputs to inputs. But organizations must also be effective in doing the right things and in their outputs related to some specific purpose, objective or task. Performance should be related to such factors as increasing profitability, improved service delivery or obtaining the best results in important areas of organizational activities. Organizations must also ensure that they meet satisfactorily, or exceed, the demands and requirements of customers, and are adaptable to specific requirements, changes in the external environment and the demands of the situation. [7] Organizational effectiveness is affected by a multiplicity of variables. Handy, C. (1993) identifies over 60 factors that impinge on any one organizational situation and which illustrate the complicated nature of the study of organizational effectiveness. These factors include: leadership, group relations, systems and structures, the individuals factors (ability, motivation to work, role), the environment factors (economic environment, physical environment, technological environment). [5] Peters, T.J. and Waterman, R.H. (1982) conducted a study of 62 American companies with outstandingly successful performance. In this study they identified eight basic attributes of excellence which appear to account for success: a bias for action; that is, being action-oriented and with a bias for getting things done; close to the customer; that is, listening and learning from the people they serve, and provide quality, service and reliability; autonomy and entrepreneurship; that is, innovation and risk-taking as an expected way of doing things; productivity through people; that is, treating members of staff as the source of quality and productivity; hands-on, value driven; that is, having welldefined basic philosophies and top management keeping in touch with the front lines ; stick to the knitting; that is, in most cases, staying close to what you know and can do well; simple form, lean staff; that is, simple structural forms and systems, and few top-level staff; simultaneous loose-tight properties; that is, operational decentralisation but strong centralised control over the few, important core values; [8] Using Drucker s definition of business as an organization that adds value and creates wealth, Armstrong, M. (1996) describe a successful organization as one that successfully achieves these objectives while also meeting its responsibilities to its stakeholders. In his opinion, there are managerial and people factors which create organizational success. [1] The managerial factors which create organizational success are: a strong visionary leadership from the top; a clearly defined and well communicated sense of purpose expressed as a mission; a value system upheld throughout the organization which emphasizes performance, quality and the responsibilities of the organization to its stakeholders; the strategic capability at senior management level to develop long range plans for the accomplishment of the organization s mission within the framework of its core values; a thrust led by the top, but pervading the organization, to achieve world class levels of performance by process of benchmarking, continuous improvement and, as necessary, re-engineering the business. It is generally agreed that organizational effectiveness is also highly dependent on the quality of the people in the organization and how well they are managed. It has frequently been argued that people make the difference. Organizational performance depends on people management practices which stimulate and focus: initiative, creativity, motivation, capability, adaptability, business orientation, responsibility. The organization success is highly dependent on having the right resources and making the best use of them. 357

The people factors which contribute to organizational success relate to the development of: a powerful management team; a well-motivated, committed, skilled and flexible workforce; stable and cooperative relationships with employees; an overall quality of working life strategy. 3. The HRM contribution to organizational performance The HRM concept is based on the assumption that human resource strategy can contribute to the business strategy but is also justify by it. The validity of this concept depends on the extent to which is believed that people create added value and should therefore be treated as a strategic resource. If this assumption is accepted, the validity of this concept depends on the extent to which it can be applied in practice and the outcomes of such applications. The HRM specialists agreed that if the HRM is translated into specific HR strategies which are implemented, it has a considerable indirect contribution to the creation of added value and competitive advantage. In accounting language, added value is the difference between the income of the business arising from sales (output) and the amount spent on materials and other purchased goods and services (input). Added value is created by people at various levels in organizations who create visions, define values and missions, set goals, develop strategic plans, and implement those plans in accordance with the underpinning values. Added value will be enhanced by anything that is done to obtain and develop the right sort of people, to motivate and manage them effectively, to gain their commitment to organization values, to build and maintain stable relationships with them, to develop the right sort of organization structure, and to deploy them effectively and productively in that structure. The HRM contributes to the creation of added value by ensuring that people with the required competences and levels of motivation are available and by helping to create a culture and environment which stimulates quality performance. An added value approach to personnel will be directed positively to improve employee motivation, commitment, skill, performance and contribution. This approach can aim to get better value for money from personnel expenditure in such areas as training, reward and employee benefits. There are four ways in which the HRM can take the lead and make the most of its opportunity to add value by: facilitating change, proposing strategies and programmes for developing a more positive quality and performance-orientated culture and helping with their implementation; making specific contribution in the areas of human resources planning, training and development, performance management, reward and employee relations; ensuring that any HR initiatives in such fields as training as training and development are treated as investments on which a proper return will be obtained which will increase added value; delivering cost-effective personnel services, providing value for money. The concept of sustainable competitive advantage as formulated by Porter, M. (1985) appears when a firm creates value for its customers, selects markets in which it can excel a presents a moving targets to its competitors by continually improving its position. [9] According to Porter, three of the most important factors are innovation, quality and cost leadership but he also recognizes that all these depend on the quality of organization s human resources. One of the keys to competitive advantage is the ability to differentiate what the business supplies to its customers from those supplied by its competitors. Such differentiation can be achieved by having higher quality people than those competitors. 358

The ways in which people provide a critical ingredient in developing an organization s competitive position are: high productivity, superior performance, flexibility, innovation and the ability to deliver high levels of personnel customers service. People also provide the key to managing the pivotal interdependencies across functional activities and the important external relationships. One of the clear benefits arising from competitive advantage based on the effective management of people is that such an advantage is hard to imitate. An organization s personnel strategies, policies, practices are a combination of processes, procedures, personalities, styles, capabilities and organizational culture. Management literature shows that the main areas in which the HRM can contribute to organizational performance are by helping to: 1. build a well-motivated, committed, skilled and flexible workforce by developing strategies, policies, employment practices in the areas of motivation, commitment, employee development, reward; all organization are concerned with what should be done to achieve sustained high level of performance through people. This means giving close attention to how individuals can best be motivated through incentives, rewards, leadership and, most important, the work they do and the organizational context within which they carry out that work. The aim is to develop motivation processes and a work environment which will help to encourage people to apply their efforts and abilities in ways which will achieve the organization s goals as well as satisfying their own needs. 2. create and develop effective organizations; organizational development is concerned with improving the overall effectiveness of the organization, in particular, the way its various processes function and its people work together. The aim of organization development is to provide a coherent approach which changes the ways in which people carry out their work and interact with others. 3. maintain a good climate of employee relations; improvements to the employee relations climate can be attained by developing fair employee relations policies and procedures and implementing them consistently. HRM has a major contribution to the climate improvement. The managers who are largely responsible for the day-to-day conduct of employee relations need to be educated and trained on the approaches they should adopt. Transparency should be achieved by communicated policies to employees, and commitment increased by involvement and participation processes. Problems which need to be resolved can be identified by simply talking with to employees, their representatives and their trade union officials. It is necessary to develop a quality of working life (QWL) strategy. 4. focus on the drivers of organizational performance, providing levers for change, taking part in change management programmes and supporting continuous improvement and total quality management. 4. Conclusions Although researchers and practitioners interpret HRM in different ways, depending on personnel agendas and vested interests, there is general agreement on its underlying philosophy, linking people management to business objectives in a strategic, integrated and coherent way. Since the nature of HRM remains a matter of debate, it is scarcely surprising that practitioners interpret it in a variety of ways. Some organizations have taken pragmatic, local initiatives based on specific problems and solutions developed by their local managers. Others have asked guidance and advice from consultants, academics and professional associations. 359

Unfortunately, the belief that employees are valuable assets and not just a cost is rarely translated into action. The practices associated with HRM are often introduced for reasons of expediency rather than any serious belief in its principles. Many organizations in free-market countries feel that competitive forces make it impossible to commit themselves to their employees. HRM in these firms is focused on cost-cutting. A conflict arises from the inherent contradiction between HRM principles such as encouraging longterm employee commitment and short-term cost-effectiveness. The worldwide economy is changing. East Asia and the European Union are destined to be major influences at the beginning of this twenty-first century. People are being managed increasingly through methods derived from different cultural ideologies. In the internationalisation context, managing people become more and more difficult, because the new environments and different cultures. On the other hand, the aim of any organization is to attain world class performance. In this context of tough global competition, will the HRM be the principal key for organizational success? References: 1. Armstrong, Michael (1996) A handbook of Personnel Management Practice, Kogan Page Limited, London; 2. Brewster, C. and Tyson, S. (1991) International Comparisons in Human Resource Management, Pitman Publishing; 3. Daft, R. L. Organization Theory and Design, West Publishing Co., 1989 ; 4. Guest, D.E. and Hoque, K. The Contribution of Personnel Management to Organizational Performance, Institute of Personnel and Development, London, 1995; 5. Handy, C. Understanding Organization, Penguin Books Ltd, 1993; 6. Johns, G. Comportament organizaţional, Ed. Economică, Bucureşti, 1998; 7. Mullins, L.J. Management and Organization Behaviour, Pitman Publishing, 1996; 8. Peters, T.J. and Waterman, R.H. In Search of Excellence, Harper and Raw, New York, 1982; 9. Porter, M. Competitive Advantage, The Free Press, New York, 1985; 10. Price, A.J. Human Resource Management in a Business Context, Alden Press, Oxford, 1997; 360